Small Enterprise Administration Points Rule Requiring Formal Veteran-Owned Small Enterprise Certification for Federal Contract Set Asides | Snell & Wilmer

On November 28, the Small Enterprise Administration (SBA) finalized a rule that requires veteran-owned small companies (VOSBs) and service-disabled veteran-owned small companies (SDVOSBs) to acquire formal SBA certification to take part in federal acquisition set asides for VOSBs and SDVOSBs (the Rule).¹ This Rule eliminates the present self-certification course of for VOSBs and SDVOSBs, which has been relied upon considerably by firms doing enterprise with the federal authorities. As such, previous to re-certification to a contracting workplace on a present contract or in bidding on a brand new alternative, firms might want to guarantee compliance with the brand new Rule.

Much like the present VA certification program,² the SBA certification will nonetheless contemplate a number of the conventional components equivalent to VOSB and SDVOSB possession and management buildings. Nonetheless, the SBA certification will not contemplate different components, such because the VA requirement that an VOSB or SDVOSB proprietor present “good character,” notably because it pertains to the affect of whether or not a person who owns or controls a part of the priority is incarcerated or on parole. Though the SBA Rule thought-about variations on the “good character” requirement, it in the end determined to drop it from its evaluation as a result of it discovered that the requirement is pointless, and the requirement is integrated through different guidelines or applications. Furthermore, the SBA acknowledged that such components are extra applicable for evaluation of whether or not an VOSB’s or SDVOSB’s can carry out the contract—a duty difficulty fairly than a responsive or eligibility difficulty.

The SBA certification would require VSOBs and SDVOSBs to resume each three years. Notably, the Rule contains an exception for self-certified SDVOSBs to proceed to function subcontractors, however this exception will solely be in impact for the subsequent five-years. Furthermore, as a part of the transition interval, the Rule takes into consideration companies which are already VA -certified or self-certified. VSOBs already licensed by the VA will hold their present three-year certifications and could also be eligible for a further yr extension earlier than needing SBA formal certification.The Rule additionally permits a year-long transition interval for self-certified contractors to use for formal SBA certification to stop a deluge of purposes.

As the brand new yr approaches, VSOBs and SDVOSBs ought to contemplate evaluating their present standing beneath the Rule. In the interim, VA-certified and self-certified issues will nonetheless stay eligible for veteran-related set asides. Though VA-certified and self-certified VSOBs and SDVOSBs could have a grace interval to acquire SBA certification, contemplate working with authorized counsel to observe developments in SBA steerage through the transition interval to make sure correct certification steps are met. As well as, prime contractors that enter into teaming agreements or in any other case subcontract to VSOBs and SDVOSBs might have to do further due diligence. Moreover, these contractors required to submit subcontracting plans for assessment by the federal authorities may even want to interact in further due diligence. A significant focus space for the Division of Justice and particular person company Workplaces of Inspector Common is fake claims related to inappropriate certifications. Though this new Rule ought to keep away from a few of these claims, contractors in any respect tier ranges ought to stay diligent and contemplate evaluating insurance policies and procedures associated to vendor background confirmations to make sure compliance.

Footnotes:

1. The Rule for Veteran-Owned Small Enterprise and Service-Disabled Veteran-Owned Small Enterprise-Certification is out there at https://www.federalregister.gov/paperwork/2022/11/29/2022-25508/veteran-owned-small-business-and-service-disabled-veteran-owned-small-business-certification#h-71.

2. This rule aligns with and expands upon certification necessities already established by the U.S. Division of Veterans Affairs (VA). Per the Nationwide Protection Authorization Act (NDAA) of 2021, the VA’s Heart for Verification and Analysis might be transferred to SBA starting January 1, 2023.