SDVOSB construction contracts: how service-disabled veteran-owned firms win federal work

Eligibility and certification

An SDVOSB must be at least 51 percent unconditionally and directly owned and controlled by one or more service-disabled veterans, and small under the NAICS code of the acquisition. SBA certification through VetCert is required to compete for SDVOSB set-asides and sole-source awards; self-certification no longer qualifies.

VA Vets First

At VA, the Vets First program requires the contracting officer to set work aside for SDVOSBs when two or more can do it at a fair price, then for veteran-owned small businesses, before any other small business program. The Supreme Court confirmed in 2016 that the rule applies even to orders VA places on existing contracts such as the Federal Supply Schedule. For medical center and national cemetery construction, that makes SDVOSB status the single most valuable designation a construction firm can hold.

Across the rest of government

Outside VA, SDVOSB set-asides compete with the other socioeconomic programs for the contracting officer’s decision, but the government-wide SDVOSB goal is 5 percent of prime contract dollars and agencies track it. DoW and GSA PBS both run SDVOSB-set-aside construction vehicles.

Limits on subcontracting

On any small business, SDVOSB, 8(a), HUBZone or WOSB set-aside, the prime must do a real share of the work itself: a general construction contractor may not pay more than 85 percent of the amount paid by the government to firms that are not similarly situated, and a specialty trade contractor may not pay more than 75 percent. Cost of materials is excluded from the calculation.

What to do next

Watch for sources sought notices from VA network contract offices and the USACE districts near you, and answer them — a VA set-aside decision depends on showing that two SDVOSBs can do the work. Firms that cross agency lines are disproportionately service-disabled veteran-owned.