Resolution is on the Horizon for Inconsistent VA and SBA Rules for Veteran Owned Businesses

For years both the Department of Veterans Affairs (VA) and the U.S. Small Business Administration (SBA) have had overlapping jurisdiction over Veteran Owned Small Businesses (VOSBs) and Service Disabled Veteran Owned Small Businesses (SDVOSBs). Unfortunately these agencies have applied inconsistent standards for determining what constitutes unconditional ownership and control of the business by the veteran in assessing eligibility. As demonstrated by the recent Veterans Contracting Group decision coming out of the U.S. Court of Federal Claims, the inconsistencies between the VA and SBA eligibility requirements for veteran owned businesses can produce “perverse and draconian” results.

As part of the 2017 National Defense Authorization Act (NDAA), VA and SBA were directed to resolve these long standing inconsistencies by working together to develop joint regulations for VOSB and SDVOSB eligibility. Those joint regulations have yet to be proposed. However, VA recently released a proposed regulation that would eliminate the conflicting standards by deferring to SBA’s existing regulations for size, ownership and control for veteran owned businesses found in 13 CFR part 125.

It remains to be seen whether this is the final resolution of the issue or merely a stop-gap measure to eliminate the inconsistency while the two agencies work towards developing entirely new eligibility standards for VOSBs and SDVOSBs. The 60 day comment period for the proposed rule does not expire until March 12, 2018, so a final rule is not expected to be released for several months.

For more information, contact MWL Partner Peter A. Fish.

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