Making Use of Your Status as a Veteran-Owned Small Business

Agenda Why does it matter if you are a VOSB/SDVOSB? Eligibility requirements for VOSB & SDVOSB Registration as a VOSB/SDVOSB Are you ready to be a prime contractor? Taking advantage of teaming relationships: – Subcontracting to others – Forming a joint venture – Pursuing subcontracting opportunities

Agenda Why does it matter if you are a VOSB/SDVOSB? VOSB = Veteran-owned Small Business SDVOSB = Service-disabled VOSB There are federal socioeconomic programs in place to help you win contracts!

Socio-Economic Programs Can Benefit Your Firm Federal Government has instituted socio- economic programs through its acquisitions Firms that qualify: – May receive contracts on a sole source basis – May only have to compete with similar firms – May get a price preference – Help the Government agency meet its goals – Help prime contractors meet their goals

What are the Basic Socio-Economic Programs? The programs and the federal government’s goals are: – Small Business—23% of total contract value, with the following subsets: HUBZone Small Business—3% Service-Disabled Veteran-Owned Small Business—3% Small Disadvantaged Business—5% Women-Owned Small Business—5%

The Government Only Met One Goal in FY 2008—SDB

SDVOSB Goal Overall, the government achieved less than ½ of the SDVOSB goal in FY 2008 Only 4 federal agencies met the 3% SDVOSB goal: – Environmental Protection Agency (EPA) – General Services Administration (GSA) – Department of Labor – Department of Veterans Affairs (VA) There is a huge potential to help the government meet their SDVOSB goal!

Priority Order of the Set-Aside Programs On-going debate about the priority of the programs for all agencies but VA due to recent GAO decisions Per GAO, socioeconomic program priorities are: 1.HUBZone Program, 2.8(a) Program or SDVOSB Program followed by 3.Small Business

When Agencies Conduct SDVOSB Set-Asides For all agencies except VA: – After considering other programs [HUBZone and 8(a)] and deciding they do not apply or not to use them, – May conduct SDVOSB set-aside if it is expected that there are at least 2 or more responsible SDVOSBs who will submit offers and that award can be made at a fair and reasonable price

SDVOSB Sole Source Awards For all agencies except VA: Contracts may be awarded to a SDVOSB on a sole source basis, if— (1) Only one SDVOSB can satisfy the requirement; (2) The price of the contract (including options) will not exceed— (i) $5.5 million for a product; or (ii) $3 million for a service; (3) The SDVOSB has been determined to be a responsible contractor with respect to performance; and (4) Award can be made at a fair and reasonable price.

What if you are a VOSB but not a SDVOSB? Department of Veterans Affairs is the only agency with special socioeconomic programs for both: – Veteran-owned small businesses – Service-disabled veteran-owned small businesses

Agenda Eligibility requirements for VOSB & SDVOSB – The first requirement is that the firm must be a small business. – Then, the firm must meet the ownership and control requirements.

Your Firm Must be a Small Business Firm must be for-profit Firm must be a small business (SB) In determining eligibility, parent and/or affiliate companies must be included Size standards for “small”: – Vary by North American Industry Classification System (NAICS) code – May be based on: # of employees, or Average annual receipts over the last 3 fiscal years

Small Business Size Standards Construction – – General building and heavy construction contractors: no more than $33.5 million in average annual receipts – Special trade construction: $14 million Manufacturing – varies, 500 to 1,500 employees Retail Trade – varies, $7 to $29 million Wholesale Trade – no more than 500 employees Most Services – varies, $7 to $35.5 million R&D – no more than 500 employees

Small Business Size Standards (con’t) A firm may be a SB for one product/service and large for others! Being a SB allows you to compete for SB set-asides against other small businesses Must be a SB to be eligible for VOSB/SDVOSB status NAICS Codes: Size standards:

Veteran-Owned Small Business Concern (VOSB) A small business concern: – Not less than 51% of which is owned by one or more veterans (as defined at 38 U.S.C. 101(2)) or, in the case of any publicly owned business, not less than 51% of the stock of which is owned by one or more veterans; and – The management and daily business operations of which are controlled by one or more veterans.

