I recently authored an article for Law360 offering perspective on a proposed rule announced by the Small Business Administration (SBA) on July 6. The new rule will establish a government-wide certification process for Veteran-Owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) to be eligible for the federal contract set-aside programs, which were established in a 2004 executive order by President George W. Bush to increase participation of these groups in government contracting.
As detailed in my earlier blog post, the proposed rule would replace the Center for Verification and Evaluation (CVE) process administered by the Veterans Affairs Administration (VA), which only applies to VOSBs and SDVOSBs planning to contract with the VA itself. The new government-wide certification process will require businesses to apply for certification with the SBA and seek renewal every three years.
In addition to combatting fraud and exploitation within the VOSB and SDVOSB set-aside programs, the SBA states the new certification process is designed to reduce ambiguity and uncertainty for contracting officers, making it easier to set aside future contracting opportunities for VOSBs and SDVOSBs.
Beyond explaining the details of the new process and its focus on offsetting fraud within the program, I highlighted some compliance challenges to anticipate with its implementation, such as representations following a merger or acquisition and adding to the already-overwhelmed SBA backlog.
“Will the SBA have enough resources for all companies to obtain their certifications in a timely manner?” I wrote. “A similar administrative logjam occurred with the All Small Mentor-Protégé Program where a combination of inadequate resources and a deluge of incoming mentor-protégé agreements resulted in a significant backlog. While once only taking seven to 10 business days to obtain approval, the wait now stands at over 100 days.”
“The proposed rule follows the lead of similar certification processes, providing an important gatekeeping function, and ultimately bringing an increase in overall compliance – leveling the playing field for those who appropriately certify their statuses,” I explained in the article. “The increased compliance should also bring more opportunities to the VOSB and SDVOSB communities furthering the goal of President Bush’s 2004 Executive Order. While blind spots remain, it is a logical and functional next step to reinforce fair practices and eliminate fraud.”
The full article, “A Closer Look at SBA Proposal for Disabled-Veteran Small Biz,” was published on August 25 by Law360 and is available online.