Service-Disabled Veteran-Owned Small Business Procurement Program

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Service-Disabled Veteran-Owned Small
~~September 10~~November 23, 2021 , 2021
Business Procurement Program
Robert Jay Dilger
The Service-Disabled Veteran-Owned Small Business (SDVOSB) Procurement Program is The Service-Disabled Veteran-Owned Small Business (SDVOSB) Procurement Program is
Senior Specialist in Senior Specialist in
intended to provide SDVOSBs greater access to federal contracting opportunities. The program is intended to provide SDVOSBs greater access to federal contracting opportunities. The program is
American National American National
designed to help federal agencies achieve the government’s statutory goal of awarding designed to help federal agencies achieve the government’s statutory goal of awarding
Government Government
SDVOSBs at least 3% of the total value of all prime and subcontract dollars awarded each fiscal SDVOSBs at least 3% of the total value of all prime and subcontract dollars awarded each fiscal

year. The program is federal government-wide with two sets of similar, but not identical, year. The program is federal government-wide with two sets of similar, but not identical,
regulations; one issued by the Secretary of the Department of Veterans Affairs (VA) and another regulations; one issued by the Secretary of the Department of Veterans Affairs (VA) and another

issued by the U.S. Small Business Administration’s (SBA’s) Administrator for all other federal issued by the U.S. Small Business Administration’s (SBA’s) Administrator for all other federal
agencies.agencies.
Under this program, federal contracting officers may set aside (reserve) federal contracts (or orders) for bidding by Under this program, federal contracting officers may set aside (reserve) federal contracts (or orders) for bidding by
SDVOSBs exclusively. Federal agencies may also award sole source contracts, without competition, to SDVOSBs under the SDVOSBs exclusively. Federal agencies may also award sole source contracts, without competition, to SDVOSBs under the
following conditions:following conditions:
 the contracting officer does not have a reasonable expectation that it will receive offers from two or more  the contracting officer does not have a reasonable expectation that it will receive offers from two or more
eligible SDVOSBs; eligible SDVOSBs;
 the contract requirement is not currently being performed (or accepted to be performed) by an 8(a)  the contract requirement is not currently being performed (or accepted to be performed) by an 8(a)
Business Development Program participant; Business Development Program participant;
 the SDVOSB has been determined to be a responsible contractor with respect to performance; the award  the SDVOSB has been determined to be a responsible contractor with respect to performance; the award
can be made at a fair and reasonable price; and can be made at a fair and reasonable price; and
 the contract’s anticipated total value, including any options, does not exceed $4 million ($7 million for  the contract’s anticipated total value, including any options, does not exceed $4 million ($7 million for
manufacturing contracts). manufacturing contracts).
To participate in the program, an SDVOSB must To participate in the program, an SDVOSB must
 be small, as defined in Section 3(q) of the Small Business Act (15 U.S.C. §632(q)) and the SBA’s  be small, as defined in Section 3(q) of the Small Business Act (15 U.S.C. §632(q)) and the SBA’s
implementing regulations (13 C.F.R. §125); implementing regulations (13 C.F.R. §125);
 be at least 51% unconditionally and directly owned and controlled by one or more service-disabled  be at least 51% unconditionally and directly owned and controlled by one or more service-disabled
veterans; veterans;
 have one or more service-disabled veterans manage day-to-day operations and make long-term decisions;  have one or more service-disabled veterans manage day-to-day operations and make long-term decisions;
and and
 be owned by one or more eligible veterans that have a service-connected disability as determined by VA  be owned by one or more eligible veterans that have a service-connected disability as determined by VA
(see 38 U.S.C. §101(2) and 13 C.F.R. §125.11). (see 38 U.S.C. §101(2) and 13 C.F.R. §125.11).
SDVOSBs generally self-certify their eligibility for contracting preferences and are subject to criminal and civil sanctions if SDVOSBs generally self-certify their eligibility for contracting preferences and are subject to criminal and civil sanctions if
they are found to have made false or fraudulent claims. SDVOSBs may be suspended or debarred, which would preclude they are found to have made false or fraudulent claims. SDVOSBs may be suspended or debarred, which would preclude
them from being awarded new federal contracts for the duration of the suspension or debarment, to ensure that federal them from being awarded new federal contracts for the duration of the suspension or debarment, to ensure that federal
agencies award contracts to responsible contractors capable of successful performance. SDVOSBs seeking VA contracts with agencies award contracts to responsible contractors capable of successful performance. SDVOSBs seeking VA contracts with
an SDVOSB contracting preference must be certified as such through VA’s VETS First Verification Program. an SDVOSB contracting preference must be certified as such through VA’s VETS First Verification Program.
P.L. 106-50, P.L. 106-50, the Veterans Entrepreneurship and Small Business Development Act of 1999, authorized the 3% SDVOSB the Veterans Entrepreneurship and Small Business Development Act of 1999, authorized the 3% SDVOSB
procurement goal. P.L. 108-183,procurement goal. P.L. 108-183, the Veterans Benefits Act of 2003, provided the authority allowing federal procurement the Veterans Benefits Act of 2003, provided the authority allowing federal procurement
officers to award SDVOSB set-aside and sole source awards. The federal government achieved the 3% SDVOSB officers to award SDVOSB set-aside and sole source awards. The federal government achieved the 3% SDVOSB
procurement goal for the first time in FY2012,procurement goal for the first time in FY2012, and it has met the goal each fiscal year since then (4.28% in FY2020). and it has met the goal each fiscal year since then (4.28% in FY2020).
This report examines the SDVOSB program’s legislative origins, SDVOSB contracting data, and recent congressional action This report examines the SDVOSB program’s legislative origins, SDVOSB contracting data, and recent congressional action
relating to SDVOSB program certification. The report discusses P.L. 116-283,relating to SDVOSB program certification. The report discusses P.L. 116-283, the William M. (Mac) Thornberry National the William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021, which requires VA to transfer, by January 1, 2023, the maintenance of its Defense Authorization Act for Fiscal Year 2021, which requires VA to transfer, by January 1, 2023, the maintenance of its
SDVOSB database to the SBA, provide the SBA compensation for doing so, and abolish VA’s Center for Verification and SDVOSB database to the SBA, provide the SBA compensation for doing so, and abolish VA’s Center for Verification and
Evaluation and transfer its function to the SBAEvaluation and transfer its function to the SBA . In addition, the SBA is required to establish a government-wide SDVOSB . In addition, the SBA is required to establish a government-wide SDVOSB
certification and periodic recertification process by January 1, 2023. VA is to continue to determine whether an individual certification and periodic recertification process by January 1, 2023. VA is to continue to determine whether an individual
qualifies as a service-disabled veteran. qualifies as a service-disabled veteran.
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Service-Disabled Veteran-Owned Small Business Procurement Program

Introduction
The Service-Disabled Veteran-Owned The Service-Disabled Veteran-Owned ~~Smal~~ Small Business (SDVOSB) Procurement Program is one of Business (SDVOSB) Procurement Program is one of
several contracting programs Congress has approved to provide greater opportunities for several contracting programs Congress has approved to provide greater opportunities for ~~smal~~
small businesses to win federal contracts. Congress’s interest in promoting businesses to win federal contracts. Congress’s interest in promoting ~~smal~~ small business contracting business contracting
dates back to World War II and the outbreak of fighting in Korea. At that time, Congress found dates back to World War II and the outbreak of fighting in Korea. At that time, Congress found
that war-induced shortages of materials, coupled with an inability to obtain defense contracts or that war-induced shortages of materials, coupled with an inability to obtain defense contracts or
financial assistance, threatened thousands of financial assistance, threatened thousands of ~~smal~~ small businesses.1 In 1953, concerned that many businesses.1 In 1953, concerned that many
~~smal~~ small businesses might fail without government assistance, Congress passed, and President businesses might fail without government assistance, Congress passed, and President
Dwight D. Eisenhower signed into law, the Dwight D. Eisenhower signed into law, the ~~Smal~~ Small Business Act (P.L. 83-163). The act authorized Business Act (P.L. 83-163). The act authorized
the U.S. the U.S. ~~Smal~~ Small Business Administration (SBA). Business Administration (SBA).
The The ~~Smal~~ Small Business Act specifies that it is Congress’s declared policy to promote the interests of Business Act specifies that it is Congress’s declared policy to promote the interests of
~~smal~~ small businesses to “preserve free competitive enterprise.”2 Congress indicated that one way to businesses to “preserve free competitive enterprise.”2 Congress indicated that one way to
preserve free competitive enterprise was to increase market competition by ensuring that preserve free competitive enterprise was to increase market competition by ensuring that ~~smal~~
small businesses receive a “fair proportion” of federal contracts and subcontracts.3 businesses receive a “fair proportion” of federal contracts and subcontracts.3
Since 1953, Congress has used its broad authority to impose requirements on the federal Since 1953, Congress has used its broad authority to impose requirements on the federal
procurement process to help procurement process to help ~~smal~~ small businesses receive a fair proportion of federal contracts and businesses receive a fair proportion of federal contracts and
subcontracts, primarily by establishing federal procurement goals and various contracting subcontracts, primarily by establishing federal procurement goals and various contracting
preferences—including restricted competitions (set-asides), sole source awards, and price preferences—including restricted competitions (set-asides), sole source awards, and price
evaluation adjustment/preference in unrestricted competitions—for evaluation adjustment/preference in unrestricted competitions—for ~~smal~~ small businesses.4 Congress businesses.4 Congress
has authorized the following: has authorized the following:
 government-wide and agency-specific procurement goals for the percentage of  government-wide and agency-specific procurement goals for the percentage of
federal contract dollars awarded to federal contract dollars awarded to ~~smal businesses general y~~small businesses generally (at least 23%) and (at least 23%) and
for the percentage of federal contract and subcontract dollars awarded to for the percentage of federal contract and subcontract dollars awarded to ~~smal~~
small businesses owned and controlled by businesses owned and controlled by ~~social y and economical y~~socially and economically disadvantaged disadvantaged
~~individuals~~ individuals (at least 5%), women (at least 5%), and service-disabled veterans (at (at least 5%), women (at least 5%), and service-disabled veterans (at

