In October of 2010 President Obama signed the Veteran Owned Small Business Verification Act, a law that requires the status of firms to be confirmed as owned and operated by Veterans, Service-Disable Veterans or an eligible surviving spouse; assuring that these business are indeed eligible for VOSB (Veteran Owned Small Business) contract set asides. Currently, businesses already in the VetBiz VIP system are in the process of undergoing the new verification process, and the deadline for completing their verification is July 31, 2011. New applications will be processed “in accordance with the 90-day time period established by 38 CFR Part 74.”
The United States Department of Veteran Affairs (USDVA) verifies companies owned and operated by veterans and service-disabled veterans. For the purposes of verification the USDVA defines a veteran as “a person who served on active duty with the U.S. Army, Air Force, Navy, Marines or Coast Guard, for any length of time and at any place and who was discharged or released under conditions other than dishonorable.” If a reservist or member of the National Guard was called into Federal active duty or was disabled in line of duty or training during that time, they are also considered a veteran. A service-disabled veteran is defined as “a veteran who possesses a disability rating letter issued by the Department of Veterans Affairs, establishing a service-connected rating between 0 and 100% or disability determination from the department of Defense.” Furthermore, for the business to qualify for verification the veteran(s) or service-disabled veteran(s) must own at least 51% of the company (including holding 51% of stock), and be involved in the management and daily operations of the business. In the case of service-disable veterans with a “permanent and severe disability” a spouse or permanent caregiver can hold the 51% ownership and be responsible for the management and business operations.
Additional requirements for a company to become verified are:
- Veteran owner(s) having direct, unconditional ownership of at least 51% of the company and have full decision making authority;
- a Veteran manages the company on both a strategic policy and a day-to-day basis;
- a Veteran holds the highest officer position;
- a Veteran should be the highest compensated employee unless there is a logical explanation otherwise submitted; and
- a Veteran has the managerial experience of the extent and complexity needed to run the company.
If a company wants to do business with the Federal government it must be registered with the CCR (Central Contractor Registry). Once your company is in the CCR you’ll need to go to USDVA’s VetBiz’s Registry to begin the qualification process. Once there, you’ll have to indicate if the business owner is a veteran or service-disable veteran, if the business is seeking veteran-owned or service-disable veteran-owned status, and if the business is considered a small business concern; along with electronically signing and submitting the VA Form 0877. (NOTE: Once all of the owners have completed the VA Form 0877, the USDVA will verify the status of each veteran owner from their Beneficiary Identification Records Locator Subsystem (BIRLS) database.) Once you’ve registered with VetBiz, you’ll be able to apply for VOSB status. While the majority of application will be done on the VetBiz web site, until the function that allows owners to directly upload additional required attachments is available, those attachments must be submitted through the USDVA’s Veteran-Owned Small Business Verification Program Document Submission Portal. The additional attachments required depend on the structure of the business (i.e. a corporation, partnership, etc.). A letter that includes a document checklist was sent out on December 10, 2010 and can be found HERE on the USDVA’s web site.
After the veteran status has been verified, the USDVA examines the information provided in through VetBiz and the attachments uploaded through Document Submission Portal. If any questions about ownership or control issues come up during the examination the USDVA will schedule a site visit, allowing for an examiner to conduct an in-person interview at the place of business with the veteran business owner(s).
Some common issues that arise during any certification process include:
- The business owner(s) not being the highest paid employee;
- Not having a required document;
- The business owner not working full-time for the business seeking certification; or
- The business owner(s) seeking certification for more than one company they own.
All these issues can be addressed by having a reasonable written explanation as to why one or more of these issues are present in your business.
The verification of company is good for one year and to maintain the status a company must apply for renewal in accordance with P.L. 109-461 and 38 CFR 74. At this time, the USDVA is redesigning their renewal process. At the moment “if the company has been verified based on document or site review, the renewal application will require the Veteran to either state that no changes have occurred with regard to Veteran status, ownership, or control regarding the company, or describe any changes that have occurred related to Veteran status, ownership, or control regarding the company.”
Important Dates & Other Resources:
- The USDVA will be hosting their 7th Annual National Veterans Small Business Conference August 15th-18th in New Orleans, LA.
- The United States Small Business Administration Office of Veterans Business Development has the stated mission of maximizing “the availability, applicability and usability of all administration small business programs for Veterans, Service-Disabled Veterans, Reserve Component Members, and their Dependents or Survivors.”
- The United States Department of Defense Office of Small Business Programs. Though his office does not award contracts or subcontracts, they are a resource for the DOD’s Small Business Offices involved with Veteran-Owned Small Business related contracting.