FVA Service Disabled Veteran Owned SDVOSB Set Aside RequirementsService Disabled Veteran Owned Small Business  / SDVOSB requirements) decisions for government contracts is becoming a hot item in bid protest litigation.  When it comes to Department of Veteran Affairs solicitations, government contracting agencies sometimes fail to follow statutory requirements for market research.

 When it comes to learning how to get government contracts for small businesses, service-disabled-veteran-owned small businesses with veterans preference that are faced with competing against larger businesses can sometimes have a difficult time winning bids because of the tough competition.  Therefore, small companies may have to resort to filing bid protests. 

Filing a bid protest can be very tricky. Therefore, as a Service Disabled Veteran Owned Business small business SDVOSB, you want to aware of the costly mistakes made when filing a GAO protest.

Under current SBA current regulations (specifically 13 CFR 125.19(b)(2)(i)) requires contracting officers to consider small business procurements for service connected disabled veteran owned business entities. If the agency fails to conduct the requirements market research before setting aside procurements for other small business programs, then they have SBA’s regulations.

SDVOSB Certification Requirements

To get SDVSOB certified and to reap the benefits of set aside contracts for disabled veterans, your documentation and application must meet the following requirements :

  • The Service Disabled Veteran (SDV) must have a service-connected disability that has been determined by the Department of Veterans Affairs (VA) or Department of Defense (DOD)
  • The SDVOSB company must be small under the North American Industry Classification System (NAICS) code assigned to the procurement
  • The SDV must unconditionally own 51% of the SDVOSB
  • The SDVO (Owner) must control the management and daily operations of the company
  • The SDV (owner ) must hold the highest officer position in the SDVOSB. There is no wiggle room for this requirement
  • The management and daily business operations of the concern must be controlled by one or more service-disabled veterans.
  • Service-disabled veteran means a veteran with a disability that is service-connected.
  • Ownership must be direct. Ownership by one or more service disabled veterans must be direct ownership.
  • A concern owned principally by another business entity that is in turn owned and controlled by one or more service-disabled veterans does not meet this requirement.

Bid Protests for SDVOSB Set Aside Requirements

GAO previously sustained protests filed against VA service disabled veteran-owned small business set aside being conducted pursuant to FSS rules where the protester asserted that the agency failed to comply with the SDVOSB requirements of the VA Act and its implementing regulations. See Aldevra, B-406205, Mar. 14, 2012, 2012 CPD ¶ 112.

Procurements that are being conducted pursuant to General Services Administration Federal Supply Schedule (FSS) procedures and implementing regulations are set forth at Federal Acquisition Regulation (FAR) subpart 8.4. In accordance with those regulations, the solicitations might be issued on an unrestricted basis.

However, the Veterans Administration may act improperly by using FSS procedures without first conducting market research to decide whether the procurement should be a Service Disabled Veteran Owned Small Businesses.

If you can successfully show that had the agency conducted market research, it would have found that at least two Service Disabled Veteran Owned Businesses could meet the  CICA small business set aside requirements at a reasonable price, you might be able to prevail in a GAO protest.

What if You Did Not Submit an SDVOSB Set Aside Contract Proposal? 

Sometimes, filing a bid protest for SDVOSB certification requirements for a set aside can be problematic if your bid protest lawyer does not fully understand the law. Problems can arise, and the agency will certainly try to get your case dismissed when a question arises as to whether you are an interested party.  This is a mandatory requirement to file a bid protest.

Do You Meet the Statutory Interested Party Requirements in Bid Protests

Under the Competition in Contracting Act of 1984, 31 USC 3551- 56 (2006) and GAO Bid Protest Regulations, 4 CFR 21.0(a)(1) (2012), only an “interested party” may protest a federal procurement. That is, a protester must meet the requirements of being an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract.

The key to overcoming this issue of an SDVOSB certification requirements in a bid protest, is to challenge the government contracting agency’s failure to solicit you for the FSS order, and the agency’s improper issuance of the order to a small business concern where there were other set aside contracts for disabled veteran concerns, including you, that could satisfy this requirement.

Under these circumstances, you will more than likely be deemed an interested party, a prospective offeror whose direct economic interest is affected by the issuance of the FSS order to another small business who is not a service-disabled veteran.

Consistent with GAO recent decisions, the Veterans Benefits, Health Care, and Information Technology Act of 2006 requires that the agency makes a determination whether these acquisitions should be set aside for SDVOSB (or VOSB) concerns prior to conducting the procurements using FSS procedures.

