If you’re a veteran-owned small business selling to the government or are looking to become one, there have been a few updates recently you should be aware of. One of these updates is a final rule eliminating self-certification for all Service-Disabled Veteran-Owned Small Businesses (SDVOSBs). Self-certification has already been removed for SDVOSBs who want to go after prime SDVOSB set-asides, but now the option is being eliminated on all fronts.
The Small Business Administration (SBA) has been making changes to both the certification process and prime contract preference programs, shifting the way businesses enter the marketplace, but also giving them more opportunities to compete for government contracts. So, let’s dive into this final rule and what it means for veteran-owned businesses.
What is an SDVOSB?
Service-Disabled Veteran-Owned Small Businesses are owned and controlled by one or more service-disabled veterans. To qualify, your firm must:
- Be a small business according to SBA’s size standards
- Have one or more service-disabled veterans manage day-to-day operations who also make long-term decisions.
- Eligible veterans must have a service-connected disability
The federal agency contracting goals for SDVOSBs was recently raised from 3% to 5%.
Right now, SDVOSBs who are not going after set-aside or sole source contracts but meet Veteran Small Business Certification (VetCert) Program requirements are able to self-certify their SDVOSB status. SDVOSBs are able to self-certify for subcontracting and government goaling purposes. The SBA aims to change this with their new rule which we’ll cover below.
SBA to Eliminate Self-Certification for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs)
Now let’s get into the main event—the Federal Register published a final rule early June 2024 including amendments to the SBA’s Veteran Small Business Certification (VetCert) Program. In this final rule, the SBA is eliminating self-certification for SDVOSBs who are awarded federal government contracts or subcontracts that count toward agency goals. In other words, the rule is removing any remaining ability to self-certify as an SDVOSB. This rule is a revision in the National Defense Authorization Act (NDAA) for Fiscal Year 2024.
Section 864 of the NDAA is amended so that each prime contract and subcontract award counted for meeting the SDVOSB procurement goals of federal agencies or prime contractors, will be entered into with firms certified by VetCert.
Additionally, the burden of SDVOSB compliance for goaling purposes rests on the Contracting Officer (CO), but under this final rule, the burden will be placed on the SBA. So, the CO’s responsibilities will be reduced to confirming the applying firm is a certified SDVOSB through SBA’s database. This may result in a minor cost in savings for contracting agencies.
Why is SBA Changing the SDVOSB Self-Certification Process?
Currently, businesses that meet the VetCert Program eligibility requirements may self-certify their SDVOSB status, receive prime or subcontract awards that are not SDVOSB set-aside or sole source contracts, AND be counted toward an agency’s SDVOSB small business goals or a prime contractor’s subcontracting goal.
This means federal agencies still get credit for awards to self-certified SDVOSBs even though the SBA has not reviewed them for their status. There’s also no incentive for agencies or prime contractors to confirm SDVOSB eligibility.
When Will the Rule Go into Effect?
This rule will go into effect in the federal register on August 5, 2024, but the actions listed above will not go into full effect until October 1, 2024. This is the start of the new federal Fiscal Year. There will be a grace period until December 22, 2024, for firms who file a VetCert application may continue to self-certify until SBA makes their decision final. If firms do not certify or do not have a pending application by this date, they cannot self-certify for any purpose.
The Veteran-Owned Small Business Certification Process Has Changed Overall
In the past two years, the certification process for both Veteran-Owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) was moved to the SBA under VetCert. It used to housed under the Department of Veterans (VA).
In January 2024, all SDVOSBs who wanted to be prime contractors on sole source and set-aside contracts were no longer able to self-certify and had to go through VetCert. As mentioned above, this is a different category of contractors who we are discussing in this article. Regardless, after this new final rule goes into effect, all SDVOSBs will have to self-certify.
Succeeding as a Small Business
The federal government has placed a lot more emphasis and attention on small businesses in the past few years. If you think you qualify as a small business such as a VOSB or SDVOSB, you should make sure to follow the certification process correctly so you can take full advantage of the set-asides out there.
To learn more about small businesses in the government, check out our blogs, Do I Qualify for Small Business Set-Aside Contracts? or Small Business Advantages in Government Contracting. If you have questions about your business or need help acquiring government contracts such as GSA Schedules, our team would be happy to assist you.
