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Benefits for Veteran Owned Businesses

By: Christopher Michel, Esq. and Jennifer S. Kiesewetter, Esq.

 

Congratulations, you’ve finally done it! You got the sweet freedom that comes from getting your DD-214 and decided to started your own business.  Now what?  How do you put the years of service you dedicated to the military to work for your own business?  One of the best ways to utilize your service for your company’s benefit is by getting it certified as an Service Disabled Veteran Owned Small Business (“SDVOSB”).

 

While veteran owned is not a classification that is considered socially disadvantaged for 8(a) certification[1] purposes, there are other certifications veterans can receive.  Every year federal agencies are required to set aside three percent (3%) of their individual contracting funds to go to SDVOSBs, and the Department of Veterans Affairs does the majority of its business with SDVOSBs.  While these contracts are never guaranteed, a business can improve its chances with certain certifications.   

 

The first step to certifying a business as an SDVOSB, is getting the business certified as a small business.  To be considered a small business, the organization must:

 

1)     Be organized for profit;

2)     Have a place of business in the U.S.;

3)     Operate primarily within the U.S., or make a significant contribution to the U.S. economy;

4)     Be independently owned and operated;

5)     Not dominate in its field on a national level;

6)     Register as a government contractor in the system for award management (SAM); and

7)     Meet the size standard for business category in which the business is participating.

 

Each different business category has its own standard for determining the size limit on a small business.   To determine what category your business falls into, use the North American Industry Classification System codes (“Industry Codes”).  Once the Industry Code is determined, then the size requirement for a small business in that industry can be determined.  The size requirement can be calculated in one of two ways, either by the number of employees employed by the business, or by calculating the average annual revenue/receipt over the most recently completed three (3) fiscal years.  For example, a company that provides wholesale services to a medical or dental office would be considered a small business as long as it has under five hundred (500) employees, whereas a construction company that constructs new single-family homes is considered a small business as long as its average annual revenue/receipts for the last three (3) years is under thirty-six million dollars ($36,000,000).

 

Once you have certified that your business is a small business, you can determine if your business qualifies as an SDVOSB.  In order to be considered an SDVOSB, a business must:

 

1)     be a small business;

2)     be fifty-one percent (51%) owned by a service disabled veteran (“SDV”);

3)     have an SDV in the highest officer position of the company;

4)     have an SDV control the daily management and operations of the business; and

5)     the service connected disability must be determined by the VA.

 

While certain veterans believe they do not qualify as an SDV, the regulations allow for veterans with a service disability rating of zero percent (0%) to qualify as an SDV, as there is no minimum disability rating for an SDVOSB.  All a veteran has to do is receive a disability determination letter from the VA, even if the disability rating is zero percent (0%).

 

Being an SDVOSB as opposed to simply a Veteran Owned Small Business (“VOSB”) can mean the difference between submitting several Requests for Proposals and getting large government contracts.  In 2015, the General Services Administration spent forty-five billion dollars ($45,000,000,000) contracting for services.  Of that Veteran Owned Small Businesses were awarded eight hundred eleven million dollars ($811,000,000) whereas SDVOSB were awarded one billion six hundred million dollars (1,600,000,000).   By getting the SDVOSB certification, a VOSB nearly doubles its chances of being awarded a contract.  Below is a breakdown of the GSA sales for VOSBs and SDVOSBs:

[2]

The SDVOSB certification offers veterans an alternative to an 8(c) certification.  The competition for governmental contracts is so tight that often times which company is awarded the contract comes down to a single factor.  By getting certified as a SDVOSB, you can give your company a head start and competitively bid with other small businesses for government contracts.  As a service disabled veteran, you have sacrificed for your country, now it is time to utilize that service for your small business.

 

[1] 8(a) certified business are businesses that are run by a socially and economically disadvantaged person.  For 8(a) purposes a person is considered social disadvantaged if they are: (1) African American, (2) Hispanic American, (3) Native American, (4) Asian Pacific American, or (5) Subcontinent Asian American.  If you are service disabled veteran and also fall into one of these categories, you should also consider becoming an 8(a) certified business.

[2] Federal Schedules, Inc., GSA Sales to Veteran-Owned Small Businesses, http://gsa.federalschedules.com/resources/gsa-sales-to-veteran-owned-vosb/

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