Service-Disabled Veteran-Owned Small Business Concern (SDVOSB) A small business concern: – Not less than 51% of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51% of the stock of which is owned by one or more service-disabled veterans; and – The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.

Service-Disabled Veteran Service-disabled veteran means a veteran, as defined in 38 U.S.C. 101(2), with a disability that is service- connected, as defined in 38 U.S.C. 101(16). Some businesses may be owned and operated by an eligible surviving spouse. Reservists or members of the National Guard disabled from a disease or injury incurred or aggravated in the line of duty or while in training status also qualify.

Disability Rating for Federal Contracting This is different than a compensable disability rating! If your small business is at least 51% owned and controlled by one or more veterans, investigate whether your firm qualifies as a SDVOSB. Bar for qualification is very low – any “service connected” disability (even zero percent compensable) validated by VA rating letter is qualifying. If you had any medical condition that was addressed while you were in service, but you do not have a VA rating letter, request a “disability rating for federal contracting purposes” from the VA by contacting your local Veterans Service Officer. Find your local Veterans Service Officer at

Agenda Registration as a VOSB/SDVOSB – Self-certification – Verification by the VA

Registration as a VOSB/SVOSB Self-certification: – You may self-certify as a VOSB/SDVOSB when you register to be a federal prime contractor at – Accepted by all federal agencies except the Department of Veterans Affairs when the VA uses Veterans First Contracting Program

Veterans First Contracting Program Created by Public Law 109–461, Veterans Benefits, Health Care, & Information Technology Act of 2006 Authorizes VA to give special preference to both SDVOSB and VOSB Firms must register at and be “verified”

Features of Veterans First Contracting Program Makes SDVOSB and VOSB priorities #1 & 2 in satisfying VA’s acquisition requirements Allows sole source contracts from $3,000 - $5,000,000 (including options) to SDVOSB and VOSB Requires restricted competitions via Set-Asides for SDVOSBs and VOSBs Allows additional credit evaluation factors for SDVOSB or VOSB status Authorizes large VA prime contractors to obtain credit for subcontracts to SDVOSBs and VOSBs only when they subcontract with “verified” firms

Veterans First Contracting Program & VA Priorities 1.May make sole source award to SDVOSB if <$5 million 2.Required to conduct SDVOSB set-aside if don’t do #1 and it is expected that there are at least 2 or more responsible SDVOSBs who will submit offers and that award can be made at fair and reasonable price 3.May make sole source award to VOSB if <$5 million 4.Required to conduct VOSB set-aside if don’t do #1, #2, or #3, and it is expected that there are at least 2 or more responsible VOSBs who will submit offers and that award can be made at fair and reasonable price 5.Make award using SBA’s 8(a) program 6.Make award under the HUBZone program 7.Conduct a Small Business set-aside 8.Conduct a full and open competition

Agenda Are you ready to be a prime contractor? Decide if this market makes sense for your firm

Should Your Firm be a Prime Contractor? Not a good market for all firms Need high-speed internet access and computer savvy Best for firms in business at least 2 years Need a record of good performance Firms must be technically & financially capable Not a good market for (most) start-ups! Subcontracting might offer better opportunities

Agenda Taking advantage of teaming relationships: – Subcontracting to others – Forming a joint venture – Pursuing subcontracting opportunities

Reference Material Limitations of Subcontracting and Joint Venture requirements differ for different types of SB set- asides NCMBC matrix that describes the requirements:

Limitations of Subcontracting to Other Firms If your firm is awarded a prime contract under any type of small business set-aside, you must self-perform a certain percentage of work with your own employees. For SDVOSB set-asides, you may use SDVOSB subs to help you meet the requirement. For VOSB set-asides (conducted by the VA), you may use VOSB subs to help you meet the requirement. For services, you may subcontract any or all of the rest to any type of firm including large businesses.

Limitations of Subcontracting to Other Firms Services (except construction): prime must perform at least 50% of the cost of the contract incurred for personnel with its own employees. General construction: prime must perform at least 15% of the cost of the contract with its own employees (not including the costs of materials). Construction by special trade contractors: prime must perform at least 25% of the cost of the contract with its own employees (not including the cost of materials). Supplies or products (other than from a non-manufacturer in such supplies or products): prime must perform at least 50% of the cost of manufacturing the supplies or products (not including the costs of materials).