~~1 U.S.~~ 1 U.S. Congress, Senate Select Committee on Small Business,Congress, Senate Select Committee on Small Business, Small Business Administration, committee print, 83rd , committee print, 83rd
Cong., 1st sess.,Cong., 1st sess., ~~August~~ August 10, 1953 (Washington, DC: GPO, 1953), p. iii; and U.S.10, 1953 (Washington, DC: GPO, 1953), p. iii; and U.S. Congress, HouseCongress, House Committee on Committee on
Banking and Currency, Banking and Currency, ~~Sm all~~Small Business Act of 1953, report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28, , report to accompany H.R. 5141, 83rd Cong., 1st sess., May 28,
1953, H.Rept. 83-494 (Washington, DC: GPO, 1953). For further information related to small business1953, H.Rept. 83-494 (Washington, DC: GPO, 1953). For further information related to small business contracting, see contracting, see
CRSCRS Report R45576, Report R45576, An Overview of ~~Sm all~~Small Business Contracting, by Robert Jay Dilger. , by Robert Jay Dilger.
2 For more information about P.L. 83-163, the Small Business 2 For more information about P.L. 83-163, the Small Business Act of 1953 (as amended), see https://www.govinfo.gov/Act of 1953 (as amended), see https://www.govinfo.gov/
content/pkg/COMPS-1834/pdf/COMPS-1834.pdf; and 15 U.S.C. §631(a). content/pkg/COMPS-1834/pdf/COMPS-1834.pdf; and 15 U.S.C. §631(a).
3 U.S.3 U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, Small Business Contracting Program Improvements Act, report , report
to accompany H.R. 3867, 110th Cong., 1st sess., October 22, 2007, H.Rept. 110-400 (Washington, DC: GPO, 2007), p. to accompany H.R. 3867, 110th Cong., 1st sess., October 22, 2007, H.Rept. 110-400 (Washington, DC: GPO, 2007), p.
4. 4.
4 4 Set-aside is a commonly used term to refer to a contract competition in which only small businesses, is a commonly used term to refer to a contract competition in which only small businesses, or specific types or specific types
of small businesses,of small businesses, may compete. Setmay compete. Set -asides can be-asides can be total or partial, depending on whether the entire procurement, or total or partial, depending on whether the entire procurement, or
just a severable segment of it, is restricted. just a severable segment of it, is restricted.
Sole source awards awards are noncompetitive procurements made after soliciting and negotiating with one source.are noncompetitive procurements made after soliciting and negotiating with one source.
A A price evaluation ~~adjustm ent~~adjustment/preference involves a reduction in the price of bids involves a reduction in the price of bids or offers by eligibleor offers by eligible parties (in this parties (in this
case for small businessescase for small businesses located in a Historically Underutilizedlocated in a Historically Underutilized ~~Business~~ Business Zone [HUBZone]). Zone [HUBZone]). ~~T he~~The reduction is reduction is
generally equivalent to a certain percentage of the price of the bid or offer. For example, a 10% price evaluation generally equivalent to a certain percentage of the price of the bid or offer. For example, a 10% price evaluation
adjustment made to a $100,000 bid wouldadjustment made to a $100,000 bid would result in the bidresult in the bid ~~being reduced~~ being reduced for comparative purposes by $10,000 to for comparative purposes by $10,000 to
$90,000. $90,000 would then be used$90,000. $90,000 would then be used in determining whichin determining which ~~bid~~ bid or offer is lowest priced or represents the “best value” or offer is lowest priced or represents the “best value”
for the government. “for the government. “ Best value” is determined basedBest value” is determined based on price and various nonprice evaluation factors selected by the on price and various nonprice evaluation factors selected by the
federal agency. For more information related to best value, see 48 C.F.R. §15.304. federal agency. For more information related to best value, see 48 C.F.R. §15.304.
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least 3%), and for least 3%), and for ~~smal~~ small businesses located in a businesses located in a ~~Historical y~~Historically Underutilized Underutilized
Business Zone (HUBZone)Business Zone (HUBZone) (at least 3%);5(at least 3%);5
 an annual  an annual ~~Smal~~ Small Business Goaling Report and Business Goaling Report and ~~Smal~~ Small Business Procurement Business Procurement
Scorecards to measure progress in meeting those procurement goals; Scorecards to measure progress in meeting those procurement goals;
 a general requirement for federal agencies to reserve (set aside) contracts that  a general requirement for federal agencies to reserve (set aside) contracts that
have an anticipated value greater than the micro-purchase threshold ( have an anticipated value greater than the micro-purchase threshold (~~general y~~generally
$10,000) but not greater than the simplified acquisition threshold ($10,000) but not greater than the simplified acquisition threshold (~~general y~~generally
$250,000);6$250,000);6
 under specified conditions, a requirement for federal agencies to set aside  under specified conditions, a requirement for federal agencies to set aside
exclusively for exclusively for ~~smal~~ small businesses contracts that have an anticipated value greater businesses contracts that have an anticipated value greater
than the simplifiedthan the simplified acquisition threshold (acquisition threshold (set-aside is a commonly used term to is a commonly used term to
refer to a contract competition in which only refer to a contract competition in which only ~~smal~~ small businesses, or specific types businesses, or specific types
of of ~~smal~~ small businesses, may compete);7 businesses, may compete);7
 federal agencies to make  federal agencies to make sole source awards, without competition, to awards, without competition, to ~~smal~~
small businesses when the award could not otherwise be made (e.g., only a single businesses when the award could not otherwise be made (e.g., only a single
source is available, under urgent and source is available, under urgent and ~~compel ing~~compelling circumstances); circumstances);
 federal agencies to set aside contracts for, or grant other contracting preference  federal agencies to set aside contracts for, or grant other contracting preference
to, specific types of to, specific types of ~~smal~~ small businesses (e.g., 8(a) Business Development Program businesses (e.g., 8(a) Business Development Program
participants, HUBZoneparticipants, HUBZone ~~smal~~ small businesses, women-owned and businesses, women-owned and ~~control ed smal~~

controlled small 5 For the small businesses5 For the small businesses generally procurement goal, see P.L. 100-656, the Business Opportunity Development generally procurement goal, see P.L. 100-656, the Business Opportunity Development
Reform Act of 1988 (20%), and P.L. 105-135, the Small BusinessReform Act of 1988 (20%), and P.L. 105-135, the Small Business Reauthorization Act of 1997Reauthorization Act of 1997 (23%). For the small (23%). For the small
disadvantageddisadvantaged ~~businesses (SDBs)~~ businesses (SDBs) procurement goal, includingprocurement goal, including 8(a) Business8(a) Business Development Program participants, see Development Program participants, see
P.L. 100-656, the Business Opportunity Development Reform Act of 1988. For the women-owned small businesses P.L. 100-656, the Business Opportunity Development Reform Act of 1988. For the women-owned small businesses
(WOSBs)(WOSBs) procurement goal, see P.L. 103-355, the Federal Acquisition Streamlining Act of 1994procurement goal, see P.L. 103-355, the Federal Acquisition Streamlining Act of 1994 . For the HUBZone . For the HUBZone
small businessessmall businesses procurement goal, see P.L. 105-135, the HUBZone Act of 1997—Title VI of the Smallprocurement goal, see P.L. 105-135, the HUBZone Act of 1997—Title VI of the Small Business Business
Reauthorization Act of 1997. For the small businessesReauthorization Act of 1997. For the small businesses owned and controlled by a service-disabledowned and controlled by a service-disabled veteran-owned small veteran-owned small
businessbusiness (SDVOSB)(SDVOSB) procurement goal, see P.L. 106-50, the Veterans Entrepreneurship and Small Business procurement goal, see P.L. 106-50, the Veterans Entrepreneurship and Small Business
Development Act of 1999. Development Act of 1999.
~~T he~~The federal government uses aspirational procurement goals instead of requiring federal government uses aspirational procurement goals instead of requiring ~~federal~~ federal agencies to awardagencies to award specific specific
percentages of federal contracts to various types of small businessespercentages of federal contracts to various types of small businesses primarily to avoid legalprimarily to avoid legal challenges underchallenges under the equal the equal
protection component of the Fifth Amendment’s Due Process Clause.protection component of the Fifth Amendment’s Due Process Clause. See,See, for example, City of Richmond v. J.A. for example, City of Richmond v. J.A.
Croson Co., 488 U.S. 469 (1989) (finding unconstitutional a municipal ordinance that requiredCroson Co., 488 U.S. 469 (1989) (finding unconstitutional a municipal ordinance that required the city’s prime the city’s prime
contractors to award at least 30% of the value of each contract to minority subcontractors) and Adarand Constructors, contractors to award at least 30% of the value of each contract to minority subcontractors) and Adarand Constructors,
Inc. v. Pena 515 U.S. 200 (1995) (finding that all racial classifications, whether imposed by federal, state, or local Inc. v. Pena 515 U.S. 200 (1995) (finding that all racial classifications, whether imposed by federal, state, or local
authorities, must pass strict scrutiny review). authorities, must pass strict scrutiny review).
6 The~~6 T he~~ contracting officer must have a reasonable expectation that offers will be contracting officer must have a reasonable expectation that offers will be obtained from two or more responsible obtained from two or more responsible
small businessessmall businesses ~~(Rule of T wo~~ (Rule of Two) that are competitive in terms of market prices, quality, and delivery of the goods or ) that are competitive in terms of market prices, quality, and delivery of the goods or
services beingservices being purchased. Seepurchased. See P.L. 115-91, the National Defense Authorization Act for Fiscal Year 2018; 15 U.S.C. P.L. 115-91, the National Defense Authorization Act for Fiscal Year 2018; 15 U.S.C.
§644(j)(1); and Federal§644(j)(1); and Federal Acquisition Regulation (FAR) §19.502Acquisition Regulation (FAR) §19.502 -2. -2.
7 See 7 See ~~FAR~~ FAR §19.203(c): §19.203(c):
For acquisitions For acquisitions of suppliesof supplies or services that have an anticipated dollar value exceeding the or services that have an anticipated dollar value exceeding the
simplified acquisitionsimplified acquisition threshold … the contracting officer shall first consider an acquisitionthreshold … the contracting officer shall first consider an acquisition for the for the
small businesssmall business socioeconomic contracting programs (i.e., 8(a), HUBZone, SDVOSB,socioeconomic contracting programs (i.e., 8(a), HUBZone, SDVOSB, or WOSB or WOSB
programs) before considering a small businessprograms) before considering a small business ~~set~~ set-aside (see FAR-aside (see FAR §19.502-2(b)). However, if a §19.502-2(b)). However, if a
requirement has been accepted by the Smallrequirement has been accepted by the Small ~~Business~~ Business Administration (SBA) under the 8(a) Administration (SBA) under the 8(a)
Program, it must remain in the 8(a) Program unless the SBAProgram, it must remain in the 8(a) Program unless the SBA ~~agrees~~ agrees to its release in accordance to its release in accordance
with 13 C.F.R. parts 124, 125, and 126. with 13 C.F.R. parts 124, 125, and 126.
Before setting aside Before setting aside an acquisition over the simplified acquisition threshold for small businesses,an acquisition over the simplified acquisition threshold for small businesses, ~~t he~~ the contracting officer contracting officer
must have a reasonable expectation that offers will bemust have a reasonable expectation that offers will be obtained from two or more responsible small businessesobtained from two or more responsible small businesses (Rule(Rule of of
~~T wo~~Two) that are ) that are ~~competit ive~~competitive in terms of market prices. See FAR in terms of market prices. See FAR §19.502-2. §19.502-2.
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businesses [WOSBs], and businesses [WOSBs], and ~~smal~~ small businesses owned and controlled by service businesses owned and controlled by service
disabled veterans [SDVOSBs]);8 anddisabled veterans [SDVOSBs]);8 and
 the SBA  the SBA and other federal procurement officers to review and restructure and other federal procurement officers to review and restructure
proposed procurements to maximize opportunities for proposed procurements to maximize opportunities for ~~smal~~ small business business
participation. participation.
The The ~~smal~~ small business procurement goals are designed to encourage federal procurement officers to business procurement goals are designed to encourage federal procurement officers to
award contracts to award contracts to ~~smal~~ small businesses. There are no punitive consequences for not meeting these businesses. There are no punitive consequences for not meeting these
procurement goals. But, the SBA’s annual government-wide and agency-specific procurement goals. But, the SBA’s annual government-wide and agency-specific ~~Smal~~ Small Business Business
Procurement Scorecards (SBA scorecards) and the General Services Administration’s (GSA’s) Procurement Scorecards (SBA scorecards) and the General Services Administration’s (GSA’s)
annual annual ~~Smal~~ Small Business Goaling Report (which serves as the SBA scorecards’ data source), are Business Goaling Report (which serves as the SBA scorecards’ data source), are
distributed widely, receive media attention, and heighten public awareness of distributed widely, receive media attention, and heighten public awareness of ~~smal~~ small business business
contracting.9 For example, Members often cite agency performance, as reported in the SBA contracting.9 For example, Members often cite agency performance, as reported in the SBA
scorecards, during their questioning of federal agency witnesses during congressional hearings. scorecards, during their questioning of federal agency witnesses during congressional hearings.
As a result, senior agency officials may encourage federal procurement officers to increase As a result, senior agency officials may encourage federal procurement officers to increase
contracting opportunities for contracting opportunities for ~~smal businesses general y~~small businesses generally, or for specific types of , or for specific types of ~~smal~~ small businesses, businesses,
to address any perceived weaknesses in the SBA’s scorecards or GSA’s to address any perceived weaknesses in the SBA’s scorecards or GSA’s ~~Smal~~ Small Business Goaling Business Goaling
Report. Report.
~~Occasional y~~Occasionally, presidential statements, directives, or executive orders also encourage federal , presidential statements, directives, or executive orders also encourage federal
procurement officers to award contracts to procurement officers to award contracts to ~~smal~~ small businesses. For example, on June 1, 2021, the businesses. For example, on June 1, 2021, the
Biden Administration announced that it Biden Administration announced that it
is launching an all-of-government effort to expand contracting is launching an all-of-government effort to expand contracting ~~opportunit ies~~opportunities for for
underserved small businesses across the country. At its center is a new goal: increasing the underserved small businesses across the country. At its center is a new goal: increasing the
share of contracts going to small disadvantaged businesses by 50 percent by 2026 [from share of contracts going to small disadvantaged businesses by 50 percent by 2026 [from
10% of small business eligible contract dollars to 15%]—translating to an additional $100 10% of small business eligible contract dollars to 15%]—translating to an additional $100
billion to SDBs [small disadvantaged businesses] over the 5-year period. To achieve this billion to SDBs [small disadvantaged businesses] over the 5-year period. To achieve this
goal,goal, ~~agencies will assess every available tool to lower barriers to entry and~~ agencies will assess every available tool to lower barriers to entry and increase increase
opportunities for small businesses and traditionally-underserved entrepreneurs to compete opportunities for small businesses and traditionally-underserved entrepreneurs to compete
for federal contracts.10for federal contracts.10
Additional Additional requirements are in place to maximize requirements are in place to maximize ~~smal~~ small business participation as prime business participation as prime
contractors, subcontractors, and suppliers. For example, before issuing a solicitation, federal contractors, subcontractors, and suppliers. For example, before issuing a solicitation, federal
contracting officers must do the following, among other requirements: contracting officers must do the following, among other requirements:
 divide proposed acquisitions of supplies and services (except construction) into  divide proposed acquisitions of supplies and services (except construction) into
reasonably reasonably ~~smal~~ small lots to permit offers on quantities less than the total lots to permit offers on quantities less than the total
requirement; requirement;

