By Debbie Gregory.

When the certified owner of a “set-aside” eligible company passes away and the company transfer to other hands, such as a surviving spouse or child, what becomes of the contract?

The death of the certified owner has different implications, dependent upon which set-aside program was being used. The new owner must understand which contracts can be continued after a change in ownership, and which may be terminated by the government.

Service-Disabled Veteran Owned Small Business (SDVOSB) – If the service-disabled veteran passes away, the company is still considered a SDVOSB through the life of any existing contracts.

VA Veteran’s First Program- The Department of Veteran Affairs (VA) has a separate program for set-aside contracts where veteran-owned small businesses must be verified in advance of bidding on VA contracts set aside for a VOSB or SDVOSB. The VA regulations have different rules based on whether the new owner is the surviving spouse of a service-disabled veteran or not. If the veteran was 100% disabled or died as a result of a service-connected disability, the surviving spouse can step in as the new owner and maintain certified status until the earliest of the following:

• The date the spouse remarries
• The date the spouse sells the business,
• The date the business no longer qualifies as small, or
• 10 years after the original owner’s death.

But if the deceased veteran owner was not 100% disabled, the surviving spouse is only allowed to perform existing contracts to the end of their term, and not exercise any options.

If the deceased veteran owner did not leave a surviving spouse, the VA regulations say: “Continued eligibility of the participant with new ownership and the award of any new contracts require that CVE verify all eligibility requirements are met by the concern and the new owners.”

By Debbie Gregory.

Vets First, a policy that gives preference to veteran-owned small businesses, has long been circumvented by the Department of Veterans Affairs. This is in direct defiance of orders from Congress, the Government Accountability Office (GAO) and more recently, the U.S. Supreme Court.

The program was created for Veteran-Owned Small Businesses and expanded the Service-Disabled Veteran contracting program for VA procurements. It was designed to ensure that legitimately owned and controlled VOSBs and SDVOSBs are able to compete for VA VOSB and SDVOSB set-aside and are credited by VA’s large prime contractors for subcontract plan achievements.

In Kingdomware Technologies, Inc. v. United States, the court ruled that not only was the VA disregarding VETS First, but in moving forward, the department’s “rule of two” should be used for all VA procurements.

The “rule of two” states a contracting officer of the VA, “shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.”

In order to be in compliance, the VA must:

Revise its acquisition policies and training to ensure better oversight of its contracting activities;
Improve the ability for veteran-owned small businesses to obtain Federal Supply Schedule contracts for the products the VA buys; and
Discontinue its use of contract vehicles that do not contain veteran-owned small businesses.

With more than 7,000 veteran and service-disabled veteran-owned small businesses in the U.S. that have met the Vets First criteria, there is no excuse for the not to award contracts to these businesses.