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VA News Every Veteran Should Know

What’s happened this week, in the world of the U.S. Department of Veterans Affairs (“VA”)? Quite a bit, actually. Read more to find out. . .

2017 NDAA May Render VetBiz-Verified Firms Ineligible for Veterans First Contracting Program.

This is certainly worth mentioning to veteran business owners, yet I have not seen any buzz on this yet. Among other changes to federal contracting rules applicable to veteran-owned small businesses, the 2017 NDAA (which President Obama signed into law on December 23) effectively prevents the VA from developing its own regulations to determine whether a company is a veteran-owned business. Basically, to ensure uniformity between the SBA’s and the VA’s programs, the VA will be required to use regulations developed by the SBA that relate to ownership, control, and size status of an SDVOSB or a VOSB.

Currently a notable difference between the SBA’s and the VA’s rules is the VA’s allowance of businesses to include “right of first refusal” provisions in corporate documents without running afoul of the ownership requirements set forth at 38 CFR 74.3 (the requirements that apply to the VA’s set-aside program). This is because 38 CFR 74.3 expands on the definition of “unconditional ownership,” allowing a business to utilize “normal commercial practices” without violating the requirement that a veteran unconditionally own his share of the business.

In contrast, the SBA’s rules at 13 CFR 125.9 do not contain this additional language, and therefore a “right of first refusal” provision in corporate documents would not pass muster with any agency other than the VA. (For a great case that analyzes the difference between the VA’s and the SBA’s treatment of the right of first refusal, check out a prior blog of mine). As such, with the requirement that the VA adopt the SBA’s provisions, businesses that were approved for the VetBiz program will suddenly be ineligible.

How will this logistically pan out? There is no way the VA’s Center for Verification and Evaluation will take another look at every single firm’s corporate documents, searching for the offending provision. Likely, businesses will run out the remainder of their two-year verification period (so long as they aren’t protested, and the issue discovered that way), and then encounter an issue upon reverification.

For those of you who will be affected by this, don’t panic. It might not even happen, and if it does, it will be well over a year from now, given that we’re relying on the government to implement these changes. The 2017 NDAA provides that the SBA and VA “shall issue guidance” pertaining to these matters within 180 days of the enactment of the 2017 NDAA. From there, public comment will be accepted and final rules eventually announced. As such, if you have something to say about this, make sure you comment on the rule changes.

Trump Appoints VA Secretary.  On January 11, President-elect Donald Trump appointed Philadelphia-based physician, David Shulkin, to run the embattled U.S. Department of Veterans Affairs as Secretary. As the current undersecretary of health for the VA, Shulkin is responsible for the health care of nearly 8.8 million vets. He commands 168 medical centers and 1,600 clinics from Philadelphia to the Philippines, and oversees a $68.6 billion budget. Prior to this position – which he has held for 18 months – Shulkin worked in the private sector. He spent more than a decade in hospital management in Philadelphia, serving as chief medical officer at the University of Pennsylvania Health System, Medical College of Pennsylvania, and Temple University Hospital.

Veteran Pens Military Science Fiction Novel.  With the help of his wife, a veteran infantry sergeant with the 101st Airborne Division and later the 28th Infantry Division has penned his first (and second) novels – these are military science fiction novels set in the world of the bestselling series, The Human Legion. Writing under a pseudonym, Virginia resident J.R. Handley draws from his combat and military experience to bring the world a fast-paced read that does justice to the original series. Both books – The Legion Awakens (Volume One) and Fortress Beta City (Volume Two) – are available on Amazon.com.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran issues at: https://legalmeetspractical.com.

This week, President-elect Donald Trump appointed David Shulkin as VA Secretary.

This week, President-elect Donald Trump appointed David Shulkin as VA Secretary.

Nightmare Before Xmas: VA Tales

I’m back, everyone! And I have to apologize – for those of you who read my blog regularly (for which I thank you), you’ll note there hasn’t been one for some time. I have a good excuse, however – on November 2, my husband and I welcomed our first child, a daughter we named Brooke Avery. Our little Bean is doing very well, my parents are safely back home in the St. Louis area, and we’re learning all sorts of tricks as new parents (For example, did you know there is something called gripe water?).