8 For 8(a) Business8 For 8(a) Business Development Program participants, see P.L. 95-507, A bill to amend the SmallDevelopment Program participants, see P.L. 95-507, A bill to amend the Small ~~Business~~ Business Act and Act and
the Smallthe Small ~~Business~~ Business Investment Act of 1958; and 15 U.S.C. §637(a). For HUBZone participants, see P.L. 105-135, the Investment Act of 1958; and 15 U.S.C. §637(a). For HUBZone participants, see P.L. 105-135, the
HUBZone Act of 1997—HUBZone Act of 1997—~~T itle~~Title VI of the Small Business VI of the Small Business Reauthorization Act of 1997; and 15 U.S.C.Reauthorization Act of 1997; and 15 U.S.C. §657a. For §657a. For
WOSBs,WOSBs, see H.R. 5654, the Small Businesssee H.R. 5654, the Small Business Reauthorization Act of 2000, incorporated by reference in P.L. 106-554, Reauthorization Act of 2000, incorporated by reference in P.L. 106-554,
the Consolidated Appropriations Act, 2001the Consolidated Appropriations Act, 2001 ; and 15 U.S.C. §637(m). For SDVOSBs,; and 15 U.S.C. §637(m). For SDVOSBs, ~~see~~ see P.L. 108-183, the Veterans P.L. 108-183, the Veterans
Benefits Act of 2003; and 15 U.S.C.Benefits Act of 2003; and 15 U.S.C. §657f. §657f.
9 See9 See SBA,SBA, “ “Small businessSmall business procurement scorecard overview,” at https://www.sba.gov/document/support-small-procurement scorecard overview,” at https://www.sba.gov/document/support-small-
business-procurementbusiness-procurement -scorecard-overview; and U.S.-scorecard-overview; and U.S. General ServicesGeneral Services Administration (GSA),Administration (GSA), “ “SAM.gov: SAM.gov: ~~DAT A~~DATA Bank Bank
Static Reports, SmallStatic Reports, Small ~~Business Goaling~~ Business Goaling Reports,” at https://sam.gov/reports/awards/static. Reports,” at https://sam.gov/reports/awards/static.
10 The~~10 T he~~ White House (Biden), “ White House (Biden), “ ~~FACT SHEET~~ FACT SHEET: Biden-⁠Harris: Biden-⁠Harris Administration Announces New Actions to BuildAdministration Announces New Actions to Build Black Black
Wealth and NarrowWealth and Narrow the Racial Wealth Gap,” Junethe Racial Wealth Gap,” June 1, 2021, at https://www.whitehouse.gov/briefing-room/statements-1, 2021, at https://www.whitehouse.gov/briefing-room/statements-
releases/2021/06/01/fact-sheet-biden-harris-administration-announces-new-actions-to-build-black-wealth-and-narrow-releases/2021/06/01/fact-sheet-biden-harris-administration-announces-new-actions-to-build-black-wealth-and-narrow-
the-racial-wealth-gap/. the-racial-wealth-gap/.
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 plan acquisitions such that, if practicable, more than one  plan acquisitions such that, if practicable, more than one ~~smal~~ small business concern business concern
may perform the work if the work exceeds the amount for which a surety may be may perform the work if the work exceeds the amount for which a surety may be
guaranteed by the SBAguaranteed by the SBA against loss under 15 U.S.C. §694b (against loss under 15 U.S.C. §694b (~~general y $6.5~~
~~mil ion, or $10 mil ion~~ generally $6.5 million, or $10 million if the contracting officer certifies that the higher amount if the contracting officer certifies that the higher amount
is necessary);11 is necessary);11
 encourage prime contractors to subcontract with  encourage prime contractors to subcontract with ~~smal~~ small business concerns, business concerns,
primarily through the agency’s role in negotiating an acceptable primarily through the agency’s role in negotiating an acceptable ~~smal~~ small business business
subcontracting plan with prime contractors on contracts anticipated to exceed subcontracting plan with prime contractors on contracts anticipated to exceed
$$~~700~~750,000 or $1.5 ,000 or $1.5 ~~mil ion~~million for construction contracts;12 and for construction contracts;12 and
 under specified circumstances, provide a copy of the proposed acquisition  under specified circumstances, provide a copy of the proposed acquisition
package to an SBA procurement center representative (PCR) for review, package to an SBA procurement center representative (PCR) for review,
comment, and recommendation at least 30 days before the issuance of the comment, and recommendation at least 30 days before the issuance of the
solicitation. If the contracting officer rejects the PCR’s recommendation, the solicitation. If the contracting officer rejects the PCR’s recommendation, the
officer must document the basis for the rejection and notify the PCR. The PCR officer must document the basis for the rejection and notify the PCR. The PCR
may appeal the rejection to the chief of the contracting office and, ultimately, to may appeal the rejection to the chief of the contracting office and, ultimately, to
the agency head.13 the agency head.13
Under the SDVOSB program, federal contracting officers may set aside federal contracts (or Under the SDVOSB program, federal contracting officers may set aside federal contracts (or
orders) for bidding by SDVOSBs exclusively when it is in the interest of (1) maintaining or orders) for bidding by SDVOSBs exclusively when it is in the interest of (1) maintaining or
mobilizingmobilizing the nation’s full productivity, war, or national defense programs; or (2) ensuring that the nation’s full productivity, war, or national defense programs; or (2) ensuring that
~~smal~~ small businesses receive a fair proportion of government contracts in each industry.14 The businesses receive a fair proportion of government contracts in each industry.14 The
contracting officer must have a reasonable expectation that offers contracting officer must have a reasonable expectation that offers ~~wil~~ will be obtained from two or be obtained from two or
more responsible SDVOSBs (Rule of Two) that are competitive in terms of market prices, quality, more responsible SDVOSBs (Rule of Two) that are competitive in terms of market prices, quality,
and delivery of the goods or services being purchased. and delivery of the goods or services being purchased.
If the contracting officer does not expect the Rule of Two to be met, federal agencies may award If the contracting officer does not expect the Rule of Two to be met, federal agencies may award
SDVOSBs sole source contracts if SDVOSBs sole source contracts if al all of the following conditions are met: of the following conditions are met:
 the contract requirement is not currently being performed (or accepted to be  the contract requirement is not currently being performed (or accepted to be
performed) by an 8(a) Business Development Program participant; performed) by an 8(a) Business Development Program participant;

