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The Veteran Entrepreneur: An Overview of Veteran-Owned Small Businesses and How to Qualify

June 3, 2019 | Daniel J. Durocher and Tom J. Whalen

The U.S. Government can be an extremely lucrative customer for any business. If you are a veteran, you might find that getting your foot in the door to doing business with the U.S. Government is easier than it might otherwise be for a non-veteran. This is because the U.S. Government “sets aside” certain of its procurement (read: buying) activities for companies that are veteran-owned. This article discusses who might qualify for these U.S. Government set-asides and how to get qualified.

First, your business must be a “Small Business Concern.” In order to meet the definition of Small Business Concern (“SBC”), a business must (a) be for profit, (b) have a place of business located in the U.S., and (c) operate primarily within the U.S. or contribute significantly to the U.S. economy.

In addition, each business seeking SBC status must show the U.S. Small Business Administration (“SBA”) that it does not exceed the small business size standards for the industry in which the business competes. Small business size standards are based on either the business’s (1) average number of employees in the last 12 months or (2) gross annual revenue for the last three years.[ 1 ]

The required small business size standards are industry-specific. The SBA sets a size standard that applies to each industry in the North American Industry Classification System (“NAICS”). Fortunately, the SBA publishes the small business size standards for each industry at https://www.sba.gov/document/support–table-size-standards and an interactive Size Standards Tool at https://www.sba.gov/size-standards/.

In determining size standards, the SBA considers all affiliated businesses (such as subsidiaries, parent companies, and sister companies). The sizes of all the affiliated businesses are added to determine if they, as a group, exceeds the applicable small business size standards. If your business qualifies as an SBC, then you’re past the first hurdle.

Second, your business must be either (1) a Veteran-Owned Small Business (“VOSB”) or (2) a Service-Disabled Veteran-Owned Small Business (“SDVOSB”). Both VOSB’s and SDVOSB’s qualify for U.S. Government set-aside contracts.

In order to be a VOSB, the business must be a SBC that is at least 51% controlled and owned by one or more veterans. Similarly, in order to be a SDVOSB, the business must be a SBC that is at least 51% controlled and owned by one or more service-disabled veterans. The government considers a person to be in control of the business if that person makes both the long-term and day-to-day decisions for the business. If your business is a VOSB or a SDVOSB, you can register your business as such, and attempt to win those lucrative set-aside contracts.[ 2 ]

Third, your business must register as a VOSB or SDVOSB. VOSBs and SDVOSBs must register to do business with the federal government on the System for Award Management (“SAM”) website (found at https://www.sam.gov). There is no fee to register. Once you register your business on the SAM website, you can self-certify as a VOSB or SDVOSB.

After you’ve registered your business, start searching for government contracts at https://www.fbo.gov (formally FedBizOpps.gov). There, you can narrow your searches to the particular type of set-aside contract you qualify for.

You also will want to register separately with the Department of Veterans Affairs (the “VA”). The VA requires registration and verification through its Vets First Verification Program in order to be eligible for VA set-aside contracts. You can start the verification process at https://www.va.gov/osdbu/verification/.

About the Authors:
Dan Durocher, Esq. is a veteran of the United States Army, having medically retired as a Captain in 2013. Dan earned the Bronze Star Medal and the Combat Infantryman Badge in connection with his 2010 deployment to Afghanistan. Dan has a passion for entrepreneurship and helping fellow-veterans receive the support and assistance they need and deserve.

Tom Whalen, Esq. is a partner in Sebaly Shillito + Dyer’s corporate department. He views his practice through an entrepreneurial lens, with a unique appreciation for business people and the daily challenges they face in running and growing a business. Tom strives to help his clients achieve their business and personal goals by providing straightforward business and legal solutions to complex problems.

Notes

[ 1 ] For businesses operating for less than three years, there is a special formula that is used to determine annual receipts: total revenue since start of business divided by number of weeks in business multiplied by 52

[ 2 ] With respect to both VOSBs and SDVOSBs, if the veteran has a permanent and severe disability, the spouse or caregiver of the veteran can own and control the business instead.

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