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Also, as mentioned, I recently released my debut novel for kids (NOT self-published), and have been busy promoting it. (I’ve been far, far less busy with this compared with caring for my new tiny human!). If you have any kid or grandkid that would be interested in a book for ages 8 to 12 likened to Jumanji but where the players go into the board to outsmart monsters (instead of safari animals), you can check it out here.

monsterville_cover

Since I realize that I’ve missed several weeks of the blog due to these recent developments, I’ve decided to share three VA-related anecdotes with you. Unfortunately, none are filled with quite the cheer that should be characteristic of this season:

  • First, is anyone going through verification or reverification with the CVE? If you are, you know there are a number of changes with the CVE that have made the process a lot more difficult. One, because of the Kingdomware case, a lot of businesses looking to jump on that bandwagon have applied for verification. This influx has resulted in much longer wait times. Two, if you need to re-set your password, just call the CVE at (866) 584-2344 rather than waste time on the website. (The account screen will say it has sent you a new password, but it hasn’t. And won’t.). Do it before 6:00 PM – while the website says the Help Desk hours are until 8:00 PM, that’s an error that hasn’t been corrected for several months. (And please be nice to the poor folks at the Help Desk – account glitches and incorrect website information is not their fault). Three, the CVE is trying out a new process where it attempts to “personalize” applications. This involves a welcome call to veterans (I won’t go into details, but this call has little value), and the assignment of applications to a specific case manager. It can take almost a month for this assignment to occur and for the first document request to go out. And for the record, an application is “complete” – and the CVE’s 60 days to process an application starts ticking – after the applicant has thoroughly responded to that first document request. This can be a full month and a half after one first hits “submit.”
  • Second, Representative Jeff Miller (Florida), who is leaving Congress and his post of chairman of the House Committee on Veterans Affairs, is reportedly one of President-elect Donald Trump’s top picks for VA Secretary. An insider into the woes of the VA and some of the actual solutions to fix the broken system, Miller would be an excellent choice (though one disadvantage cited is he is not a veteran). You can read his interview with USA Today about potentially taking the post here. Other rumored candidates include Sarah Palin, Massachusetts Senator Scott Brown, Texas Governor Rick Perry, and 2012 Presidential nominee Mitt Romney. While Miller is not recognized as the front-runner, we can only hope that Trump will eventually realize the value he offers to the position.
  • Third, in early December, the VA released reports on VA hospital ratings. If possible, some of you may want to consider traveling for better health care. The documents show that Denver’s VA Eastern Colorado Health Care System was given two stars out of five, and the Grand Junction VA Medical Center (Colorado) was given three. Many of the lowest-performing centers were centered in Texas and Tennessee: the Dallas, El Paso, Nashville, Memphis and Murfreesboro centers all received one-star ratings in the second quarter of 2016. The much-discussed Phoenix VA also received one star. Meanwhile, many centers situated in the Northeast and Upper Midwest received five-star ratings.
A Nightmare Before Christmas. . . But surely next week there can be a positive story about the VA? Suggestions are always welcome.

A Nightmare Before Christmas. . . But surely next week there can be a positive story about the VA? Suggestions are always welcome.

There you have it – three stories, and more to come next week. I have some catching up to do!

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran issues at: https://legalmeetspractical.com.

GAO Protests: Will You Get Your Money Back?

 

As a government contractor, at one point or another you’ve probably encountered a bid protest. Maybe you missed out on an award and felt that the Government didn’t properly apply the terms of the solicitation. Maybe someone protested your socioeconomic status (such as if the contract was an SDVOSB set-aside). Or maybe you protested someone you suspected was ineligible.

Overall, protests are not fun. No one wants to be involved in one. They are, however, sometimes necessary, which is unfortunate given the time and money it would save if the government always properly evaluated proposals and only awarded contracts to eligible contractors.

One question I get a lot as a procurement law attorney is whether someone who brings a bid protest at the Government Accountability Office (“GAO”) can recover filing costs if they prevail. After all, if the government errs in evaluating a proposal, resulting in the time, stress, and money required to hire an attorney to pursue a contract, why should the contractor be penalized?

Long story short, the answer is a protestor is usually out the costs of protesting to the GAO. The bar is high, because the protestor has to show two things: one, that the protest was “clearly meritorious;” and two, that the agency unduly delayed in taking corrective action to remedy its mistake.