11 For additional information and analysis concerning the Small11 For additional information and analysis concerning the Small ~~Business~~ Business Administration’s (SBA’s)Administration’s (SBA’s) Surety Bond Surety Bond
program, see CRSprogram, see CRS Report R42037, Report R42037, SBA Surety Bond Guarantee Program , by Robert Jay Dilger. , by Robert Jay Dilger.
12 12 FAR §19.702(a). Subcontracting plans are not required from small businesses,Subcontracting plans are not required from small businesses, for personal services contracts, for contracts or contract for personal services contracts, for contracts or contract
modifications that will be performed entirely outside of the United States and its outlying areas, or for modifications modifications that will be performed entirely outside of the United States and its outlying areas, or for modifications
that were within the scope of the contract. “[A]ny contractor or subcontractor failing to comply in good faith with the that were within the scope of the contract. “[A]ny contractor or subcontractor failing to comply in good faith with the
requirements of the subcontracting plan is in material breach of its contract.” FAR §19.702(c). In addition, see FAR requirements of the subcontracting plan is in material breach of its contract.” FAR §19.702(c). In addition, see FAR
§19.702: §19.702:
Any contractor receiving a contract with a value greater than the simplified acquisition threshold Any contractor receiving a contract with a value greater than the simplified acquisition threshold
must agree in the contract that small business,must agree in the contract that small business, veteran-owned small business,veteran-owned small business, service-disabled service-disabled
veteran-owned small business,veteran-owned small business, HUBZone small business,HUBZone small business, small disadvantagedsmall disadvantaged business,business, and and
women-ownedwomen-owned small businesssmall business concerns willconcerns will have the maximum practicable opportunity to have the maximum practicable opportunity to
participate in contract performance consistent with its efficient performance. participate in contract performance consistent with its efficient performance.
13 See 13 See ~~FAR~~ FAR §19.202-1 for the specified conditions: §19.202-1 for the specified conditions:
(i) (i) ~~T he~~The proposed acquisition is for supplies proposed acquisition is for supplies or services currently being provided by a small business or services currently being provided by a small business
and the proposed acquisition is of a quantity or estimated and the proposed acquisition is of a quantity or estimated ~~do llar~~dollar value, the magnitude of which value, the magnitude of which
makes it unlikely that small businessesmakes it unlikely that small businesses can compete for the prime contract; (ii) can compete for the prime contract; (ii) ~~T he~~The proposed proposed
acquisition is for construction and seeks to package or consolidate discrete construction projects acquisition is for construction and seeks to package or consolidate discrete construction projects
and the magnitude of this consolidation makes it unlikely that small businessesand the magnitude of this consolidation makes it unlikely that small businesses can compete for the can compete for the
prime contract; or (iii) prime contract; or (iii) ~~T he~~The proposed acquisition is for a consolidated or bundled proposed acquisition is for a consolidated or bundled requirement.requirement.
See See ~~FAR~~ FAR §19.505 for a description of the appeals process. §19.505 for a description of the appeals process.
14 FAR 14 FAR §19.502-1 and FAR §19.1403; and 13 C.F.R.§19.502-1 and FAR §19.1403; and 13 C.F.R. §125.12-§125.16. §125.12-§125.16.
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 the SDVOSB has been determined to be a responsible contractor with respect to  the SDVOSB has been determined to be a responsible contractor with respect to
performance; performance;
 the award can be made at a fair and reasonable price; and  the award can be made at a fair and reasonable price; and
 the contract’s anticipated total value, including any options, does not exceed $4  the contract’s anticipated total value, including any options, does not exceed $4
~~mil ion ($7 mil ion~~ million ($7 million for manufacturing contracts).15for manufacturing contracts).15
To participate in the SDVOSB procurement program, an SDVOSB must To participate in the SDVOSB procurement program, an SDVOSB must
 be  be small, as defined in Section 3(q) of the , as defined in Section 3(q) of the ~~Smal~~ Small Business Act (15 U.S.C. Business Act (15 U.S.C.
§632(q)) and in the SBA’s implementing regulations (13 C.F.R. §125); §632(q)) and in the SBA’s implementing regulations (13 C.F.R. §125);
 be at least 51%  be at least 51% ~~unconditional y~~unconditionally and directly owned and controlled by one or and directly owned and controlled by one or
more service-disabled veterans; more service-disabled veterans;
 have one or more service-disabled veterans manage day-to-day operations and  have one or more service-disabled veterans manage day-to-day operations and
make long-term decisions; and make long-term decisions; and
 be owned by one or more eligible  be owned by one or more eligible veterans that has a service-connected disability veterans that has a service-connected disability
as determined by VA as determined by VA (see 38 U.S.C. §101(2) and 13 C.F.R §125.11).16 (see 38 U.S.C. §101(2) and 13 C.F.R §125.11).16
SDVOSBs SDVOSBs ~~general y~~generally self-certify their program eligibility self-certify their program eligibility and are subject to criminal and civil and are subject to criminal and civil
sanctions for making false or fraudulent claims. SDVOSBs also may be suspended or debarred, sanctions for making false or fraudulent claims. SDVOSBs also may be suspended or debarred,
which would preclude them from being awarded new federal contracts for the duration of the which would preclude them from being awarded new federal contracts for the duration of the
suspension or debarment, to ensure that federal agencies award contracts only to responsible suspension or debarment, to ensure that federal agencies award contracts only to responsible
contractors that are capable of successful performance.17 SDVOSBs seeking VA contracts with a contractors that are capable of successful performance.17 SDVOSBs seeking VA contracts with a
SDVOSB contracting preference must be certified as such through VA’s VETS First Verification SDVOSB contracting preference must be certified as such through VA’s VETS First Verification
Program. As of Program. As of ~~September 10~~November 22, 2021, the SBA’s Dynamic , 2021, the SBA’s Dynamic ~~Smal~~ Small Business Search database of Business Search database of
~~smal~~ small businesses interested in bidding on federal contracts included 43,businesses interested in bidding on federal contracts included 43,~~727~~986 veteran-owned veteran-owned ~~smal~~
small businesses (VOSBs), including SDVOSBs, and 24,businesses (VOSBs), including SDVOSBs, and 24,~~171~~457 self-certified SDVOSBs.18 self-certified SDVOSBs.18
This report examines the SDVOSB program’s legislative origins, SDVOSB contracting data, and This report examines the SDVOSB program’s legislative origins, SDVOSB contracting data, and
recent congressional action relating to SDVOSB program certification. P.L. 116-283, the recent congressional action relating to SDVOSB program certification. P.L. 116-283, the ~~Wil iam~~
William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, requires VA, by M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, requires VA, by
January 1, 2023, to transfer the maintenance of its SDVOSB database to the SBA, provide the January 1, 2023, to transfer the maintenance of its SDVOSB database to the SBA, provide the
SBA compensation for doing so, and abolish VA’s Center for Verification and Evaluation and SBA compensation for doing so, and abolish VA’s Center for Verification and Evaluation and
transfer its function to the SBA (see transfer its function to the SBA (see “VA-SBA Coordination Issues”)”). The SBA is required to . The SBA is required to
establish a government-wide SDVOSB certification and periodic recertification process by establish a government-wide SDVOSB certification and periodic recertification process by
January 1, 2023. VA is to continue to determine whether an individual qualifies as a service-January 1, 2023. VA is to continue to determine whether an individual qualifies as a service-
disabled veteran. disabled veteran.

~~15 FAR §19.1406.~~
~~16 FAR §19.1403.~~
~~17 For additional information and analysis, see CRS~~ 15 FAR §19.1406. Sole source award limits are adjusted for inflation on October 1 of each year that is evenly divisible by five. As a result, sole source award limits may differ from those in statute. The next inflation adjustment will take place on October 1, 2025. See P.L. 111-350, To enact certain laws relating to public contracts as Title 41, U.S. Code, “Public Contracts” (as amended); and 41 U.S.C. §1908(c)(2). 16 FAR §19.1403. 17 For additional information and analysis, see CRS Report R45322, Report R45322, Selected Legal Tools for Maintaining Government
Contractor Accountability, by David H. Carpenter. Also, see 18 U.S.C., by David H. Carpenter. Also, see 18 U.S.C. §1001 (false statements); 18 U.S.C. §287 (false §1001 (false statements); 18 U.S.C. §287 (false
claims); 18 U.S.C.claims); 18 U.S.C. §371 (conspiracy to defraud the government)§371 (conspiracy to defraud the government) ; and 48 C.F.R. §9.400-§9.409 (suspension and ; and 48 C.F.R. §9.400-§9.409 (suspension and
debarment). debarment). ~~T he~~The SBA’s SBA’s regulations on penalties for misrepresentations and false statements are contained in 13 C.F.R. regulations on penalties for misrepresentations and false statements are contained in 13 C.F.R.
§121.108 for small businesses,§121.108 for small businesses, 13 C.F.R.13 C.F.R. §124.501 for 8(a) small businesses,§124.501 for 8(a) small businesses, 13 C.F.R.13 C.F.R. §124.1004 for SDBs, 13 C.F.R. §124.1004 for SDBs, 13 C.F.R.
§125.29 for veteran-owned small businesses§125.29 for veteran-owned small businesses (VOSBs)(VOSBs) and SDVOSBs,and SDVOSBs, 13 C.F.R. §126.900 for HUBZone small 13 C.F.R. §126.900 for HUBZone small
businesses,businesses, and 13 C.F.R.and 13 C.F.R. §127.700 for WOSBs. §127.700 for WOSBs.
18 U.S. Small Business ~~18 U.S. Small Business~~ Administration (SBA), “Dynamic SmallAdministration (SBA), “Dynamic Small ~~Business Search,” accessed on August 25~~ Business Search,” accessed on November 22, 2021, at , 2021, at
http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm. http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
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The SDVOSB Program’s Origins
The following sections provide an overview of the history of The following sections provide an overview of the history of ~~smal~~ small business contracting business contracting
preferences, focusing on executive and legislative actions that led to the SDVOSB program’s preferences, focusing on executive and legislative actions that led to the SDVOSB program’s
creation. creation.
The First Federal Small Business Procurement Programs
In 1942, Congress authorized the In 1942, Congress authorized the ~~Smal er~~Smaller War Plants Corporation (SWPC) to make loans and War Plants Corporation (SWPC) to make loans and
provide grants to provide grants to ~~smal~~ small businesses to finance plant construction, conversion, or expansion and to businesses to finance plant construction, conversion, or expansion and to
enter into contracts with other federal agencies “to furnish articles, equipment, supplies, or enter into contracts with other federal agencies “to furnish articles, equipment, supplies, or
materials to the government.” Congress authorized the SWPC to subcontract those contracts to materials to the government.” Congress authorized the SWPC to subcontract those contracts to
~~smal~~ small businesses to ameliorate businesses to ameliorate ~~smal~~ small businesses’ financial difficulties while mobilizingbusinesses’ financial difficulties while mobilizing “the “the
productive facilities of productive facilities of ~~smal~~ small business in the interest of successful prosecution of the war.”19 The business in the interest of successful prosecution of the war.”19 The
SWPC’s subcontracting authority expired along with the SWCP at the end of World War II. SWPC’s subcontracting authority expired along with the SWCP at the end of World War II.
In 1951, at the onset of the Korean War, Congress authorized the In 1951, at the onset of the Korean War, Congress authorized the ~~Smal~~ Small Defense Plants Defense Plants
Administration (SDPA), which Administration (SDPA), which ~~general y~~generally was provided with the same powers as the SWPC.20 In was provided with the same powers as the SWPC.20 In
1953, Congress authorized the transfer of the SDPA’s subcontracting and other authorities to the 1953, Congress authorized the transfer of the SDPA’s subcontracting and other authorities to the
newly created SBA,21 with the intent that it would authorize these powers both in peacetime and newly created SBA,21 with the intent that it would authorize these powers both in peacetime and
wartime.22 wartime.22
When the When the ~~Smal~~ Small Business Act of 1958 transformed the SBA into a permanent agency, this Business Act of 1958 transformed the SBA into a permanent agency, this
subcontracting authority was included in Section 8(a) of the act.23 At its inception, the SBA’s subcontracting authority was included in Section 8(a) of the act.23 At its inception, the SBA’s
subcontracting authority was not limited, as it is today, to subcontracting authority was not limited, as it is today, to ~~smal~~ small businesses owned and controlled businesses owned and controlled
by by ~~social y and economical y~~socially and economically disadvantaged individuals disadvantaged individuals and specified disadvantaged groups and specified disadvantaged groups
(collectively referred to as (collectively referred to as ~~smal~~ small disadvantaged businesses, SDBs).24 disadvantaged businesses, SDBs).24 ~~Initial y~~Initially, the SBA reportedly , the SBA reportedly
rarely used this subcontracting authority, focusing instead upon its loan and other programs.25rarely used this subcontracting authority, focusing instead upon its loan and other programs.25

