Service Disabled Veteran Owned Small Business SDVOSB Program – Government Contracts

Whether you are contemplating getting into a subcontractor relationship via a Service Disabled Veteran Owned Small Business SDVOSB teaming arrangement for an upcoming project, small businesses use teaming agreements for many reasons. Each contractor’s goal is different. However, the ultimate concern of all interested parties should be whether the planned teaming relationship is legal or whether it violates any SBA affiliation rules.  When you are drafting your agreements you want to make sure that any template you have does not violate federal procurements laws

• If your company is deemed other than small as a result of a small business size protest, you can be barred from bidding government contracts as a small business under the targeted NAICS code.

What SDVOSB Service-Connected Disability mean?

The meaning and definition of being service-disabled veteran business can be found in 38 U.S.C. 101(2) and (16). The term “service-connected” means, with respect to disability or death, that such disability was incurred or aggravated, or that the death resulted from a disability incurred or aggravated, while the veteran was in  line of duty in the active military, naval, or air service. A service connected injury or disease incurred while performing military service is mostly considered as meeting the service-connects criteria. The dibbled veteran’s military discharged papers DD 214 will be the source document when assessing the service-connected disability.

Who Ultimately Decides Whether You Have a Serviced Connected Disability?  

If you are a Service-Disabled Veteran, the Veterans Administration (VA) will make the ultimate determination via a Department of Defense Form 214, Certificate of Release or Discharge from Active Duty, or a Statement of Service from the National Archives and Records Administration, stating that you have a service-connected disability. It is important to understand that having the SDVOSB prerequisites meets the eligibility requirement but is also a prerequisite for getting sdvosb certification for government contracting purposes.

Can a Veteran with 0% disability still meet the Sdvosb Certification Requirements for Approved for the SDVSOB ContractingcProgram? 

Currently do have have to have a minimum disability rating to be admitted into the Service disabled veteran owned small business program. You can have SDVOSB status if you have 0 to 100% disability rating.

What is an SDVOSB. Service-Disabled Veteran-Owned Small Business Concern?

An SDVOSB firm is a  small business concern owned and controlled by a Service-Disabled Veteran or Service-Disabled Veterans, as defined in section 3(q) of the Small Business Act (15 U.S.C. 632(q)) and SBA’s implementing SDVOSBC Program Regulations (13 C.F.R. 125)

Can I Get Sdvosb sole source contracts under the Service Disabled Veteran Owned Small Business SDVOSB Program?

Yes. 13 CFR 125.19 and 13 CFR 125.20 allows federal contracting agencies to make SDVOSB sole source awards to qualified small business. If your SDVOSB status is challenged or protested. The matter is presented before the SBA Office of Hearings and Appeals (SBA OHA) for resolution.

What are SDVOSB Certification Requirements 13 CFR 128?  

To participate in the Service Disabled Veteran Owned Small Business program, you must be a small business under the North American Industrial Classification System (NAICS) code assigned by the Contracting Officer to the procurement; Your business must be 51 % unconditionally and directly owned by one or more Service-Disabled Veterans or in the case of any publicly owned business, not less than 51% of the stock of the company is owned by one or more Service-Disabled Veterans; and The management and daily business operations of the SDVO SBC must be controlled by one or more service-disabled veterans (or in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran).

What are the Requirements for SDVOSB Joint Ventures? 

Under  13 C.F.R. 125.15(b), small businesses may pursue government contracts by using SDVOSB joint venture agreements.  The companies must be small under the specific NAICS code to move forward under a joint venture relationship. An SDVOSB can only avoid affiliation if a large business is a mentor and approved as

SDOVSB Teaming Agreement in a Sole Source Contract?

Mistakes to Avoid When Engaged in SDVOSB Teaming Arrangements?

If you have submitted a proposal for an SDVOSB set aside, and you have also submitted a named company as a named. teaming partner, you may want to watch out for the common mistakes when companies set up SDVOSB teaming arrangements.

• The contractor teaming arrangement does not show that the prime contractor (SDVOSB) is in total control of the contract
• The teaming arrangement violates the ostensible subcontractor rule because of undue reliance or the subcontractor performing the primary and vital parts of the contract
• The arrangement violates the limitations on subcontracting rules because the teaming subcontractor is not a similarly situated small business.

SDVOSB Teaming Arrangements With Only Other SDVOSB Companies?

When conducting your pr-teaming agreement due diligence, one of the questions CEOs have is whether they have to only enter into SVOSB teaming arrangements with other service disabled companies. There is nothing in the regulations requiring this.

• There are pros and cons of developing SDVOSB arrangements with other small businesses that are service disabled.
• A teaming arrangement with other disabled companies could minimize the risk of SBA affiliation violations.

Should You Use a Service Disabled Veteran Owned Small Business Joint Venture or SDVOSB Teaming Arrangements?

Contractor teaming agreements are encouraged. However, they can be abused and small service disabled veteran owned small businesses must be wary of cold calls from large businesses seeking quick teaming arrangements. When you contemplate building a business relationship to bid on a federal contract, there is no doubt that SDVOSB teaming agreements can benefit your company. However, you must go about it the right way.

• Parties to the joint venture not only must comply with SBA regulations regarding affiliation. They must also balance VA requirements. This can be confusing and problematic. See also SBA 8a Mentor Protege Joint Venture Rules 13 CFR 124.513 & 13 CFR 121.103.