In other words, it’s not enough that source selection officials make a gross error in evaluating proposals; the contracting agency also has to drag its heels once the contractor files a protest to complain about the error.

A recent GAO decision illustrates this principle: in Cape Environmental Management, Inc., a protestor unsuccessfully attempted to recover its costs after an agency took corrective action. (B-412046.3, September 30, 2016). The GAO noted that a “clearly meritorious” protest is one where the issue is “not a close question” and the government has “no defensible legal position.” Because the GAO found that the protestor had not established this element, it didn’t reach the second element of undue delay. (As a note, there is generally no entitlement to fees if the agency takes corrective action prior to the due date of its agency report).

Basically, if you are considering protesting a lost contract to the GAO, know that it will involve a monetary investment. Absent fairly extraordinary circumstances, you won’t recover your filing fees.

As such, consider whether “going after the prize” is worth it to your business.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran business issues at: https://legalmeetspractical.com.

 

Monsters Ate My Blog!

Since I started my legal practice nearly five years ago, I have been faithful in posting a blog on veteran issues every week. Lately, however, I have been a bit inconsistent, and since my followers have been wonderful at offering feedback and comments to the blog, I wanted to explain that I missed a week or two because my debut middle grade (for ages 8-12) novel is being released today. I have been busy with a blog tour, organizing school and library visits, and getting my next book into the hands of my literary agent. For more details on all that, visit my writing website here. Thank you for your patience in waiting for this next post!

And why the reference to monsters? That’s what the book is about (and why it makes sense that it’s a Halloween release):

monsterville_coverMonsterville is Jumanji meets Goonies, a fast-paced adventure where board games come alive and winning your life depends on applying monster movie rules of survival. 13-year-old film-obsessed Lissa discovers a shape-shifting monster in her woods and decides to film the greatest horror movie of all time. . . until her little sister is kidnapped to the monster homeland of Down Below and she needs her star’s help to rescue her.

The literary rights to Monsterville are represented by Lauren Galit of the LKG Agency, and the film rights are represented by Pouya Shahbazian of New Leaf Literary (Divergent, The Selection).

Because I’ve missed a few weeks, there are some relevant cases I’d like to share with you. Here they are, in a nutshell and with any links to the cases themselves:

In URS Federal Services, the GAO held that the Navy did not err in assigning a “technically unacceptable” rating to a proposal after an individual identified as “key personnel” resigned. B-413034 et al. (July 25, 2016). The resignation was not the contractor’s fault, but the Navy acted reasonably in downgrading the proposal since technically it affected the quality of the services offered by the contractor.

The lesson from this protest is to protect yourself from this possibility of losing key personnel. Give them an incentive to stay and/or disincentive to leave in their employment agreement. This is keeping in mind that a court won’t make someone continue to work for an employer they want to leave. They can’t be forced to perform, but a strong employee contract can either entice them to stay (such as by giving them incentive payments for supporting that particular contract); or it can compel them to (such as by assigning a monetary penalty if they resign prior to the expiration of a certain period of time or milestone).

In Bryan Concrete & Excavation, Inc., the Civilian Board of Contract Appeals (CBCA) held that an SDVOSB set-aside contract was void and unenforceable because the prime contractor had entered into an illegal “pass-through” arrangement with a non-SDVOSB subcontractor. CBCA 2882 (August 26, 2016). Because the contract was obtained by misrepresenting the concern’s eligibility for the set-aside contract, it was invalid from its inception and the contractor had no recourse against the government when it was later terminated for default.

In Matter of Jamaica Bearings Co., the appellant appealed a Small Business Administration (SBA) area office determination that it was not an eligible SDVOSB for purposes of a set-aside. A disappointed offeror had lodged a status protest, and the awardee had failed to respond to the SBA’s request for information. Consequently, the SBA area office found the awardee ineligible. Here’s the twist: the protest itself was insufficient because it contained non-specific allegations. (See 13 CFR 125.125(b)). As such, the SBA Office of Hearings and Appeals ruled that the status protest should have been dismissed at the outset for lack of specificity, and reversed the SBA area office’s determination that the awardee was ineligible.