19 P.L. 77-603, the Small Business19 P.L. 77-603, the Small Business Mobilization ActMobilization Act (June 11, 1942). (June 11, 1942).
20 P.L. 82-96, An Act 20 P.L. 82-96, An Act ~~T o~~To amend and extend the Defense Production Act of 1950 and the Housing and Rent Act of amend and extend the Defense Production Act of 1950 and the Housing and Rent Act of
1947, as amended1947, as amended (July 31, 1951). (July 31, 1951).
21 P.L. 83-163, Reconstruction Finance Corporation Liquidation Act 21 P.L. 83-163, Reconstruction Finance Corporation Liquidation Act (July 30, 1953). (July 30, 1953).
22 See22 See U.S.U.S. Congress, HouseCongress, House Committee on Banking and Currency, Committee on Banking and Currency, Small Business Act of 1953, report to accompany , report to accompany
H.R. 5141, 83rd Cong., 1st sess., May 28, 1953, H.Rept. 83-494 (Washington, DC: GPO, 1953), p. 2 (stating that the H.R. 5141, 83rd Cong., 1st sess., May 28, 1953, H.Rept. 83-494 (Washington, DC: GPO, 1953), p. 2 (stating that the
SBASBA ~~would~~ would “continue many of the functions of the [SDPA] in the present mobilization period and in addition would“continue many of the functions of the [SDPA] in the present mobilization period and in addition would be be
given powers and dutiesgiven powers and duties to encourage andto encourage and assist small-businessassist small-business enterprises in peacetime as wellenterprises in peacetime as well as in any future waras in any future war or or
mobilization period”). Also, see U.S.mobilization period”). Also, see U.S. Congress, Senate Committee on Banking and Currency, Congress, Senate Committee on Banking and Currency, Small Business Act, ,
report to accompany H.R. 7963, 85th Cong., 2nd sess., June 16, 1958, pp. 9, 10 (stating that the act would “report to accompany H.R. 7963, 85th Cong., 2nd sess., June 16, 1958, pp. 9, 10 (stating that the act would “ put the put the
procurement assistance program on a peacetime basis”). procurement assistance program on a peacetime basis”).
23 P.L. 85-536, as amended, §8(a)(1)-(2) (July 18, 1958). 23 P.L. 85-536, as amended, §8(a)(1)-(2) (July 18, 1958).
24 24 ~~T he~~The SBA’s SBA’s 8(a) Business8(a) Business Development Program eligibility wasDevelopment Program eligibility was expanded duringexpanded during the 1980s to include four the 1980s to include four
disadvantageddisadvantaged groups:groups: Community Development Corporations in 1981 (Community Development Corporations in 1981 ( P.L. 97-35, the Omnibus Budget P.L. 97-35, the Omnibus Budget
Reconciliation Act of 1981); Indian tribes and Alaska Native Corporations in Reconciliation Act of 1981); Indian tribes and Alaska Native Corporations in ~~19 85~~1985 (P.L. 99-272, the Consolidated (P.L. 99-272, the Consolidated
OmnibusOmnibus ~~Budget~~ Budget Reconciliation Act of 1985); and Native HawaiianReconciliation Act of 1985); and Native Hawaiian Organizations in 1988 (P.L. 100-656, Business Organizations in 1988 (P.L. 100-656, Business
Opportunity Development Reform Act of 1988). For further information and analysis of the 8(a) Business Opportunity Development Reform Act of 1988). For further information and analysis of the 8(a) Business
Development Program, see CRSDevelopment Program, see CRS Report R44844, Report R44844, SBA’s “8(a) Program ”: Overview, History, and Current Issues, by , by
Robert Jay Dilger.Robert Jay Dilger.
~~25 T homas~~ 25 Thomas Jefferson Hasty, III, “Minority Business Enterprise Development and the Small Business Jefferson Hasty, III, “Minority Business Enterprise Development and the Small Business Administration’s Administration’s
8(a) Program: Past, Present, and (Is 8(a) Program: Past, Present, and (Is ~~T here~~There a) Future?,” a) Future?,” Military Law Review, vol. 145 (Summer 1994), pp. 1, 8 , vol. 145 (Summer 1994), pp. 1, 8
(hereinafter Jefferson Hasty, III, “Minority Business Enterprise Development and the SBA’s(hereinafter Jefferson Hasty, III, “Minority Business Enterprise Development and the SBA’s 8(a) Program”). 8(a) Program”).
(“[B]ecause the SBA(“[B]ecause the SBA ~~believed~~ believed that the efforts to start and operate an 8(a) program would not be worthwhile in terms of that the efforts to start and operate an 8(a) program would not be worthwhile in terms of
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During the 1960s, President Lyndon B. Johnson created the Test Cities Program (PTCP), which During the 1960s, President Lyndon B. Johnson created the Test Cities Program (PTCP), which
involved a involved a ~~smal~~ small-scale use of the SBA’s authority under Section 8(a) to award contracts to -scale use of the SBA’s authority under Section 8(a) to award contracts to ~~smal~~
small businesses businesses ~~wil ing~~willing to locate in urban areas and hire unemployed individuals, largely African to locate in urban areas and hire unemployed individuals, largely African
Americans, or sponsor minority-owned businesses by providing capital or management Americans, or sponsor minority-owned businesses by providing capital or management
assistance.26 In 1970, under the Nixon Administration, the SBA issued the 8(a) program’s first assistance.26 In 1970, under the Nixon Administration, the SBA issued the 8(a) program’s first
regulations, articulating the SBA’s policy of using Section 8(a) to “assist regulations, articulating the SBA’s policy of using Section 8(a) to “assist ~~smal~~ small concerns owned concerns owned
by disadvantaged persons to become self-sufficient, viable businesses capable of competing by disadvantaged persons to become self-sufficient, viable businesses capable of competing
effectively in the market place.”27effectively in the market place.”27
In 1978, P.L. 95-507, an act to amend the In 1978, P.L. 95-507, an act to amend the ~~Smal~~ Small Business Act and the Business Act and the ~~Smal~~ Small Business Investment Business Investment
Act of 1958, provided the SBAAct of 1958, provided the SBA express statutory authority for its 8(a) Minority express statutory authority for its 8(a) Minority ~~Smal~~ Small Business Business
and Capital Ownership Development Contracting Program (now and Capital Ownership Development Contracting Program (now ~~cal ed~~called the 8(a) Business the 8(a) Business
Development Program and commonly referred to as the 8(a) program).28 Under the 1978 Development Program and commonly referred to as the 8(a) program).28 Under the 1978
amendments, the SBA can only subcontract under Section 8(a) with “amendments, the SBA can only subcontract under Section 8(a) with “~~social y and economical y~~socially and economically
disadvantaged disadvantaged ~~smal~~ small business concerns”;29 or businesses that are least 51% owned by one or more business concerns”;29 or businesses that are least 51% owned by one or more
~~social y and economical y~~socially and economically disadvantaged individuals disadvantaged individuals and whose management and daily and whose management and daily
operations are controlled by such individual(s).30operations are controlled by such individual(s).30
P.L. 95-507 also authorized federal procurement officers to let (send) contracts to the SBA when P.L. 95-507 also authorized federal procurement officers to let (send) contracts to the SBA when
the SBAthe SBA certifies to the officer that it can award the contract to competent and responsible certifies to the officer that it can award the contract to competent and responsible ~~smal~~
small businesses owned and controlled by businesses owned and controlled by ~~social y and economical y~~socially and economically disadvantaged individuals. As a disadvantaged individuals. As a
result, the SBA’s 8(a) program became a federal government-wide procurement program. result, the SBA’s 8(a) program became a federal government-wide procurement program.
During the 1980s, SBA 8(a) program eligibility During the 1980s, SBA 8(a) program eligibility was expanded to include four disadvantaged was expanded to include four disadvantaged
groups:groups:
 Community Development Corporations in 1981 (P.L. 97-35, the Omnibus Budget  Community Development Corporations in 1981 (P.L. 97-35, the Omnibus Budget
Reconciliation Act of 1981), Reconciliation Act of 1981),
 Indian tribes and Alaska Native Corporations in 1985 (P.L. 99-272, the  Indian tribes and Alaska Native Corporations in 1985 (P.L. 99-272, the
Consolidated Omnibus Budget Reconciliation Act of 1985), and Consolidated Omnibus Budget Reconciliation Act of 1985), and
 Native  Native ~~Hawai an~~Hawaiian Organizations in 1988 (P.L. 100-656, the Business Opportunity Organizations in 1988 (P.L. 100-656, the Business Opportunity
Development Reform Act of 1988). Development Reform Act of 1988).
Federal procurement laws continue to refer to Federal procurement laws continue to refer to ~~smal~~ small businesses owned and controlled by businesses owned and controlled by ~~social y~~
~~and economical y~~socially and economically disadvantaged individuals. However, these four disadvantaged groups are disadvantaged individuals. However, these four disadvantaged groups are

developing small business,developing small business, the SBA’sthe SBA’s power to contract with other government agencies essentially went unused.power to contract with other government agencies essentially went unused. ~~T he~~ The
program actually lay dormant for about fifteen years until the racial atmosphere of the 1960s provided the impetus toprogram actually lay dormant for about fifteen years until the racial atmosphere of the 1960s provided the impetus to
wrestle the SBA’swrestle the SBA’s 8(a) authority from its dormant state.”) 8(a) authority from its dormant state.”)
26 Jefferson Hasty, III, “Minority Business Enterprise Development and the SBA’s 8(a) Program,”26 Jefferson Hasty, III, “Minority Business Enterprise Development and the SBA’s 8(a) Program,” pp. 11, 12. pp. 11, 12.
27 13 C.F.R. §124.8-1(b) (1970). 27 13 C.F.R. §124.8-1(b) (1970).
28 P.L. 95-507, 28 P.L. 95-507, ~~T o~~To amend the Small Business amend the Small Business Act andAct and the Small Businessthe Small Business Investment Act of 1958 (October 24, 1978). Investment Act of 1958 (October 24, 1978).
~~T he~~The Clinton Administration changed the program’s name from the 8(a) Minority Small Business Clinton Administration changed the program’s name from the 8(a) Minority Small Business and Capital and Capital
Ownership Development Program to the 8(a) Business Development Program in 1988 “Ownership Development Program to the 8(a) Business Development Program in 1988 “ to emphasize that individuals to emphasize that individuals
need not be members of minority groups and to stress the importance of assisting participating firms in their overall need not be members of minority groups and to stress the importance of assisting participating firms in their overall
~~business~~ business development.” See SBA,development.” See SBA, “Small Business“Small Business ~~Size~~ Size Regulations:Regulations: 8(a) Business8(a) Business Development/Small Disadvantaged Development/Small Disadvantaged
BusinessBusiness Status Determinations; Rules of Procedure Governing CasesStatus Determinations; Rules of Procedure Governing Cases Before the Office of HearingsBefore the Office of Hearings and Appeals,” 63 and Appeals,” 63
Federal Register 35727, June 30, 1998. 35727, June 30, 1998.
29 P.L. 95-507, 29 P.L. 95-507, ~~T o~~To amend the Small Business amend the Small Business Act andAct and the Small Businessthe Small Business Investment Act of 1958Investment Act of 1958 ; and 15 U.S.C. ; and 15 U.S.C.
§637(a)(4)(A)-(B). §637(a)(4)(A)-(B).
30 P.L. 95-507, 30 P.L. 95-507, ~~T o~~To amend the Small Business amend the Small Business Act andAct and the Small Businessthe Small Business Investment Act of 1958Investment Act of 1958 ; and 15 U.S.C. ; and 15 U.S.C.
§637(a)(4)(A)-(B). §637(a)(4)(A)-(B).
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defined by law as defined by law as ~~social y and economical y disadvantaged smal~~ socially and economically disadvantaged small business concerns.31 As a result, business concerns.31 As a result,
GSA, which collects and reports federal procurement data used by the SBA, includes contracts GSA, which collects and reports federal procurement data used by the SBA, includes contracts
awarded to these four disadvantaged groups when reporting contract awards for meeting federal awarded to these four disadvantaged groups when reporting contract awards for meeting federal
procurement goals for procurement goals for ~~smal~~ small businesses owned and controlled by businesses owned and controlled by ~~social y and economical y~~
socially and economically disadvantaged individualsdisadvantaged individuals (now (now ~~cal ed~~called the SDB procurement goal). the SDB procurement goal).
Government-Wide Small Business Procurement Goals and Set-
Aside and Sole Source Authority32
In 1978, P.L. 95-507 indicated that “it is the policy of the United States that In 1978, P.L. 95-507 indicated that “it is the policy of the United States that ~~smal~~ small business business
concerns and concerns and ~~smal~~ small business concerns owned and controlled by business concerns owned and controlled by ~~social y and economical y~~socially and economically
disadvantaged individualsdisadvantaged individuals ~~shal~~ shall have the maximum practicable opportunity to participate in the have the maximum practicable opportunity to participate in the
performance of contracts let by any Federal agency.”33 The act requires federal agency heads to performance of contracts let by any Federal agency.”33 The act requires federal agency heads to
establish federal procurement goals establish federal procurement goals ~~annual y~~annually, in consultation with the SBA, “that , in consultation with the SBA, “that ~~realistical y~~
realistically reflect the potential of reflect the potential of ~~smal~~ small business concerns and business concerns and ~~smal~~ small business concerns owned and controlled business concerns owned and controlled
by by ~~social y and economical y~~socially and economically disadvantaged individuals” disadvantaged individuals” to participate in federal procurement.34 to participate in federal procurement.34
The act required each agency, at the conclusion of each fiscal year, to report its progress in The act required each agency, at the conclusion of each fiscal year, to report its progress in
meeting these goals to the SBA, and the SBAmeeting these goals to the SBA, and the SBA was required to submit this information to the was required to submit this information to the
House and Senate House and Senate ~~Smal~~ Small Business Committees. In 2013, this reporting requirement was expanded Business Committees. In 2013, this reporting requirement was expanded
to require the SBA to submit a report on federal agency progress in meeting to require the SBA to submit a report on federal agency progress in meeting ~~smal~~ small business business
procurement goals to the President and Congress and to make the report (now procurement goals to the President and Congress and to make the report (now ~~cal ed the Smal~~
called the Small Business Procurement Scorecard) available on a public website.35 Business Procurement Scorecard) available on a public website.35
As mentioned, federal government-wide procurement goals have been established for As mentioned, federal government-wide procurement goals have been established for
  ~~smal businesses general y~~small businesses generally (23%), (23%),
 SDBs (which include SBA-certified SDBs, self-certified SDBs, 8(a) Business  SDBs (which include SBA-certified SDBs, self-certified SDBs, 8(a) Business
Development Program participants, and 8(a) Business Development Program Development Program participants, and 8(a) Business Development Program
jointjoint ventures) (5%), ventures) (5%),
 WOSBs (5%),  WOSBs (5%),
 HUBZone HUBZone ~~smal~~ small businesses (3%), and businesses (3%), and
 SDVOSBs (3%).  SDVOSBs (3%).
These government-wide goals and the percentage of contracts awarded to These government-wide goals and the percentage of contracts awarded to ~~smal~~ small businesses, by businesses, by
type, in FY2020 are provided itype, in FY2020 are provided in Table 1. The percentage of federal The percentage of federal ~~smal~~ small business eligible business eligible
contract dollars awarded to contract dollars awarded to ~~smal~~ small businesses, including the required double counting of specific businesses, including the required double counting of specific
types of contracts since FY2019, is used to determine if the goal has been achieved (see the types of contracts since FY2019, is used to determine if the goal has been achieved (see the
second and third columns). second and third columns).

