Legal Meets Practical

If a service-disabled veteran-owned small business (“SDVOSB”) or veteran-owned small business (“VOSB”) wants to do business with the U.S. Department of Veterans Affairs (“VA”), it must be listed in the Center for Verification and Evaluation’s (“CVE”) VetBiz registry. Many business owners who have been through this process – called verification – can attest to the experience as not fun. Painful, even. The verification process is relatively young and the CVE is still resolving issues.

In the past year, however, the CVE started touting its “simplified renewal.” In theory, this process was available for businesses that had been previously verified with a full document examination whose two-year eligibility period was expiring. In this program, if there had been no changes to the business since the last time the business documents were examined, the company could certify that no changes have taken place. Renewal for these companies was supposed to take 7 business days.

From my experience, simplified renewal was the CVE unicorn. I have heard of no business that has been able to use this process, including single-member limited liability companies that had reported no changes in their business since their initial verification.  One veteran – a solo proprietor with no changes – went through two rounds of document requests from the CVE and spent well over 12 hours compiling documents for his renewal.

Finally, however, the CVE has killed its unicorn. Or maybe it’s simply started owning up to the fact that “simplified renewal” doesn’t really exist. Now, on its website, it no longer uses the term “simplified renewal.” Rather, it uses “verification renewal,” and the fact sheet it includes on verification renewal describes the process it used in practice for simplified renewal.

In a nutshell, if you are a business owner and you’re coming up for renewal, you’re required to completely update every document in every section of your VetBiz portal. This includes not only newly-issued documents such as tax returns and licenses, but also explanations to documents which have not been changed. For instance, if you have By-laws and there have been no amendments since the last verification, you need a Letter of Explanation stating as such.

With reverification, keep in mind that it’s not really simple. However, by knowing what documents you need to update, and how to update them, you can make the process as simple as possible. Good luck with the process!

Access the VA’s new fact sheet on the reverification process here.

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Earlier this month, the Congressional Budget Office (“CBO”) released a report regarding the trends and policy options as it relates to providing veterans with their benefits. In general, the report describes an (unsurprising) surge in veterans who are receiving disability compensation benefits – nearly $54 billion worth in 2013, or about 70% of the Veterans Benefits Administration’s (“VBA”) total mandatory spending. In total, 16% of all veterans in 2013 received VA disability compensation.

These figures represent a 55% increase in veterans receiving benefits from 2000 to 2013, which the report attributes to the following factors:

• Changes in policy that make it easier for veterans to claim benefits. For example, the VA has designated additional conditions that have been linked to exposure to Agent Orange as presumptive for veterans who served in Vietnam.
• The recent conflicts in Iraq and Afghanistan. The veterans of these wars represent a significant share of veterans receiving disability compensation. Part of this may be attributed to the combat-related injuries stemming from these wars. Also, these veterans appear to be more informed regarding their entitlements to disability compensation and the means to pursuing benefits.
• Labor market conditions. Limited employment opportunities in recent years may have prompted some veterans to apply for disability benefits to replace lost earnings.

The CBO report identifies options for changing the disability compensation program, falling under either modifying the VA’s processes for identifying service-connected disabilities or revising compensation by changing payment amounts, changing coordination with other federal benefits, or by changing the tax treatment of payments. The end goal is clear: to reduce the burden to Uncle Sam.

Some of these options are set forth as follows, and forgive my editorializing:

Option #1: Institute a time limit on initial applications. As a veterans advocate who got her start in this field with her father’s VA disability claim – over thirty years after his service – I am completely opposed to this. VA disability compensation is an entitlement, not a privilege, and if a veteran wants to wait ten years to apply for his benefits (which would result in the VA not having to pay him for ten years), that’s his right.

Option #2: Require the VA to expand its use of reexaminations. When it comes to temporary ratings, these reexaminations are used to ensure that a veteran’s disability rating truly reflects the degree of disability. The CBO notes that these reexaminations are not often scheduled or performed as is required.