In this case, Jamaica Bearings Co. got lucky. Yes, the SBA OHA ruled in its favor in finding that the SBA area office erred in considering the protest; however, the SBA OHA was also very clear that Jamaica Bearings Co. had no business in introducing new evidence on appeal. If the protest had been sufficient, it had missed its window for responding and would have lost out on the award. In fact, this happened to another contractor not too long ago.

Cases often offer lessons, and make sure you stay informed to stay up to date on your rights, obligations, and recourses as it relates to federal contracts.

*Did you find this article interesting? If so, sign up for Sarah Schauerte’s legal blog on veteran business news at: https://legalmeetspractical.com.

 

 

 

 

 

Veteran Business Sues VA for Violating Kingdomware Mandate

A few months ago, the U.S. Supreme Court held that the VA is mandated to set aside certain contracts for veteran-owned small businesses (VOSBs) when “procuring goods and services pursuant to a contracting preference under [Title 38] or any other provision of law.” Known as the “Rule of Two,” this mandatory preference applies if the solicitation’s 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 the best value to the U.S. (38 U.S.C. § 8127(d)).

Since this ruling, the VOSB community has waited with bated breath to see how the VA would implement this mandate. Not only that, but it has waited to see if the VA would try to find ways around it. According to my contacts in the veteran business community, there have been several solicitations where the VA has failed to set aside the opportunity for VOSBs, or has failed to conduct market research to see if two or more responsible VOSBs would make fair and reasonable offers. These VOSBs that have been affected, however, have been afraid to publicly challenge the VA via a bid protest due to fear of retaliation.

One VOSB, however, is boldly going where no one else will.

On August 25, PDS Consultants, Inc. (PDS), an SDVOSB headquartered in New Jersey, filed a complaint with the U.S. Court of Federal Claims (CoFC)(Case No. 16-1063C). PDS seeks review of the VA’s continued ordering of certain vision-related products from Winston-Salem Industries for the Blind (Winston-Salem) for certain Veterans Integrated Service Networks (VISNs), despite not first conducting the required Rule of Two analysis. PDS also seeks review of the recent VA Policy Memorandum that authorizes orders from Winston-Salem without first conducting a Rule of Two analysis. Further, it asks for injunctive relief ordering the VA to adhere to its guidelines and the direction from the CoFC in Angelica Textile Services, Inc. v. United States, 95 Fed. Cl. 208 (2010)(requiring that Veteran Benefits Act and related VA procedures be given priority over the Javits-Wagner-O’Day Act).

This is an important case for VOSBs across the board because it should confirm the VA’s obligation to follow the Rule of Two, as well as the preference for the Veterans First Act over the Javits-Wagner-O’Day Act. It may also provide some much-anticipated guidance on the VA’s requirement to conduct market research pursuant to the Rule of Two, as well as further elaborate on the policy memorandum the VA issued this summer to implement Kingdomware.

HOWEVER, just because there’s a lawsuit, that doesn’t mean the court will issue a substantive decision. At this point, the CoFC has issued a scheduling order indicating that a decision won’t come for several months. There is the chance that the VA will take corrective action in the interim. If this happens, the parties may settle and the case be dismissed – resulting in the CoFC not issuing the public smackdown (to use a legal term) of the VA that many veteran business owners want.

At any rate, this is the case the veteran business community has been waiting for since Kingdomware. Stay tuned. . .

A copy of the Complaint filed in the CoFC may be accessed here. Also, the VA’s policy memorandum implementing Kingdomware is here.

Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran issues at: https://legalmeetspractical.com.

PDS's case before the CoFC continues the fight to ensure the VA puts VOSBs first in contracting preferences.

PDS’s case before the CoFC continues the fight to ensure the VA puts VOSBs first in contracting preferences.

 

President of Zero-Rated Vet Charity Speeds Off in Rolls Royce

We know there’s a lot of veteran-related fraud out there – scams playing the “it’s for veterans!” card, folks who defraud the veterans disability compensation system, shell companies set up to take advantage veteran status on federal contracts, etc. etc. But this one might take the cake.

I warn you: if you are a veteran who cares about your blood pressure, you might not want to read further.

A few months ago, CNN outed Mr.Thomas Burch, Jr. for running National Vietnam Veterans Foundation (the “Foundation”), one of the worst-rated veteran charities in the country. The now-defunct organization was located in Washington, D.C., and was bashed by CNN for donating only $122,000 to veterans of its $8.6 million raised in 2014. That’s around two percent.

