The Veterans Affairs Dept. and Small Business Administration put into effect final rules that modify how veteran-owned small businesses are defined and verified. Under the VA and SBA final rules, which went into effect on Oct. 1, the VA agreed to adopt the SBA’s regulations on ownership and control of veteran-owned and service-disabled veteran-owned small business (VOSB or SDVOSB), including ownership and control.
Congress ordered the SBA to develop standard rules for veteran ownership and control of a small business in the National Defense Authorization Act for Fiscal 2017. The goal was to eliminate the confusion from having the VA verify one set of rules, while the SBA had another set of rules.
The rule promulgated by the SBA, which is to be applied by the VA in its verifications, also includes these provisions, according to an analysis by Steve Koprince, government contracting attorney:
- The service-disabled veteran owner must control the company’s “daily business operations,” which includes marketing, production, sales and administrative functions, supervision of the executive team and the implementation of policies.
- A non-service disabled veteran may have a say over certain “extraordinary actions” including adding a new equity stakeholder; dissolving, merging or selling the company; or having the company declare bankruptcy.
- For partnerships, the service-disabled veteran must unconditionally own at least 51% of the aggregate voting interest.
- Service-disabled veteran owners must receive at least 51% of the company’s annual distribution of profits.