Background: Congress Eliminates Self-Certification for SDVOSB Set Aside Contracts
Before 2021, there was no governmentwide SDVOSB certification program, and firms seeking to be awarded SDVOSB set-aside contracts with federal agencies other than the U.S. Department of Veterans Affairs (VA), only needed to self-certify their status under the Small Business Act, 15 U.S.C. § 657f. On February 18, 2020, the Department of Defense Office of Inspector General published a report of its audit findings (see report), concluding therein that $876.8 million in SDVOSB contracts were improperly awarded to ineligible entities due to a lack of eligibility verification. In 2021, Congress transferred the responsibility for certification of SDVOSBs to the SBA, effective January 1, 2023, and created a certification requirement at the SBA for firms seeking SDVOSBs set-aside contracts across the federal government. Pub. L. No. 116-283, 134 Stat. 3388 (2021). In the same legislation, Congress also provided a one-year grace period between January 1, 2023 and January 1, 2024 for businesses to apply for SDVOSB certification with the SBA, and to continue to self-certify.
Despite this phased approach, Congress did not eliminate self-certification entirely in 2021. Businesses that otherwise qualified as SDVOSBs but did not seek SDVOSB set-aside contracts were permitted to self-certify for prime contract or subcontract awards that were not SDVOSB set-aside contracts. Notably, those awards could still count toward an agency’s goal for SDVOSB awards, meaning that self-certifying offerors or bidders could still apply for most contracts, and contracting officers could still select them and satisfy the agency’s participation goal with respect to SDVOSBs. Stated differently, even if a contract was awarded under full and open competition, the awarding agency could claim SDVOSB program participation credit if the awardee had self-certified to that status.
NDAA 2024 Eliminates the Remaining Vestiges of SDVOSB Self-Certification for Contracts Awarded Outside of the SDVOSB Set Aside Program
NDAA 2024 eliminates self-certification for contracts awarded outside of the SDVOSB set-aside program, effective October 1, 2025. Starting on that date, in order for a prime contract or subcontract award to be counted toward meeting an agency’s established SDVOSB participation goal, the awardee must be certified as an SDVOSB by the SBA. As a result, SDVOSBs will have to obtain a certification from the SBA to count their participation in a procurement toward an agency’s participation goal, irrespective of the contract type.
Congress did have the foresight to provide for a conditional grace period. Specifically, under Section 864, contractors that apply to SBA for SDVOSB certification before December 22 may continue to rely on their self-certification until the SBA formally decides on their SDVOSB certification application. However, currently self-certified SDVOSBs that fail to apply for certification will no longer be able to rely upon their self-certified SDVOSB status after December 22.
The NDAA also charged the SBA with promulgating implementing regulations by June 19, and increased the governmentwide goal for SDVOSB participation from 3% to 5%.
Conclusion
NDAA 2024 eliminates that last opportunity for SDVOSB self-certification. SDVOSBs that have not already done so should apply to SBA for SDVOSB certification before the December 22 deadline if they wish to retain their self-certified eligibility while awaiting a decision from the SBA on their application for program certification.