Government Contracts Monitor

Short Take: Final Rule on VA Small Business Status Protests

March 17, 2015

The Department of Veterans Affairs (VA) has adopted a final rule establishing the procedures governing Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB) status protests. This action resolves, at least for now, the issue as to whether status protests involving VA procurements will be transferred to the Small Business Administration (SBA), which processes protests involving non-VA procurements. There will continue to be parallel, but separate, regimes for VA and non-VA procurement SDVOSB and VOSB status protests. Companies wanting to file such protests will need to make certain they file their protests and appeals according to the correct/applicable rules.

The final rule adopts, as final, VA’s 9/30/13 interim rule amending the SDVOSB and VOSB status protest procedures in Section 819.307 of the VA Acquisition Regulation (VAAR) to provide that such protests be initially adjudicated by VA’s Director, Center for Verification and Evaluation, and that either the protesting or protested party can appeal to the Executive Director of VA’s Office of Small and Disadvantaged Business Utilization within no more than five business days of receipt of the initial status protest determination. The rule also provides that when a SDVOSB or VOSB status protest is sustained after the award of a contract, the contract will be deemed void and the contracting officer must cancel the contract and award to the next eligible SDVOSB or VOSB in line for award. Moreover, the ineligible SDVOSB or VOSB is precluded from submitting another offer on a future set-aside procurement unless it successfully appeals or applies for and receives verified SDVOSB or VOSB status in accordance with 38 C.F.R. Part 74.

The final rule reasserts VA’s determination to keep this function in-house at VA, rather than transferring it to SBA, on the grounds that (1) the VA program is founded in Title 38 of the U.S. Code, which is applicable solely to VA acquisitions, and (2) VA has developed “appropriate internal expertise in adjudicating SDVOSB/VOSB status protests.”

Offerors wishing to protest the status of a SDVOSB or VOSB on a VA procurement need to follow the procedures set forth in VAAR 819.307.