The Veteran’s Administration (VA) administers the “Veterans First” Service-Disabled-Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB) verification program. The VA’s program requires companies to apply for verification through the VA’s Center for Verification and Evaluation (CVE) and to re-certify every two years. The CVE’s verification process is challenging and requires applicants to produce extensive documentation. Nevertheless, verification is worth the effort, as it allows the SDVOSB and VOSB to participate in VA’s “Veteran’s First Contracting Program” contract set asides and sole source contracts.
According to the VA, the following are the top three reasons for denial of certification in the 4th Quarter of FY2014:
- Veteran does not demonstrate full-time devotion to business (38 CFR 74.4(c)(3)). “One or more veterans or service-disabled veteran owners who manage the applicant or participant must devote full-time to the business during the normal working hours of firms in the same or similar line of business. Work in a wholly-owned subsidiary of the applicant or participant may be considered to meet the requirement of full-time devotion. This applies only to a subsidiary owned by the VOSB itself, and not to firms in which the veteran has a mere ownership interest.”
- Veteran does not control decision-making and/or serve as managing member of LLC (38 CFR 74.4(e)). “In the case of a limited liability company, one or more veterans or service-disabled veterans must serve as management members, with control over all decisions of the limited liability company.”
- Non-veteran receives highest salary (38 CFR 74.4(g)(3)). “With the exception of a spouse or personal caregiver who represents a severely disabled veteran owner, no such non-veteran or immediate family member may … [r]eceive compensation from the applicant or participant in any form as directors, officers or employees, including dividends, that exceeds the compensation to be received by the highest officer (usually chief executive officer or president).”
These represent just the top 3 reasons why the VA denies applications for verification and recertification of program participants. Applicants and participants recertifying also are denied for reasons such as: unconditional ownership, undue influence, control of decision-making, managerial experience/critical license, 51% majority ownership, and day-to-day management and administration of operations issues.
