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.
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This week, President-elect Donald Trump appointed David Shulkin as VA Secretary.
Wow, thanks for sharing!! And what are your thoughts on this new VA Secretary? Do you think he will bring something different? I’d thought the younger vet affiliated with the IAVA was going to get it but haven’t followed the news lately. Love to hear your thoughts on it!
I haven’t heard much about Trump’s process for appointing Shulkin. I know little about him other than his relatively short track record with the VA (18 months, but McDonald was also brought in from the outside).
He’s not a veteran, which may anger some folks, but honestly, at this point the VA needs someone exceptional at process improvement. Veteran status would be a plus for morale purposes.
I’ll do a more in-depth coverage on Shulkin and his appointment for the blog next week.
Sarah, this is worrisome, however I believe and tell me if I am wrong this “right of first refusal” clause permitted by VA CVE does not apply to an SDVOSB with only 1 SDV owner and no Operating Agreements with provisions for future sale.Therefore I would be able to pass an SBA protest review of my SDVOSB status?
Thank you
I can’t give legal advice via a blog post, but I will say that in general, the right of first refusal issue comes into play when there are multiple owners and a clause in the operating agreement that specifically gives the company/other owners the right of first refusal in the event another owner leaves.
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