~~31 15 U.S.C.~~ 31 15 U.S.C. §637(a)(4)(A)-(B). §637(a)(4)(A)-(B).
32 For an overview of small business32 For an overview of small business contracting programs, see CRScontracting programs, see CRS Report R45576, Report R45576, An Overview of Small Business
Contracting, by Robert Jay Dilger. , by Robert Jay Dilger.
33 P.L. 95-507, a bill to amend the Small Business 33 P.L. 95-507, a bill to amend the Small Business Act and the SmallAct and the Small ~~Business~~ Business Investment Act of 1958; and 15 U.S.C. Investment Act of 1958; and 15 U.S.C.
§644(g)(1)(B). §644(g)(1)(B).
34 P.L. 95-507, a bill to amend the Small Business 34 P.L. 95-507, a bill to amend the Small Business Act and the SmallAct and the Small ~~Business~~ Business Investment Act of 1958; and 15 U.S.C. Investment Act of 1958; and 15 U.S.C.
§644(g)(2). §644(g)(2).
35 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013; and 15 U.S.C.35 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013; and 15 U.S.C. §644(h)(2). §644(h)(2).
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As As ~~wil~~ will be discussed, federal agencies may award sole source contracts to and set aside contracts be discussed, federal agencies may award sole source contracts to and set aside contracts
for bidding by for bidding by ~~smal~~ small businesses or specific types of businesses or specific types of ~~smal~~ small businesses to help them meet these businesses to help them meet these
goals.goals.
Table 1. Federal Contracting Goals and Percentage of FY2020 Federal Contract
Dollars Awarded to Small Businesses, by Type
% of Small
Business Eligible
% of Small
Federal
Business Eligible
Contracts
Federal
% of All Federal
(including
Contracts
Contracts
required double
(excluding
(excluding
counting, see
required double
required double
Business Type
Federal Goal
Table notes)
counting)
counting)
~~Smal~~ Small Businesses Businesses
23.0% 23.0%
26.02% 26.02%
25.42% 25.42%
21.89% 21.89%
~~Smal~~ Small Disadvantaged Disadvantaged
5.0% 5.0%
10.54% 10.54%
10.39% 10.39%
9.08% 9.08%
Businesses Businesses
Women-Owned Women-Owned ~~Smal~~
Small 5.0% 5.0%
4.85% 4.85%
4.71% 4.71%
4.10% 4.10%
Businesses Businesses
HUBZone HUBZone ~~Smal~~
Small 3.0% 3.0%
2.44% 2.44%
2.39% 2.39%
2.04% 2.04%
Businesses Businesses
Service-Disabled Service-Disabled
3.0% 3.0%
4.28% 4.28%
4.23% 4.23%
3.92% 3.92%
Veteran-Owned Veteran-Owned ~~Smal~~
Small Businesses Businesses
Sources: U.S. U.S. ~~Smal~~ Small Business AdministrationBusiness Administration (SBA), “Government-Wide(SBA), “Government-Wide Performance,Performance, FY2020 SmalFY2020 Smal Business Business
Procurement Scorecard,”Procurement Scorecard,” at https://www.sba.gov/document/support-at https://www.sba.gov/document/support-~~smal~~ small-business-procurement-scorecard--business-procurement-scorecard-
overview;overview; and data generated using U.S.and data generated using U.S. General ServiceGeneral Service Administration,Administration, “Sam.Gov Data Bank: Ad Hoc Report,” “Sam.Gov Data Bank: Ad Hoc Report,”
July 31, 2021, at https://sam.gov/reports/awards/adhocJuly 31, 2021, at https://sam.gov/reports/awards/adhoc ~~(al reported~~ (all reported contract dol ars). contract dol ars).
Notes: In accordance with federal In accordance with federal law, the SBAlaw, the SBA provided double credit,provided double credit, for scorecardfor scorecard purposes only, for prime purposes only, for prime
contracts awarded in disastercontracts awarded in disaster areas that are awarded as a local set aside and a areas that are awarded as a local set aside and a ~~smal~~ small business or other business or other
socioeconomicsocioeconomic set aside when the vendor state is the sameset aside when the vendor state is the same as the place of performanceas the place of performance (see 15 U.S.C.(see 15 U.S.C. §644(f)) §644(f))
and for primeand for prime contracts awarded to businesses in Puerto Rico and covered territoriescontracts awarded to businesses in Puerto Rico and covered territories (see 15 U.S.C.(see 15 U.S.C. §644(x)(1)). §644(x)(1)).
The Department of Energy’s (DOE’s) first-tierThe Department of Energy’s (DOE’s) first-tier subcontract awards are also included as required by P.L.subcontract awards are also included as required by P.L. 113-76, 113-76,
the Consolidated Appropriations Act, 2014 (§318). the Consolidated Appropriations Act, 2014 (§318).
The FY2020 The FY2020 ~~Smal Business~~ Small Business Procurement Scorecard was made available on July 30, 2021, and reflectsProcurement Scorecard was made available on July 30, 2021, and reflects contracting contracting
data as of February 22, 2021. data as of February 22, 2021. ~~Smal~~ Small business eligiblebusiness eligible contracts totaled $559.981 bil ion in FY2020 and $145.8 contracts totaled $559.981 bil ion in FY2020 and $145.8
bil ion was awarded to bil ion was awarded to ~~smal~~ small businesses ($142.4 without double counting), $59.0 bil ion to businesses ($142.4 without double counting), $59.0 bil ion to ~~smal~~ small disadvantaged disadvantaged
businessesbusinesses ($58.2 bil ion without double counting), $27.1 bil ion to women($58.2 bil ion without double counting), $27.1 bil ion to women ~~-owned smal businesses~~ -owned small businesses ($26.4 bil ion ($26.4 bil ion
without double counting), $13.6 bil ion to SBA-certifiedwithout double counting), $13.6 bil ion to SBA-certified ~~HUBZone smal businesses~~ HUBZone small businesses ($13.4 bil ion without double ($13.4 bil ion without double
counting), and $23.9 bil ioncounting), and $23.9 bil ion to service-disabledto service-disabled veteran-owned veteran-owned ~~smal~~ small businesses ($23.7 bil ion without double businesses ($23.7 bil ion without double
counting). DOE’s first-tiercounting). DOE’s first-tier subcontract awards in FY2020 were $3.36 bil ion to subcontract awards in FY2020 were $3.36 bil ion to ~~smal~~ small businesses,businesses, $0.81$0.81 bil ion to bil ion to
~~smal~~ small disadvantaged businesses,disadvantaged businesses, $0.76 bil ion$0.76 bil ion ~~to smal~~ to small women-owned businesses,women-owned businesses, $0.24 bil ion$0.24 bil ion to SBA-certified to SBA-certified
HUBZone HUBZone ~~smal~~ small businesses,businesses, and $0.23 bil ion to service-disabledand $0.23 bil ion to service-disabled veteran-owned veteran-owned ~~smal~~ small businesses. businesses.
Small Businesses Generally and Small Disadvantaged Businesses36
P.L. 100-656, the Business Opportunity Development Reform Act of 1988, established a federal P.L. 100-656, the Business Opportunity Development Reform Act of 1988, established a federal
government-wide goal of providing not less than 20% of the total value of government-wide goal of providing not less than 20% of the total value of al all prime contract prime contract

36 For additional information and analysis of the SDB36 For additional information and analysis of the SDB procurement goal and the 8(a) Businessprocurement goal and the 8(a) Business Development Program, Development Program,
see CRSsee CRS Report R44844, Report R44844, SBA’s “8(a) Program ”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
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awards for each fiscal year to awards for each fiscal year to ~~smal businesses general y~~small businesses generally (increased to not less than 23% by P.L. (increased to not less than 23% by P.L.
105-135) and not less than 5% of the total value of 105-135) and not less than 5% of the total value of al all prime contract and subcontract awards for prime contract and subcontract awards for
each fiscal year to each fiscal year to ~~smal~~ small businesses owned and controlled by businesses owned and controlled by ~~social y and economical y~~socially and economically
disadvantaged individualsdisadvantaged individuals (now (now ~~cal ed~~called the SDB procurement goal).37 These government-wide the SDB procurement goal).37 These government-wide
goals became the SBA’s benchmark, and often its minimum floor, when negotiating procurement goals became the SBA’s benchmark, and often its minimum floor, when negotiating procurement
goals with individualgoals with individual federal agencies each year.federal agencies each year.
P.L. 100-656 also authorized the SBA P.L. 100-656 also authorized the SBA to set aside contracts for bidding by 8(a) program-eligible to set aside contracts for bidding by 8(a) program-eligible
participants exclusively if (1) there is a reasonable expectation that at least two eligibleparticipants exclusively if (1) there is a reasonable expectation that at least two eligible 8(a) 8(a)
program participants program participants ~~wil~~ will submit offers that can be made at a fair market price; and (2) the submit offers that can be made at a fair market price; and (2) the
contract’s anticipated total value, including any options, contract’s anticipated total value, including any options, ~~general y~~generally exceeds $5.0 exceeds $5.0 ~~mil ion~~million for for
manufacturing contracts (now $7.5 manufacturing contracts (now $7.5 ~~mil ion~~million) and $3.0 ) and $3.0 ~~mil ion for al~~ million for all other acquisitions (now $4.5 other acquisitions (now $4.5
~~mil ion~~million). The act also authorized the SBA). The act also authorized the SBA to award sole source contracts to any 8(a) program-to award sole source contracts to any 8(a) program-
eligibleeligible ~~smal~~ small business recommended by a federal procuring agency offering the contract business recommended by a federal procuring agency offering the contract
opportunity when (1) the opportunity when (1) the ~~smal~~ small business is determined to be a responsible contractor with respect business is determined to be a responsible contractor with respect
to performance of the contract opportunity; (2) the award is consistent with the 8(a) program to performance of the contract opportunity; (2) the award is consistent with the 8(a) program
participant’s business plan; and (3) the contract’s anticipated total value, including any options, participant’s business plan; and (3) the contract’s anticipated total value, including any options,
does not exceed the set-aside thresholds (does not exceed the set-aside thresholds (~~initial y $5.0 mil ion~~initially $5.0 million for manufacturing contracts [now for manufacturing contracts [now
$7.5 $7.5 ~~mil ion~~million] and $3.0 ] and $3.0 ~~mil ion for al~~ million for all other acquisitions [now $4.5 other acquisitions [now $4.5 ~~mil ion~~million]).38 ]).38
P.L. 100-656 authorizes the SBA P.L. 100-656 authorizes the SBA to enter into to enter into al all types of contracts with other federal agencies. types of contracts with other federal agencies.
This This ~~al ows~~allows the SBA the SBA to enter into partnership agreements and memoranda of understanding with to enter into partnership agreements and memoranda of understanding with
other federal agencies to delegate its 8(a) program authority, including the authority to set aside other federal agencies to delegate its 8(a) program authority, including the authority to set aside
contracts for and award sole source contracts to 8(a) program-eligible contracts for and award sole source contracts to 8(a) program-eligible ~~smal~~ small businesses, to these businesses, to these
agencies.39agencies.39
As shown i As shown in Table 1, in FY2020, the federal government exceeded the 23% government-wide in FY2020, the federal government exceeded the 23% government-wide
procurement goal for procurement goal for ~~smal businesses general y~~small businesses generally and the 5% government-wide goal for SDBs. and the 5% government-wide goal for SDBs.
Women-Owned Small Businesses40
P.L. 103-355, the Federal Acquisition Streamlining Act of 1994, established a WOSB federal P.L. 103-355, the Federal Acquisition Streamlining Act of 1994, established a WOSB federal
government-wide procurement goal of not less than 5% of the total value of government-wide procurement goal of not less than 5% of the total value of al all prime contract prime contract
and subcontract awards for each fiscal year. In 2000, federal agencies were authorized to set aside and subcontract awards for each fiscal year. In 2000, federal agencies were authorized to set aside
contracts for WOSBs (then capped at $5.0 contracts for WOSBs (then capped at $5.0 ~~mil ion~~million for manufacturing contracts and $3.0 for manufacturing contracts and $3.0 ~~mil ion~~million
for for al all other acquisitions, including any options) to help federal agencies meet the 5% goal.41 In other acquisitions, including any options) to help federal agencies meet the 5% goal.41 In
2013, the set-aside caps were removed.42 In 2014, to help federal agencies meet the 5% 2013, the set-aside caps were removed.42 In 2014, to help federal agencies meet the 5%
procurement goal, federal agencies were authorized to award WOSBs sole source contracts when procurement goal, federal agencies were authorized to award WOSBs sole source contracts when