Definitions for Limitations of Subcontracting Cost of contract performance incurred for personnel: Direct labor costs and any overhead which has only direct labor as its base, plus the concern's General and Administrative rate multiplied by the labor cost. Employees: All individuals employed on a full-time, part-time, or other basis. This includes employees obtained from a temporary employee agency, professional employee organization or leasing concern. SBA will consider the totality of the circumstances, including criteria used by the IRS for Federal income tax purposes, in determining whether individuals are employees of a concern. Volunteers (i.e., individuals who receive no compensation, including no in-kind compensation, for work performed) are not considered employees.

Dealers & Wholesalers For any type of SB set-aside, your firm must be small (<500 employees), and – For orders <$25,000, you may provide the product of any size manufacturer – For orders >$25,000, you must provide the product of a SB manufacturer unless there is a waiver

What is a Joint Venture? Joint venture = an association of two or more business concerns to engage in and carry out a single, specific business venture for joint profit, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. For VA contracts, a joint venture must be in the form of a separate legal entity.

Who Can Joint Venture under a SDVOSB Set-Aside? A SDVOSB and (1) Any small business as long as (a) for procurement with $ size standard, the procurement >1/2 size standard or (b) for procurement with # employees size standard, the procurement >$10M. For procurements of lower value than (1)(a) or (1)(b), a SDVOSB and any small business as long as the SDVOSB and joint venture partner considered together as affiliated meet the SB size standard.

Who Can Joint Venture under a VOSB Set-Aside? A VOSB and (1) Any small business as long as (a) for procurement with $ size standard, the procurement >1/2 size standard or (b) for procurement with # employees size standard, the procurement >$10M. For procurements of lower value than (1)(a) or (1)(b), a VOSB and any small business as long as the VOSB and joint venture partner considered together as affiliated meet the SB size standard.

What about the Subcontracting Market? Federal subcontracts are commercial contracts between two firms May be the best market for you, initially Good way to develop performance record Access subcontract opportunities via and

Pursuing Subcontracting Opportunities All prime contractors – who are other than small businesses – with a contract over $550,000 (or $1 million for construction) must negotiate a subcontracting plan with the government with goals for awards to SB, HUBZone, SDVOSB, SDB and WOSB firms. VA primes also have goals for awards to VOSB.

How to Pursue Subcontracting Opportunities Market your firm to prime contractors to help them meet their subcontracting goals. – Create a one-page Capability Statement – Network with prime contractors at events – Use contract award info to identify primes – Register at

North Carolina Military Business Center Mission: To leverage military and other federal business opportunities for economic development and quality of life in NC Goals: – Increase military business for NC companies – Integrate military/families into workforce – Support defense-related recruitment

Business Development Team Create awareness of federal opportunities Identify current opportunities, notify NC firms Assist firms during acquisition process Pre-position, develop subcontract opportunities Federal ContractsContracts Value CY200536$26.3 million CY $ $258.4 million CY $ $1,086.1 million CY $478.0 – $618.6 million CY $620.1 – $1,314.4 million As of: 30 Aug 2009

MatchForce Matches businesses to military opportunities Matches primes to NC sub-contractors Matches businesses to NC job seekers Businesses won >$1.267 billion, contracts Currently on MatchForce: 14,198 NC Businesses29,978 Individuals 9,481 Contract Opportunities3,886 Job Opportunities As of: 30 Aug 2009

MatchForce Business Benefits Easier access to government purchasing Source for partners, subs and suppliers Source for potential employees Support for business-to-business sales Support for individual-to-business sales Free advertising

Now: Get Engaged in the Federal Market! Register at: Market your firm as VOSB/SDVOSB to prime contractors and federal agencies as appropriate Market your firm to VA for sole source awards Watch for VOSB/SDVOSB set-asides

Contact Information Scott Dorney, Executive Director, , Linn Owen, Business Development Specialist, , See and for resource material!