The federal government has long encouraged contracting with businesses owned and controlled by veterans who have service-connected disabilities. The service-disabled veteran-owned small business designation, or SDVOSB, gives eligible firms access to set-aside and sole-source opportunities, and Congress has established a government-wide goal for the share of contract dollars that go to these businesses.
A change in who certifies
For many years, veteran-owned firms had two parallel paths. The Department of Veterans Affairs verified veteran-owned and service-disabled veteran-owned businesses for its own Veterans First contracting program, while most other agencies allowed firms to self-certify their SDVOSB status.
That changed when responsibility for certification moved to the U.S. Small Business Administration. Beginning January 1, 2023, the SBA took over certification through its Veteran Small Business Certification program, commonly called VetCert. The transition included a grace period for firms that had been self-certifying. Today, firms generally need SBA certification to compete for SDVOSB set-aside and sole-source contracts across government. Check sba.gov for the program’s current rules.
General eligibility themes
The specific standards are set out in regulation, but eligibility generally includes:
- The business must be small under the size standard for the relevant NAICS code.
- It must be at least 51 percent owned by one or more service-disabled veterans, with that ownership direct and unconditional.
- Service-disabled veterans must control both the long-term decision-making and the day-to-day management and operations.
- Service-connected disability status is established through documentation such as a VA or Department of Defense determination.
Control is often where applications get complicated. Agreements that give minority owners or outside parties the power to block decisions can raise questions. If your operating agreement or bylaws include unusual provisions, have them reviewed by a qualified professional before applying.
How the designation is used
Certified SDVOSBs may compete for contracts set aside for service-disabled veteran-owned firms and, under certain conditions, receive sole-source awards. At the Department of Veterans Affairs, a statutory preference for veteran-owned businesses shapes how the department approaches its acquisitions, and the Supreme Court addressed the VA’s obligations under that statute in its 2016 Kingdomware decision.
Being certified does not guarantee work. The firms that benefit most usually combine their designation with clear capabilities, relevant past performance and steady relationships with agency small business offices.
Keeping your status in good order
Certification is not permanent without maintenance. Firms must keep their information current, report changes in ownership or control, and follow the program’s recertification requirements. If you plan to bring in investors, add partners or restructure, think through how those changes might affect eligibility before you finalize them.
Veteran Business Outreach Centers, SBA district offices and APEX Accelerators can help explain the process at no cost. For questions about your specific ownership structure, talk to a government contracts attorney.