In that CNN report, the watchdog group Charity Navigator gave the Foundation zero out of four stars. According to its public tax returns, called 990s, the Foundation took in $29 million over a four-year period but nearly all of it went to telemarketers and fundraisers. In one year, the charity also paid a parking garage bill of nearly $8,000.

Maybe this went to keep Mr. Burch’s Rolls Royce safe. This car has been photographed multiple times during the media scrutiny – a beauty of a vintage vehicle with the customized license plate, “My Rolls.”

Yesterday, CNN announced that the organization has shut down. This was confirmed by an interview with its vice-president; also, the website has been removed from the Internet.

Even though it’s horrible to think of someone running an extremely profitable veterans organization that did not actually give back to veterans, for me, the kicker is how it wasn’t shut down sooner. Because – wait for it – Mr. Burch was/is also a VA attorney!

For years, Burch managed to hold concurrent employment as the highest officer in a non-profit organization for veterans, as well as a senior employee at the VA. (He is the leading Freedom of Information Act (FOIA) attorney for the VA Office of General Counsel. He is also the Deputy Director of Homeland Security and Operations at VA). In public statements, the VA claims it was not aware of Burch’s involvement with the Foundation, but did no one with the VA have access to the Internet? Surely any Google search, LinkedIn update, Facebook post, etc., would have clued anyone in.

Obviously, this implicates conflict of interest rules. By executive order of the President, an officer or employee who is appointed by the President to a full-time, non-career position in the executive branch (such as the VA) may not receive any outside earned income during that appointment. Other higher-level officials in the executive branch – that is, non-career officials who are compensated at the rate above a GS-15, are limited in their outside earned income opportunities by other provisions of the Ethics Reform Act of 1989.29. Such officials may not have outside income which exceeds 15% of the official salary earned by a level II on the Executive Schedule.

Regardless of the category Burch fits into, according to information published by CNN, he earned $65,000 in 2014 as the head of National Vietnam Veterans Foundation, while also earning $127,000 at the VA. This is well over the 15% cap provided by the Ethics Reform Act (applied to the lower-rate category). Other conflict of interest rules likely apply as well – those put in place to ensure that an individual is able to carry out the ethical and fiduciary duties of his tax-paid position.

An internal investigation, conducted by the agency’s Office of Inspector General (“OIG”), is still in progress; and for now, Mr. Burch remains on the VA’s payroll as a staff attorney.

CNN has noted that attempts to reach Burch for comment both by phone and email were unsuccessful. At one point, when a reporter attempted to speak with him at his home, he sped off in his Rolls Royce.

I’d like a Rolls Royce, too, but I’d prefer to earn it by other means.

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veterans issues at: https://legalmeetspractical.com.

 

 

 

VA CVE Wait Times: Can Their Statistician Keep a Straight Face?

In general, I feel like I’m fairly even-handed in how I discuss the U.S. Department of Veterans’ Affairs’ (VA) Center for Verification and Evaluation (CVE), which processes applications for inclusion in the VetBiz Registry (You must be recognized as a veteran-owned business in this registry to compete for VA set-aside work). The process is still undergoing growing pains, which I understand; but it has also back-pedaled recently with some of its recent “improvements” (to include the implementation of a new bifurcated process, which unnecessarily adds a step to the process). I generally cover any update with the CVE, since a lot of my readers are veteran business owners who are listed in the CVE’s VetBiz registry and depend on VA set-aside work for their livelihood.

One topic I’ve bitten my tongue on – for some time now – is the verification statistics the VA posts on its website. Finally, I’m going to say something: in my opinion, these statistics are misrepresentations, and veteran business owners should not be putting any stock into them when seeking either verification or reverification in the VA’s VetBiz Registry. They should assume the process should take at least three months, and carve out the time accordingly. They should also completely ignore the “success rate.”

First of all, the VA is claiming that there is a 99% success rate in verification (through June 2016). This figure is not real (at all), because it does not include veterans who withdraw their applications when the CVE determines they are ineligible, rather than receive denials. Because no one in their right mind would say “sure, send me a denial letter” this means that NO ONE elects that decision, so hardly anyone receives a denial to be counted.