the contract’s anticipated total value, including any options, does not exceed $5.0 million for 37 P.L. 105-135, the HUBZone Act of 1997—37 P.L. 105-135, the HUBZone Act of 1997—~~T itle~~Title VI of the Small Business VI of the Small Business Reauthorization Act of 1997. 38 FAR §19.805-1. 39 See 13 C.F.R. §124.501. For example, see SBA and U.S. Department of Defense, “Partnership Agreement between the U.S. Small Business Administration and the U.S. ~~Reauthorization Act of 1997.~~
~~38 Sole source award limits are adjusted for inflation on October 1 of each year that is evenly divisible by five. T he next~~
~~adjustment for inflation will take place on October 1, 2025. See P.L. 111-350, T o enact certain laws relating to public~~
~~contracts as title 41, United States Code, “ Public Contracts” (as amended); 41 U.S.C. §1908(c)(2); and FAR §19.805-1.~~
~~39 See 13 C.F.R. §124.501. For example, see SBA and U.S. Department o f Defense, “Partnership Agreement between~~
~~the U.S. Small Business Administration and the U.S.~~ Department of Defense,” January 7, 2013, at Department of Defense,” January 7, 2013, at
https://business.defense.gov/Portals/57/Documents/dod-sba-8a-partnership.pdf?ver=2020-03-11-131448-290. https://business.defense.gov/Portals/57/Documents/dod-sba-8a-partnership.pdf?ver=2020-03-11-131448-290.
40 For additional information and analysis of the WOSB40 For additional information and analysis of the WOSB federal contracting program, see CRSfederal contracting program, see CRS Report R46322, Report R46322, SBA
~~Wom en-Owned Sm all~~Women-Owned Small Business Federal Contracting Program , by Robert Jay Dilger. , by Robert Jay Dilger.
41 H.R. 5654, the Small Business 41 H.R. 5654, the Small Business Reauthorization Act of 2000, incorporated by reference in P.L. 106-554, the Reauthorization Act of 2000, incorporated by reference in P.L. 106-554, the
Consolidated Appropriations Act, 2001; and 15 U.S.C.Consolidated Appropriations Act, 2001; and 15 U.S.C. §637(m)(2). §637(m)(2).
42 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013; and 15 U.S.C. 42 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013; and 15 U.S.C. §637(m)(2). §637(m)(2).
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~~the contract’s anticipated total value, including any options, does not exceed $5.0 mil ion for~~
manufacturing contracts (now $7.0 manufacturing contracts (now $7.0 ~~mil ion~~million) and $3.0 ) and $3.0 ~~mil ion for al~~ million for all other acquisitions (now $4.5 other acquisitions (now $4.5
~~mil ion~~million).43 ).43
As shown i As shown in Table 1, in FY2020, the federal government did not met the 5% government-wide in FY2020, the federal government did not met the 5% government-wide
procurement goal for WOSBs. procurement goal for WOSBs.
HUBZone Small Businesses44
In 1997, P.L. 105-135 established a federal government-wide goal of providing not less than 3% In 1997, P.L. 105-135 established a federal government-wide goal of providing not less than 3%
of the total value of of the total value of al all prime contract awards for each fiscal year (phased-in over five years) to prime contract awards for each fiscal year (phased-in over five years) to
~~smal~~ small businesses located within a HUBZone.45businesses located within a HUBZone.45 P.L. 111-240, the P.L. 111-240, the ~~Smal~~ Small Business Jobs Act, added Business Jobs Act, added
the total value of subcontracts to the HUBZone government-wide procurement goal, bringing the the total value of subcontracts to the HUBZone government-wide procurement goal, bringing the
goal into conformity with other goal into conformity with other ~~smal~~ small business subtype procurement goals.business subtype procurement goals.
To help federal agencies meet the 3% procurement goal, P.L. 105-135 also authorized them to set To help federal agencies meet the 3% procurement goal, P.L. 105-135 also authorized them to set
aside contracts for HUBZone small businesses and to award these businesses sole source aside contracts for HUBZone small businesses and to award these businesses sole source
contracts when the contract’s anticipated total value, including any options, does not exceed $5.0 contracts when the contract’s anticipated total value, including any options, does not exceed $5.0
~~mil ion~~ million for manufacturing contracts (now $7.5 for manufacturing contracts (now $7.5 ~~mil ion~~million) and $3.0 ) and $3.0 ~~mil ion for al~~ million for all other acquisitions other acquisitions
(now $4.5 (now $4.5 ~~mil ion~~million).46 ).46
In addition, when a contract is awarded on the basis of full and open competition and price is a In addition, when a contract is awarded on the basis of full and open competition and price is a
selection factor, HUBZone selection factor, HUBZone ~~smal~~ small businesses are businesses are ~~general y~~generally provided up to a 10% price evaluation provided up to a 10% price evaluation
preference over other businesses (other than another preference over other businesses (other than another ~~smal~~ small business). business).
As shown i As shown in Table 1, in FY2020, the federal government did not met the 3% government-wide in FY2020, the federal government did not met the 3% government-wide
goal for HUBZonegoal for HUBZone ~~smal~~ small businesses. businesses.
SDVOSBs’ Government-Wide Procurement Goal
P.L. 105-135 also required the SBA P.L. 105-135 also required the SBA to study and submit to the House and Senate to study and submit to the House and Senate ~~Smal~~ Small Business Business
Committees a final report within nine months of enactment. The report was to document Committees a final report within nine months of enactment. The report was to document
SDVOSBSDVOSB needs, the availabilityneeds, the availability and use of SBA programs by SDVOSBs, the percentage and and use of SBA programs by SDVOSBs, the percentage and
dollar value of SDVOSB federal contracts, and suggested or recommended methods to improve dollar value of SDVOSB federal contracts, and suggested or recommended methods to improve
the SBA’s and other agencies’ programs to serve SDVOSBs’ needs.the SBA’s and other agencies’ programs to serve SDVOSBs’ needs.
Several veterans’ organizations, including the American Legion and the Association for Service Several veterans’ organizations, including the American Legion and the Association for Service
Disabled Veterans, supported this requirement. It was Disabled Veterans, supported this requirement. It was ~~general y~~generally viewed as a first step toward viewed as a first step toward
establishing a SDVOSB government-wide procurement goal and including SDVOSBs in the establishing a SDVOSB government-wide procurement goal and including SDVOSBs in the
SBA’s 8(a) Minority SBA’s 8(a) Minority ~~Smal~~ Small Business and Capital Ownership Development contracting program Business and Capital Ownership Development contracting program
(now (now ~~cal ed~~called the 8(a) Business Development Program). the 8(a) Business Development Program).
These organizations argued that P.L. 93-237, an act to amend the These organizations argued that P.L. 93-237, an act to amend the ~~Smal~~ Small Business Act [1974], Business Act [1974],
required the SBArequired the SBA to “give special consideration to veterans of the Armed Forces of the United to “give special consideration to veterans of the Armed Forces of the United