Why Have an SDVOSB Teaming Agreement

As a federal contractor, you can develop a teaming contract relationship with another company to win government contracts. FAR Subpart 9.6 and FAR 19.1406 allows companies to do this. However, the approach is carefully scrutinized when small business size protests are filed after award.

• SDVOSB teaming agreement allow the two companies to effectively utilize resources to bid on larger contracts
• The approach to using a contractor teaming arrangement gets strict scrutiny from the Small Business Administration (SBA) if your competition files a size protest.

Some companies may not have a choice but to enter into a teaming relationship with another company. This can be for substandard past performance and experience. This also can be tricky because a company cannot simply rely on a subcontractor’s past performance to get a contract. However, the source selection team will consider the teaming partner’s past performance in addition to the prime’s experience. See more onVA Service Disabled Veteran Owned SDVOSB Requirements & Joint Venture Contracts.

When considering whether or not to enter into SDVOSB teaming arrangements, understand that if you are service disabled veteran owned small business (SDVOSB), the government has now advanced by providing specific set-asides and sole-source opportunities. However, like the 8a certification and HUBzone categories of the FAR, you are not guaranteed a federal contract.

• Before venturing into the litigation field, remember that the Department of Veterans Affairs (VA) generally oversees the VA SDVOSB Programs and not the SBA. However, when it comes to small business status, the SBA controls that outcome.

Understanding the approach teaming contracts is essential

The approach to better position yourself for a federal contract is to learn about the service disabled veteran owned small business joint venture or teaming arrangement approach. This solves two problems. First, the agency can still meet its SDVOSB goals. Second, by venturing with another company that is also similarly situated, you can still avoid SBA affiliation violations.

• Many large businesses are actively seeking out SDVOSB teaming arrangements and SDVOSB joint ventures in hope of landing revenues in a government contract. 
• Understanding the rules and having the best guidance with government contractor teaming and joint venture regulations and the best way to avoid affiliation can benefit the company’s bottom line.

Service Disabled Veteran Owned Small businesses often have concerns about the Veteran Affairs eligibility requirements. As a result,  many SDVOSB small businesses find themselves at a loss, and not enough questions answered.  However, there can be still problems with affiliation and the Ostensible Subcontractor Rule.  A solution to these problems is for companies to develop a more robust road-map for seeking out future projects and making sure that the right SDVOSB teaming arrangements and SDVOSB Joint Venture relationships are in place.

SDVOSB Joint Venture Vs SDVOSB Teaming Agreements

The bottom line is that small businesses are still moving forward with teaming agreements. Under this relationship, there can be a presumption that the awarded company, the SDVOSB is in control of the contract.  Whereas joint ventures tend to act as a third company, is presumed to be the offeror and then has to verify the percentage of work being completed by the joint venture entity.  See SBA Joint Venture Agreement Contract Rules & SBA Approval and Difference Between Teaming Agreement vs Joint Ventures.

Joint Ventures

SDVOSB joint ventures are governed by 13 CFR  125.18. Parties should also be aware that there are still performance and limitations of contracting requirements for the JV. Companies should also be mindful that affiliation is more prominent with joint venture relationships versus teaming arrangements. The parties should also be aware that compared to teaming relationships, the managing venturer (small business prime) is responsible for controlling the day-to-day management and administration of the joint venture’s contractual performance, but other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary

There are more layers of legal inquiry when you are operating under an SDVOSB joint venture such as:

• Whether the venture is unlawfully using populated or unpopulated approaches
• When employees assigned to the joint venture are actually performing administrative functions or not
• Not having the correct contents in your joint venture agreement can expose you to affiliation

Teaming Agreements

Having a SBVOSB teaming agreement in place develops the traditional prime subcontractor relationship. The small business prime controls the contract and the relationships. Once this is done, it is difficult to become affiliated. There are no joint bank accounts required as in the case of a joint venture.

Be Proactive and Avoid Legal Traps

• There are many landmines and legal traps when it comes to forming teaming arrangements
• Understand the difference and the impact of both SDVOSB teaming arrangements and joint venture relationships.
• When you decide that you want to enter into a teaming agreement, you also want to be mindful of the limitation on subcontracting rules and laws governing similarly situated small businesses.
• Be mindful that having a teaming agreement alone does not by itself give you legal rights in court

In addition, You must still meet the control and contract performance thresholds set forth in the small business program and federal procurement rules. 

How to Avoid SDVOSB Fraud Charges

Small businesses must be well-versed on the dos and don’ts when bidding and performing SDVOSB government contracts. The various law enforcement agencies are targeting federal contractors for FAR violations, limitations on subcontracting errors, fraudulent invoices and even making side agreements after the contracts are awarded. SDVOSB fraud must be avoided at all costs. The DOJ, SBA OIG or VA OIG can investigate allegations of procurement fraud. If this happens to you, then you want to immediately seek help from experienced SDVOSB attorneys.

Get Sound Legal Advice About Service Disabled Veteran Government Contracts

If you are a disabled veteran now seeking to acquire federal contracts for disabled veterans, you must also know the affiliation rules that could cost you a large contract.

• Don’t fall to the temptation of drafting a quick service-disabled veteran-owned small business joint venture or teaming contract for the simple sake of just presentment to the government.
• Remember, anyone can pretty much protest a contract award if they meet the GAO or FAR requirements.
• Although you are a service-disabled veteran, you are still subject to very strict procurement and bidding rules by the contracting officer.

If you are a veteran business and have questions or need help with Service Disabled Veteran Government Contracts, call our SDVOSB and government small business lawyers at 1-866-601-5518.