The only reason why the 1% denial rate exists (as opposed to 0%) is because those veterans didn’t receive the email and didn’t elect that option in time. Or maybe they were so fed up by the process that they never responded and therefore received a denial by default.

Second of all, the VA is claiming that it only takes 42 days for verification, and 31 days for reverification. Where on earth is the VA getting this estimate? Is it only counting Tuesdays and Thursdays? (As a note, the statistics don’t specify whether these are in business days or calendar days). Especially recently, I have seen applications languish in one stage for weeks, even when the application should have no issue with moving forward and/or getting approved.

The statistics homepage provides a clue as to how the VA is able to manipulate that number. It says that the clock only starts running once a “complete” application is received. That means that the business has to get through the Initiation stage, which is the first stage where the CVE checks an application for “completeness” and then moves it along to the Examination stage.

“Completeness” doesn’t mean that an application contains all the basic required documentation. It means that an application has also submitted anything else the CVE feels is necessary for it to evaluate for eligibility, which isn’t necessarily on the required documents list. The CVE can take its time getting to an application in this first stage; then, once the veteran business owner has submitted any additional information, take its time again in marking the application as “complete” and putting it in the Examination queue. Then the clock starts running. That means there can be up to an entire month unaccounted for in the processing time (perhaps more). Not only that, but the VA stops the clock every time it asks for additional documentation (until it is uploaded and submitted by the business owner).

If the CVE needs to take 80 or 90 days to process applications – which I believe is a more accurate figure – that’s understandable. It takes time to verify eligibility (which we want to be done correctly), and resources are limited. However, the CVE claims a processing time that is less than half the real figure; and it also grossly skews its approval rate by not counting the many businesses who withdraw due to frustration with document requests or eligibility issues. This misrepresents to veteran business owners what to expect during the verification process, and this runs contrary to the CVE’s goal of helping veteran business owners.

What do you think? If you have an experience to share – positive or negative – that touches on wait times (or other VetBiz issues such as document requests), please leave a comment!

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran business issues at: https://legalmeetspractical.com.

 

Are the statistics for VetBiz applications laughable?

Are the statistics for VA VetBiz applications laughable?

The SBA’s Universal Mentor-Protege Program & How It Can Work for You

In a final rule published in the Federal Register on July 25, 2016, the SBA provides the framework for what may be one of the most important small business programs of the last decade–one that will allow all small businesses to obtain developmental assistance from larger mentors, and form joint ventures with those mentors to pursue set-aside contracts.

The SBA’s final rule creates a new regulation, 13 C.F.R. 125.9, entitled: “What are the rules governing SBA’s small business mentor-protege program?” The new regulation sets forth the framework of the small business mentor-protege program. It also sets out the major benefit to being in a mentor-protege relationship: A protege and mentor may joint venture as a small business for any government prime contract or subcontract, provided the protege qualifies as small for the procurement. Such a joint venture may seek any type of small business contract for which the protege firm qualifies (e.g., a protege firm that qualifies as a WOSB could seek a WOSB set-aside as a joint venture with its SBA-approved mentor).

In plain English, this means that if you are a small business in a good business relationship with a larger business with complementary capabilities and strong past performance, you could team up to take advantage of your socioeconomic status on set-asides. You just need to be willing to do the dance with the SBA to get your mentor-protege relationship approved.

So. . . who can be a mentor, and who can be a protege? 

As a general matter, “[a]ny concern that demonstrates a commitment and the ability to assist small business concerns may act as a mentor and receive benefits ” from the mentor-protege program. Mentors may be large or small businesses – the key is whether they have the good financial health and character to successfully guide their proteges.

To qualify as a protege, a company “must qualify as small for the size standard corresponding to its primary NAICS code or identify that it is seeking business development assistance with respect to a secondary NAICS code and qualify as small for the size standard corresponding to that NAICS code.” However, if the prospective protege is not a small business in its primary NAICS code, “the firm must demonstrate how the mentor-protege relationship is a logical business progression for the firm and will further develop or expand current capabilities.” Further, “SBA will not approve a mentor-protege relationship in a secondary NAICS code in which the firm has no prior experience.”

What is the mentor-protege agreement?

