Under current law, the VA runs its own Service-Disabled Veteran-Owned Small Business program, and the SBA handles those duties for all other agencies.
Key legislators contend that having two programs for certifying service-disabled veteran-owned small businesses is overly complex and inconsistent.
Senior members of the House Small Business Committee want to consolidate the service-disabled veteran-owned small business procurement process under the sole jurisdiction of the Small Business Administration, and to legislate that change as part of the fiscal 2015 defense authorization bill.
The Department of Veterans Affairs has its own SDVOSB program, while the SBA handles SDVOSB duties for all other federal agencies. At the ACT-IAC Small Business Conference on April 24, House Small Business Committee Senior Counsel Emily Murphy raised the issue in a discussion on the legislative and regulatory outlook for small firms.
The bill was introduced last July by Colorado Republican Mike Coffman, who serves on the Small Business, Armed Services and Veterans Affairs committees.
Coffman called the existing VA/SBA process "cumbersome, expensive and overly complex." Differences in definitions, processes and interpretation between the agencies cause inconsistent decisions as to which firms qualify for contracts, he said. According to Coffman, SDVOSBs can qualify at one agency and not another for procurement preferences. The inconsistency often adds cost, confusion and opens the door to fraud, he said.
SDVOSB shenanigans were at the heart of a congressional investigation last summer into hardware and software reseller and IT services provider Strong Castle.
A House Oversight and Government Reform Committee investigation and report on Strong Castle owner Braulio Castillo alleged that he secured preferential status as a small business owned by a disabled veteran and as a business operating in a blighted neighborhood. Castillo's Historically Underutilized Business Zone, or HUBZone, preference was ultimately revoked, but his SDVOSB status -- based on a sports injury incurred at the U.S. Military Academy Preparatory School -- was affirmed by the Veterans Affairs Department in September 2013.
According to Coffman, the measure would transfer the VA verification processes to SBA; unify the definitions of SDVOSB and Veteran-Owned Small Business (VOSB), and add transparency and predictability to the process by creating an appellate process by which an SDVOSB can challenge an agency decision.
Coffman’s bill was approved by the Small Business panel on March 5. Committee Chairman Sam Graves (R-Mo.) and Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-N.Y.) requested on April 9 that the measure be added to the 2015 defense bill, and House sources told FCW that a Senate companion bill is in the works.