Option #3: Change the positive-association standard for declaring presumptive conditions. By presuming that certain medical conditions are caused by medical service, this removes from the veteran the burden of establishing the connection between their military service and the onset of a medical condition. However, the issue is that these presumptions are established only after a lengthy process involving medical studies, findings, and regulatory changes that can take years. Doesn’t this mean that this is a safe presumption to make? By requiring veterans to present other factors to establish the presumption that a condition is service-connected, this potentially creates unnecessary paperwork. And multiply that additional paperwork by the number of veterans this affects….

Option #4: Restrict individual unemployability benefits to veteran who are younger than the full retirement age for social security. Under this option, the VA would no longer make IU payments to veterans who were past the Social Security’s full retirement age. However, the VA and the Social Security Administration (SSA) are two entirely different federal departments that award compensation based on different sets of criteria. You do not have to be service-disabled in order to received SSA benefits, but this option essentially cuts off benefits for anyone who is service-disabled by virtue of them becoming eligible to receive a different type of benefit from the SSA. Again, I reiterate – disability compensation because you are wounded in service is an entitlement.

Option #5: Supplement payments to veterans who have mental disorders. The rationale here is that because payments to veterans with mental disorders may not adequately make up for lost earnings, these veterans should be eligible for more money. I am completely on board with this – mental disorders affect veterans much more significantly than veterans with physical disorders (I know of several 100% physically-disabled veterans who can still work, while this is not the case with 100% mentally-disabled veterans). This group of veterans is struggling, and additional compensation would help.

Option #6: Tax VA benefits. If VA benefits were treated as income for purposes of individual tax returns, there’s no questioning that a significant chunk of money will be paid back into the system. However, for those veterans barely getting by on their VA disability compensation benefits, this type of change could create a catastrophic effect. For those who are TDIU, for example, it’s the equivalent of getting a 30% pay cut.

These aren’t the only options covered by the CBO report. You can access it in its entirety here. Do you agree with some of these suggestions? Disagree? Feel free to post a comment below.

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by Sarah Schauerte

Reverse auctions may be prohibited for many small business procurements under a provision of the National Defense Authorization Act of 2015, which was passed by the House of Representatives this summer.

In contracting, many government agencies use “reverse auctions – ” where the lowest bid wins, rather than the highest. Theoretically, this saves money for taxpayers by encouraging businesses to offer the lowest possible price. However, this practice also makes a good deal of money for FedBid, which collects fees from the winning bidders who, in turn, pass those costs to the government.

Reverse auctions, while favored by some, have attracted some detractors in recent years. These individuals argue that reverse auctions prompt companies to submit unrealistically low bids to outmaneuver business rivals. Also, awarding contractors based on price alone means that the government may end up with inferior products or services. Further, the GAO has warned that reverse auctions are less transparent than traditional contracting practices.

Under the new NDAA, reverse auctions would be disallowed when the government seeks to award a “covered contract,” so long as the contract is suitable for small businesses or is set aside under a small business preference program such as SDVOSB or HubZone. The NDAA defines a “covered contract” as including a contract “for services, including design and construction services” and a contract “for goods, in which the technical qualifications of the offeror constitute part of the basis of the award.” This definition is so broad that it applies to a large number of government contracts.

In the event a contract is “covered,” reverse auctions may not be used if the contract “is suitable for award to a small business concern,” or if the contract is awarded as an 8(a), WOSB, HUBZone, or SDVOSB-set asides (including those set aside under the VA’s Veterans First Contracting Program). Even for “covered contract” awarded on an unrestricted basis, the NDAA states that the agency cannot award a covered contract using a reverse auction “if only one offer is received or if offerors do not have the ability to submit revised bids throughout the course of the auction.”

This House-passed NDAA would greatly limit the use of reverse auctions in small business contracting. The Senate is currently considering its own version of the 2015 NDAA, which does not appear to contain similar restrictions. Because both houses of Congress must eventually pass a piece of identical legislation for it to become law, this means that reverse auctions may be safe for the time being.

For relevant, entertaining viewing, click this, which links to the classic Schoolhouse Rock video of how a bill becomes a law. You’ve watched it before in Civics or Government class, and it’s worth spending another three minutes to relive.

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