In order to participate in the mentor-protege program, “[t]he mentor and protege firms must enter into a written agreement setting forth an assessment of the protege’s needs and providing a detailed description and timeline for the delivery of the assistance the mentor commits to provide to address those needs . . ..” The mentor-protege agreement must provide that the mentor will provide assistance to the protege for at least one year. However, the agreement must also provide “that either the protege or the mentor may terminate the agreement with 30 days advance notice to the other party . . . and to SBA.” The written mentor-protege agreement must be approved by the SBA before it takes effect. Additionally, the SBA “must approve all changes to a mentor-protege agreement in advance, and any changes made to the agreement must be provided in writing.” A single mentor-protege agreement may not exceed three years, but it may be extended for a second three years.

What is the application process? 

On October 1, 2016, the SBA will begin accepting applications for the new universal small business mentor-protege program. Applications will only be accepted through the SBA’s new certify.sba.gov portal, and it is unclear whether the SBA will choose to cap the number of applicants to the program.

Applicants are required to register in the System for Award Management (SAM) prior to creating their profile in certify.sba.gov. Applicants (both prospective Protégés and Mentors) will be required to complete an online training module as part of the application process, and to upload a certificate of completion to certify.sba.gov before they are allowed to complete the application process.

The application itself will be entirely electronic, and will require that certain documents – certificate of completion for the online training module, signed Mentor-Protégé agreement(s), size determination letters, and other documents – be uploaded to certify.sba.gov, or completed in narrative form within that web portal. Although Mentors are not required to provide financial statements and tax returns during the application process, the SBA retains the right to request such documentation during the reporting and evaluation processes. For further information, go to the SBA’s website for the small business mentor-protege program.

What do you think? What kind of logistical problems do you foresee in the application process? After all, this is brand new. Also, are there any issues the SBA should consider when implementing this new program?

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran small business issues at: https://legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

As of October 1, only the SBA approves mentor-protege applications. A Federal department or agency can no longer operate its own mentor-protégé program, unless: 1) the agency submits a program plan to the SBA, and 2) receives approval of the plan within one year of the SBA’s mentor-protégé regulations finalization. (The requirement for SBA approval does not apply to DoD, which has special statutory authority to operate its own mentor-protege program).

As of October 1, only the SBA approves mentor-protege applications. Absent special statutory authority, a agency can no longer operate its own mentor-protégé program, unless: 1) the agency submits a program plan to the SBA, and 2) receives approval of the plan within one year of the SBA’s mentor-protégé regulations finalization.

Is the VA Already Defying the Supreme Court?

As we know, in late June, the U.S. Supreme Court sided with veterans in holding that in some cases, the U.S. Department of Veterans Affairs (VA) is required to set aside certain pieces of work for veteran-owned small businesses (VOSBs).

Almost immediately, the VA issued an Acquisition Policy Flash, which reiterates the Supreme Court’s major holdings: namely, that the Rule of Two applies to orders placed under the GSA Schedule, and applies even when the VA is meeting its SDVOSB and VOSB contracting goals. (As a refresher, the “Rule of Two” is that the work has to be set aside for veteran companies when there is a “reasonable expectation” that at least two such businesses will bid on the contract and “the award can be made at a fair and reasonable price that offers best value to the United States.”). The Policy Flash states that the VA “will implement the Supreme Court’s ruling in every context where the law applies.” It also instructs contracting officers to conduct robust market research to ensure compliance with the Rule of Two.

More recently, the VA issued further guidance on the implementation of the Kingdomware decision, in the form of a memorandum that describes the changes to the Veterans Affairs Acquisition Regulation (VAAR). It juxtaposes the old policies contained within the VAAR, compared with the new policies adopted due to the Supreme Court’s holding related to the Rule of Two.

Notably, the memorandum enumerates the changes to the VAAR (at 810.001-70) as it relates to the market research contracting officers must conduct in determining whether a contract should be set aside for the veteran community:

“When performing market research, contracting officers shall review the Vendor Information Pages (VIP) database at https://www.vip.vetbiz.gov as required by subpart 819.70. The contracting officer will search the VIP database by applicable North American Industry Classification System (NAICS) codes to determine if two or more verified service-disabled veteran-owned small businesses (SDVOSBs) and veteran- owned small businesses (VOSBs), in the appropriate NAICS code, are listed as verified in the VIP database. The contracting officer will determine if identified SDVOSBs or VOSBs are capable of performing the work and likely to submit an offer/quote at a fair and reasonable price that offers best value to the Government. If so, the contracting officer shall set-aside the requirement in the contracting order of priority (see 819.7005 and 819.7006).”

