SBA Announces Final Rule Eliminating Self-Certification for SDVOSB

On June 6, 2024, the U.S. Small Business Administration (SBA) published a final rule (the “Rule”) to eliminate self-certification for Disabled Veteran-Owned Small Businesses (SDVOSBs) that contract or subcontract with the federal government for to agency or subcontracting purposes.

As a reminder, effective January 1, 2024, bidders must be SBA-certified SDVOSBs and Veteran-Owned Small Businesses (VOSBs) under the Veteran Small Business Certification (VetCert) program to be eligible to compete for the exclusive source and SDVOSB suite of awards. See 13 CFR § 128.401(a). If the Rule is finalized, SDVOSB self-certification will essentially be eliminated. This means that SDVOSB self-certification will no longer be accepted for SDVOSB procurement of master contracts. Similarly, self-certified SDVOSBs will no longer count toward agency contracting or prime contractor subcontracting purposes.

Below we summarize the key takeaways from the Final Rule.

When will the regulation come into force?

The rule goes into effect on August 5, 2024, unless SBA receives significant adverse comments by July 8, 2024 and decides to withdraw the rule.

What type of SDVOSB self-certification is currently permitted under SBA regulations?

Under current SBA regulations, companies that do not apply for exclusive or sole source SDVOSB contracts but meet the SBA VetCert program eligibility requirements may self-certify their SDVOSB status and may: 1) receive a prime contract or subcontracts that do not are separate from the SDVOSB or exclusive-use contracts and 2) be counted toward the agency’s small business SDVOSB goal or the prime contractor’s subcontract goal for SDVOSB awards.

What changes in the new regulation?

The regulation implements Art. 864 of the National Defense Authorization Act for Fiscal Year 2024 and amends the SDVOSB requirements as follows:

Effective October 1, 2024, each prime contract and subcontract counted to meet SDVOSB’s participation goals in contracts for Federal agencies or prime Federal contractors will be awarded to VetCert-certified firms pursuant to Section 36 of the Small Business Act (15 U.S.C. 657f).
The rule provides a grace period for companies that apply for SBA SDVOSB certification by December 22, 2024, to continue to self-certify such contracts and subcontracts with the federal government until SBA makes a final decision on the company’s application.
SDVOSBs that do not submit an application for certification to the SBA by December 22, 2024, or fail to obtain certification under the SBA’s VetCert program and fail to submit the application on time, will not be eligible to self-certify for such federal government contracts or subcontracts after December 22 2024

The regulations also require SBA SDVOSB certification for subcontracted assistance. Under the existing system, the burden of ensuring SDVOSB compliance for subcontracting purposes rests with the contracting authority. The provision shifts this burden to the SBA. The contracting officer’s responsibilities would be limited to confirming that the recipient is SDVOSB certified in the SBA certification database.

How can we help

The impact of the Rule may go beyond changes in plain language. For example, tackling fraud related to small business set-aside programs remains a government priority. Please carefully follow these changing regulations to ensure that contractors do not submit false claims by misrepresenting their SDVOSB or VOSB status. Holland & Knight’s Government Contracting Group will continue to closely monitor developments in SBA’s SDVOSB and VOSB programs. If you have questions about the SBA Final Rule and the specific impact on your business, please contact the authors.