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Section 862 of the Fiscal Year 2021 National Defense Authorization Act, Pub. L. 116-283, expands Service-Disabled Veteran-Owned Small Businesses verification government-wide and transfers certification authority from the VA to the SBA.  This legislation requires SBA to amend 13 CFR 125 to eliminate self-certification and create a government-wide certification program for Veteran-owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs).  The certification requirement applies only to participants wishing to compete for set-aside or sole-source contracts. When the program is established (target date January 2023), SDVOSBs that are not certified will not be eligible to compete on set-asides or receive sole-source contracts in the SDVOSB Program.  NDAA also created a one-year grace period for SDVOSB firms currently self-certified to apply to SBA for certification.

Statement of Need:

Section 862 requires the Administrator to establish procedures necessary to implement the amendments. The Advanced Notice of Proposed Rulemaking (ANPRM) is intended to gather feedback from the public, particularly those VOSBs and SDVOSBS that would seek certification from SBA on how to implement the transferred authority and establish a government-wide certification program for SDVOSBs In addition, to the statutory requirement to establish regulations and procedures to implement the NDAA 2021 amendments, SBA’s current regulations are also in conflict with said changes.

Summary of the Legal Basis:

The legal basis is the mandate in section 862 of the National Defense Authorization Act for Fiscal Year 2021 (NDAA 2021) (Public Law 116-283) for SBA to amend its regulations to implement a statutory requirement to certify VOSBs and SDVOSBs and establish a government wide certification program for SDVOSBs.

Alternatives:

There are no viable alternatives to implementing regulations. In addition to the statutory requirement to establish regulations and procedures to implement the NDAA 2021 amendments, SBA’s current regulations are also in conflict with said changes. Therefore, revised regulations are necessary not only to incorporate the new authority, but also to amend any inconsistencies.

Anticipated Costs and Benefits:

SBA's SDVOSB/VOSB certification program ensures that only eligible small businesses receive set-aside contracts from agencies throughout the federal government. Since agencies cannot award to small businesses unless they are certified by SBA, this regulation may reduce an agency's time and costs associated with contract award, protest, and appeal. The statutory requirement for SBA to establish a government-wide certification program for SDVOSBs and certify VOSBs and SDVOSBs imposes a significant program cost burden for the agency that is currently unfunded. There are no financial costs to the applicant other than the time spent preparing and submitting the application.

Risks:

There is a risk that SBA's certification program would fail to identify an ineligible entity that would subsequently receive a set-aside contract. This risk is reduced by existing SDVOSB/VOSB protest procedures and periodic eligibility examinations of participant firms.