This is the qualifier for whether a contract will be reserved for veterans, and if you’ll examine it closely, you’ll see this is very “soft” language. How is the contracting officer supposed to assess if the VOSBs with the corresponding NAICS codes are “capable” of performing the work? How will he know/determine if they’re capable of offering a “fair and reasonable price” that is the “best value” to the Government? How are “fair and reasonable price” and “best value” defined?

Because this is soft language, this raises the issue of whether it provides wiggle room for the VA to avoid following Kingdomware. Many veteran business owners and organizations are concerned that the VA will attempt to escape Kingdomware on a technicality, or otherwise fail to follow its precedent. After all, the VA has been fighting the precedent for over four years – first at the Government Accountability Office, then the U.S. Court of Federal Claims, then a federal district court. . . and finally the end of the line, the U.S. Supreme Court. It stands to reason that it will try to find a way around adhering to the decision.

If you as a veteran business owner have concerns with the way the new regulations are worded, or with how the VA is now implementing Kingdomware, please know that you have a voice. The National Veteran Small Business Coalition (which was involved in the decision) is collecting input relevant to Kingdomware. This includes input into the new wording of the regulations and how you have seen contracting officers implement (or not implement) Kingdomware in recent procurements. If you would like to chime in on their input to the VA, please email their executive director director, Scott Denniston, at scott.denniston@nvsbc.org. You may also leave comments below. Help us make sure Kingdomware has the positive impact it should!

*Did you find this article informative? If so, sign up for Sarah Schauerte Reida’s legal blog on veteran issues at: https://legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

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VA VetBiz System on Hiatus in August

UPDATE: Via a release issued today (August 5), the CVE has shortened the announced “down” time by one week. According to the latest news, the system will only be on hiatus until Monday, August 15th. This is good news for those going through reverification and getting close to expiration.

For those of you who are going through the reverification or verification process to be included in the U.S. Department of Veterans Affairs’ (VA) VetBiz Registry (its database of small business contractors eligible for veteran-owned and service-disabled veteran-owned set-asides), you might want to get a move on.

Commencing at 8:00 a.m. on Thursday, August 11th, and ending at 8:00 a.m. on Monday, August 22nd, the VetBiz system will be down. During this period, firms will not have access to their profiles and the CVE will not be able to process applications. Firms will not be able to commence the reverification process or submit a change request to modify any aspect of the firm’s profile/status. Additionally, the CVE will be unable to accept new verification applications.

In a notice sent out in mid-July to firms already in the VetBiz Registry, the CVE encouraged firms whose eligibility expires before October 15, 2016 – and firms that desire to update their information – to take action as soon as possible, as the CVE will not grant any extensions of eligibility due to this temporary hiatus.

This comes at an unfortunate time, as this is the end of the Government’s fiscal year, when contract solicitations and awards increase. Also, the notice was sent out only three weeks in advance of the hiatus.

So, why the need? According to the email blast: “The VA Veterans First verification program is undergoing a transformation in response to feedback provided by Veteran-owned Small Businesses. The modifications and enhancements will result in significant changes to our application process to improve the Veteran experience as we establish “My VA Verification.””

I’m not sure if the explanation given could be more vague, but I did some digging to find out what constitutes “My VA Verification.” Apparently, the VA is changing the examination phases of the application process, now requiring firms to go through a “pre-qualification” stage before undergoing a comprehensive evaluation.

As an attorney who regularly assists with these applications, I will say I’m not too thrilled with this development. A few years ago, the CVE was making some serious headway in making the application process easier; but requiring a company to go through both “pre-qualification” and an actual examination amplifies the work and complexity for both the CVE and the firm. Also, for those who have gone through the process already, and learned from trial and error, they might not be too happy to now have to master another process.

There are good intentions here, but we’ll see about execution. If you want to take a look at My VA Verification and offer your comments below based on your experience, please chime in!

*Did you find this article informative? If so, sign up for Sarah Schauerte’s legal blog on veteran issues at: https://legalmeetspractical.com.

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