VA retains the decider role over veteran-owned status protests

Monday - 10/7/2013, 5:47pm EDT

The Veterans Affairs Department decided to remain the final decider on all acquisition protests to whether a company is a service-disabled veteran small business, a veteran-owned small business or not.

In an interim final rule issued last week in the Federal Register, VA announced it would not cede the control of deciding on socio-economic status protests to the Small Business Administration.

VA stated the decision to remain in charge of deciding status protests comes from the part of the law that gives the agency "unique statutory requirements" to oversee the SDVOSB/VOSB set-aside acquisition authorities.

"VA's statutory authority has an exception where surviving spouses of certain service-disabled Veterans may remain qualified as owners of SDVOSBs, which is not present in the governmentwide SDVOSB set-aside authority program at 15 U.S.C. 657f," VA wrote in the interim rule. "In contrast, SBA adjudicates only SDVOSB status protests pursuant to the separate governmentwide SDVOSB set-aside authority. Moreover, VA has developed expertise over the last two years in adjudicating SDVOSB and VOSB verification examinations and status protests. VA's current interim SDVOSB and VOSB status protest processes and procedures have mainly proved effective, and VA now has the infrastructure and experience to address and resolve future SDVOSB and VOSB status protests."

VA also moved the decision authority to the director of the Center for Veterans Enterprise (CVE) instead of the director of the Office of Small and Disadvantage Business Utilization (OSDBU).

Instead, the OSDBU only will have authority over appeals after the CVE's initial decision.

When the agency first issued the interim rule in 2009, VA and SBA were supposed to come to an interagency agreement on the process for status protests and appeals. But now four years later, the two agencies couldn't reach an acceptable agreement and VA decided to keep the task.

The oversight of the status of service-disabled or veteran-owned small businesses has been the subject to debate and controversy over the last four years.

Rep. Mike Coffman (R-Colo.) introduced a bill in July that would require VA to cede authority to SBA. Lawmakers believe giving SBA authority would make the application of the status decision more consistent and root out fraud. The bill, H.R. 2882, has not made it out of the Veterans Affairs or Small Business committees yet.

Auditors and veteran-owned businesses have criticized VA's application of the status certification program. For example, the Government Accountability Office found in 2012 that VA's approach had vulnerabilities that could lead to fraud, abuse or being wrongly excluded from the program.

Veterans' groups also have said the program is overly burdensome.

VA said part of the way it's improving the process is by adopting the same procedure as the SBA uses to solve status protests for the Historically Underutilized Business Zone (HUBZone) program.

VA said a contracting officer or an "interested party" can file a status protest, which must be determined within 21 business days by the CVE director.

"If the director, CVE, does not contact the contracting officer within 21 business days, the contracting officer may award the contract to the apparently successful offeror, unless the contracting officer has granted the director, CVE, an extension," VA wrote. "The contracting officer may award the contract after receipt of a status protest if the contracting officer determines in writing that an award must be made to protect the public interest."

Vendors who disagree with the CVE director's decision can appeal to the OSDBU director within five days. The OSDBU has 10 business days to decide on the appeal.

The new interim final rule became effective Sept. 30, but VA is accepting comments through Nov. 29.

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