SDVOSB Joint Venture Requirements 

The following are direct citations from  13 § 125.18. SDVSOB Joint Venture requirements can be problematic when considering the work share requirements, limitations on subcontracting and whether there is a similarly situated small business on board. Have your attorney explain the various nuances.
What requirements must an SDVO SBC meet to submit an offer on a contract?

(a)Representation of SDVO SBC status. An SDVO SBC must submit the following representations with its initial offer (which includes price) on a specific contract:

(1) It is an SDVO SBC;

(2) It is small under the NAICS code assigned to the procurement;

(3) It will comply with the limitations on subcontracting requirements set forth in § 125.6;

(4) If applicable, it is an eligible joint venture; and

(5) If applicable, it is an eligible nonmanufacturer.

(b)Joint ventures. An SDVO SBC may enter into a joint venture agreement with one or more other SBCs or its SBA-approved mentor for the purpose of performing an SDVO contract.

(1)Size of concerns to an SDVO SBC joint venture.

(i) A joint venture of at least one SDVO SBC and one or more other business concerns may submit an offer as a small business for a competitive SDVO SBC procurement or sale, or be awarded a sole source SDVO contract, so long as each concern is small under the size standard corresponding to the NAICS code assigned to the procurement or sale.

(ii) A joint venture between a protégé firm that qualifies as an SDVO SBC and its SBA-approved mentor (see §§ 125.9 and 124.520 of this chapter) will be deemed small provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the SDVO procurement or sale.

(2)Contents of joint venture agreement. Every joint venture agreement to perform an SDVO contract, including those between a protégé firm that qualifies as an SDVO SBC and its SBA-approved mentor authorized by § 124.520 or § 125.9 of this chapter, must contain a provision:

(i) Setting forth the purpose of the joint venture;

(ii) Designating an SDVO SBC as the managing venturer of the joint venture, and an employee of the SDVO SBC managing venturer as the project manager responsible for performance of the contract;

(iii) Stating that with respect to a separate legal entity joint venture, the SDVO SBC must own at least 51% of the joint venture entity;

(iv) Stating that the SDVO SBC(s) must receive profits from the joint venture commensurate with the work performed by the SDVO SBC;

(v) Providing for the establishment and administration of a special bank account in the name of the joint venture. This account must require the signature of all parties to the joint venture or designees for withdrawal purposes. All payments due the joint venture for performance on an SDVO contract will be deposited in the special account; all expenses incurred under the contract will be paid from the account as well;

(vi) Itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each, where practical. If a contract is indefinite in nature, such as an indefinite quantity contract or a multiple award contractwhere the level of effort or scope of work is not known, the joint venture must provide a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each, or in the alternative, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available;

(vii) Specifying the responsibilities of the parties with regard to negotiation of the contract, source of labor, and contract performance, including ways that the parties to the joint venture will ensure that the joint venture and the SDVO small business partner(s) to the joint venture will meet the performance of work requirements set forth in paragraph (b)(3) of this section, where practical. If a contract is indefinite in nature, such as an indefinite quantity contract or a multiple award contract where the level of effort or scope of work is not known, the joint venture must provide a general description of the anticipated responsibilities of the parties with regard to negotiation of the contract, source of labor, and contract performance, not including the ways that the parties to the joint venture will ensure that the joint venture and the SDVO small business partner(s) to the joint venture will meet the performance of work requirements set forth in paragraph (d) of this section, or in the alternative, specify how the parties to the joint venture will define such responsibilities once a definite scope of work is made publicly available;

(viii) Obligating all parties to the joint venture to ensure performance of the SDVO contract and to complete performance despite the withdrawal of any member;

(ix) Designating that accounting and other administrative records relating to the joint venture be kept in the office of the SDVO SBC managing venturer, unless approval to keep them elsewhere is granted by the District Director or his/her designee upon written request;

(x) Requiring that the final original records be retained by the SDVO SBC managing venturer upon completion of the SDVO contract performed by the joint venture;

(xi) Stating that quarterly financial statements showing cumulative contract receipts and expenditures (including salaries of the joint venture’s principals) must be submitted to SBA not later than 45 days after each operating quarter of the joint venture; and

(xii) Stating that a project-end profit and loss statement, including a statement of final profit distribution, must be submitted to SBA no later than 90 days after completion of the contract.

See How We Can Help You Avoid Costly Mistakes With Federal JV Agreements

If you are a Service Disabled Veteran Owned Small Business (FAR service disabled veteran-owned business set aside contracts) needing help with government small business services that challenges service disabled veteran owned small business set aside and SDVOSB requirements, call our Washington, DC bid protest lawyers at 1-866-601-5518 for a free initial consultation.

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