~~43 See~~ States and their survivors or dependents.” Given this statutory directive, these organizations 43 See P.L. 113-291, the Carl Levin and HowardP.L. 113-291, the Carl Levin and Howard P. “P. “ Buck” McKeon National Defense Authorization Act for Fiscal Buck” McKeon National Defense Authorization Act for Fiscal
Year 2015; 15 U.S.C. §637(m)(7)-(8); and FAR §19.1506. Year 2015; 15 U.S.C. §637(m)(7)-(8); and FAR §19.1506.
44 For additional information and analysis of the HUBZone program, see CRS44 For additional information and analysis of the HUBZone program, see CRS Report R41268, Report R41268, Small Business
~~Adm inistration~~Administration HUBZone Program , by Robert Jay Dilger. , by Robert Jay Dilger.
45 45 ~~T he~~The HUBZone contracting goal was HUBZone contracting goal was not less than 1% of the total value of all prime contract awards for FY1999, not not less than 1% of the total value of all prime contract awards for FY1999, not
lessless than 1.5% for FY2000, not less than 2% for FY2001, not less than 2.5% for FY2002, and not less than 3% for than 1.5% for FY2000, not less than 2% for FY2001, not less than 2.5% for FY2002, and not less than 3% for
FY2003 and each fiscal year thereafter. FY2003 and each fiscal year thereafter.
46 See 46 See P.L. 105-135, the Small BusinessP.L. 105-135, the Small Business Reauthorization Act of 1997; 15 U.S.C. §657a; and FARReauthorization Act of 1997; 15 U.S.C. §657a; and FAR §19.1306. §19.1306.
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~~States and their survivors or dependents.” Given this statutory directive, these organizations~~
argued that the SBA had erred in 1987 when it rejected a petition from John K. Lopez, chairman argued that the SBA had erred in 1987 when it rejected a petition from John K. Lopez, chairman
of the Association for Service Disabled Veterans, to include disabled veterans in its list of groups of the Association for Service Disabled Veterans, to include disabled veterans in its list of groups
presumed to be presumed to be ~~social y~~socially disadvantaged in the 8(a) program.47 disadvantaged in the 8(a) program.47
The SBA argued at that time that the 8(a) program was designed to address chronic and long-term The SBA argued at that time that the 8(a) program was designed to address chronic and long-term
social discrimination by providing contracting preferences for minorities. The SBA social discrimination by providing contracting preferences for minorities. The SBA
acknowledged that disabled veterans had experienced socioeconomic hardships but determined acknowledged that disabled veterans had experienced socioeconomic hardships but determined
that (1) these hardships were related to the disability itself, not prejudice against disabled that (1) these hardships were related to the disability itself, not prejudice against disabled
veterans; (2) these hardships did not meet the requirement of chronic and long-term social veterans; (2) these hardships did not meet the requirement of chronic and long-term social
discrimination because they did not predate the Vietnam era; (3) the petition did not make a discrimination because they did not predate the Vietnam era; (3) the petition did not make a
distinction between disabled veterans and disabled civilians (leading the SBA to conclude that the distinction between disabled veterans and disabled civilians (leading the SBA to conclude that the
appropriate protections sought were not to be found in the 8(a) program but through the appropriate protections sought were not to be found in the 8(a) program but through the
RehabilitationRehabilitation Act); and (4) P.L. 93-237’s special consideration for veterans’ provision neither Act); and (4) P.L. 93-237’s special consideration for veterans’ provision neither
necessitated mandatory eligibilitynecessitated mandatory eligibility for SBA programs or created a presumptive social disadvantage for SBA programs or created a presumptive social disadvantage
for disabled veterans.48 for disabled veterans.48
In December 1998, the SBA contracted with the University of Massachusetts at Boston to prepare In December 1998, the SBA contracted with the University of Massachusetts at Boston to prepare
the mandated report concerning the SBA’s assistance to disabled veterans. The law directed the the mandated report concerning the SBA’s assistance to disabled veterans. The law directed the
SBA to have the study completed and submitted to Congress by September 2, 1998. Due to SBA to have the study completed and submitted to Congress by September 2, 1998. Due to
various budgetary issues and difficulties in obtaining data, the study was not completed until various budgetary issues and difficulties in obtaining data, the study was not completed until
November 10, 2000.49 November 10, 2000.49
In the meantime, on July 2, 1998, the SBA In the meantime, on July 2, 1998, the SBA announced the formation of a Veterans Affairs Task announced the formation of a Veterans Affairs Task
Force for Entrepreneurship, composed of 39 representatives of veterans’ service organizations Force for Entrepreneurship, composed of 39 representatives of veterans’ service organizations
and advocacy groups, SBA officials, and SBA management and training resource partners, to and advocacy groups, SBA officials, and SBA management and training resource partners, to
recommend ways the agency can better serve VOSBs.50 The task force completed its work in recommend ways the agency can better serve VOSBs.50 The task force completed its work in
October 1998 and presented its final report to then-SBA Administrator Aida Alvarez on October 1998 and presented its final report to then-SBA Administrator Aida Alvarez on
November 9, 1998. November 9, 1998.
The task force issued several high priority recommendations, including that the SBA promote a The task force issued several high priority recommendations, including that the SBA promote a
10% government-wide procurement goal for VOSBs (including SDVOSBs) and recognize 10% government-wide procurement goal for VOSBs (including SDVOSBs) and recognize

~~47 U.S. Congress, House~~ 47 U.S. Congress, House Committee on Veterans’ Affairs, Subcommittee on Education, Committee on Veterans’ Affairs, Subcommittee on Education, ~~T raining~~Training, Employment and , Employment and
HousingHousing and Houseand House Committee on Small Business,Committee on Small Business, Subcommittee on Government Procurement, Subcommittee on Government Procurement, SBA ~~Program s~~Programs to
Assist ~~Veterans~~ Veterans in Readjusting to Civilian Life, joint, joint hearing, 104th Cong., 2nd sess., Julyhearing, 104th Cong., 2nd sess., July 31, 1996, SBC31, 1996, SBC ~~Serial~~ Serial No. 104No. 104 --
91 and VAC91 and VAC ~~Serial~~ Serial No. 104-28, pp. 4-15. For additional information concerning the SBA’s administrative decisions on No. 104-28, pp. 4-15. For additional information concerning the SBA’s administrative decisions on
groups seekinggroups seeking to be presumed socially disadvantaged,to be presumed socially disadvantaged, see Georgesee George ~~R. LaNo ue~~ R. LaNoue and John C. Sullivan, and John C. Sullivan, “ “Presumptions for Presumptions for
Preferences: Preferences: ~~T he~~The Small Business Small Business Administration’s Decisions on GroupsAdministration’s Decisions on Groups Entitled to Affirmative Action,” Entitled to Affirmative Action,” Journal of
Policy History, vol. 6, no. 4 (1994), at https://www.cambridge.org/core/journals/journal-of-policy-history/article/, vol. 6, no. 4 (1994), at https://www.cambridge.org/core/journals/journal-of-policy-history/article/
presumptions-for-preferences-the-small-business-administrations-decisions-on-groups-entitled-to-affirmative-action/presumptions-for-preferences-the-small-business-administrations-decisions-on-groups-entitled-to-affirmative-action/
99AFFC9D3FF1C1F1D520D9D3600B1E3299AFFC9D3FF1C1F1D520D9D3600B1E32 (hereinafter LaNoue and Sullivan,(hereinafter LaNoue and Sullivan, “ “Presumptions for Preferences: Presumptions for Preferences: ~~T he~~The
SBA’sSBA’s Decisions on GroupsDecisions on Groups ~~Entitled t o~~ Entitled to Affirmative Action”). Affirmative Action”).
48 LaNoue and Sullivan,48 LaNoue and Sullivan, “Presumptions for Preferences: “Presumptions for Preferences: ~~T he~~The SBA’s Decisions on Groups SBA’s Decisions on Groups Entitled to Affirmative Entitled to Affirmative
Action,” pp. 454, 455. Action,” pp. 454, 455.
49 U.S.49 U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, The Implementation of P.L. 106-50P.L. 106-50, the Veterans
Entrepreneurship and ~~Sm all Business Developm ent~~Small Business Development Act of 1999 , hearing, 106th Cong., 2nd sess., March 14, 2000, Serial , hearing, 106th Cong., 2nd sess., March 14, 2000, Serial
No. 106-46 (Washington, DC: GPO, 2000), pp. 7, 8, 27, 47; and Paul R. Camacho, “No. 106-46 (Washington, DC: GPO, 2000), pp. 7, 8, 27, 47; and Paul R. Camacho, “ Phase IV, Final Report: Phase IV, Final Report: ~~T he~~The Status Status
and Needsand Needs ~~of Small Businesses Owned~~ of Small Businesses Owned and Controlled by Disabledand Controlled by Disabled Veterans,” William Joiner Center for the StudyVeterans,” William Joiner Center for the Study of of
War and SocialWar and Social Consequences,Consequences, University of Massachusetts at Boston, November 10, 2000University of Massachusetts at Boston, November 10, 2000 , at , at
https://scholarworks.umb.edu/cgi/viewcontent.cgi?article=1000&context=joinercenter_pubs. https://scholarworks.umb.edu/cgi/viewcontent.cgi?article=1000&context=joinercenter_pubs.
50 U.S. 50 U.S. Congress, HouseCongress, House Committee on Veterans’ Affairs, Committee on Veterans’ Affairs, 1998 National Convention of the Disabled American
Veterans,, committee print, prepared by communication from the Executive Secretary of the Disabled American committee print, prepared by communication from the Executive Secretary of the Disabled American
Veterans, 105th Cong., 2nd sess., December 18, 1999, H.Doc. 105Veterans, 105th Cong., 2nd sess., December 18, 1999, H.Doc. 105 -353 (Washington, DC: GPO, 1999), p. 129. -353 (Washington, DC: GPO, 1999), p. 129.
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SDVOSBs as SDVOSBs as ~~social y and economical y~~socially and economically disadvantaged (making them eligible disadvantaged (making them eligible to participate in the to participate in the
8(a) program).51 8(a) program).51
Citing the task force’s recommendations and hearing testimony provided by SDVOSB advocates, Citing the task force’s recommendations and hearing testimony provided by SDVOSB advocates,
the sponsors of H.R. 1568, the Veterans Entrepreneurship and the sponsors of H.R. 1568, the Veterans Entrepreneurship and ~~Smal~~ Small Business Development Act Business Development Act
of 1999, included a provision establishing a government-wide SDVOSB procurement goal of not of 1999, included a provision establishing a government-wide SDVOSB procurement goal of not
less than 5% of the total value of less than 5% of the total value of al all prime contract and subcontract awards for each fiscal year. prime contract and subcontract awards for each fiscal year.
The House Committee on The House Committee on ~~Smal~~ Small Business reported the Business reported the ~~bil~~ bill on June 29, 1999, and the House on June 29, 1999, and the House
passed the passed the ~~bil~~ bill by voice vote that same day. by voice vote that same day.
During congressional deliberations, the lack of data collected on veteran procurement made it During congressional deliberations, the lack of data collected on veteran procurement made it
difficult to determine an appropriate procurement threshold for SDVOSBs. The House difficult to determine an appropriate procurement threshold for SDVOSBs. The House ~~bil~~ bill started started
with a not less than 5% procurement goal primarily because that was the goal provided for with a not less than 5% procurement goal primarily because that was the goal provided for
WOSBs.52 The WOSBs.52 The ~~bil~~ bill’s sponsors argued on the House floor that the 5% goal for SDVOSBs would ’s sponsors argued on the House floor that the 5% goal for SDVOSBs would
ensure that veterans, ensure that veterans, ~~especial y~~especially those fighting for their country, have equal opportunity to those fighting for their country, have equal opportunity to
government contracts.53 government contracts.53
The Senate Committee on The Senate Committee on ~~Smal~~ Small Business reported its version of the Business reported its version of the ~~bil~~ bill on August 4, 1999. It on August 4, 1999. It
included a government-wide SDVOSB procurement goal of not less than 3% of the total value of included a government-wide SDVOSB procurement goal of not less than 3% of the total value of
al all prime contract and subcontract awards for each fiscal year “as an incentive to Federal agencies prime contract and subcontract awards for each fiscal year “as an incentive to Federal agencies
to undertake a major effort to make their procurement activities more accessible to veterans who to undertake a major effort to make their procurement activities more accessible to veterans who
sacrificed their health and limbs for our Nation.”54 The following day, the Senate Committee on sacrificed their health and limbs for our Nation.”54 The following day, the Senate Committee on
~~Smal~~ Small Business’s version of the Business’s version of the ~~bil~~ bill was agreed to by unanimous consent in the Senate and was was agreed to by unanimous consent in the Senate and was
agreed to in the House without objection that same day. President agreed to in the House without objection that same day. President ~~Bil~~ Bill Clinton signed the Clinton signed the ~~bil~~ bill into into
law (P.L. 106-50, the Veterans Entrepreneurship and law (P.L. 106-50, the Veterans Entrepreneurship and ~~Smal~~ Small Business Development Act of 1999) Business Development Act of 1999)
on August 17, 1999. on August 17, 1999.
After the SDVOSB 3% government-wide procurement goal’s authorization, SDVOSB advocates After the SDVOSB 3% government-wide procurement goal’s authorization, SDVOSB advocates
directed their attention to providing federal agencies authority to award sole source contracts to directed their attention to providing federal agencies authority to award sole source contracts to
and set aside contracts for SDVOSBs. and set aside contracts for SDVOSBs.
SDVOSBs’ Sole Source and Set-Aside Authority
SDVOSB advocates, as SDVOSB advocates, as ~~wel~~ well as the George W. Bush Administration, supported efforts to provide as the George W. Bush Administration, supported efforts to provide
federal agencies authority to award sole source contracts to and set aside contracts for SDVOSBs federal agencies authority to award sole source contracts to and set aside contracts for SDVOSBs
to help them meet the 3% goal. As one Bush Administration official testified before Congress, to help them meet the 3% goal. As one Bush Administration official testified before Congress,

~~51 U.S. Congress, House~~ 51 U.S. Congress, House Committee on Small Business,Committee on Small Business, H.R. 1568H.R. 1568: The Veterans Entrepreneurship and Small Business
~~Developm ent~~Development Act of 1999, hearing, 106th Cong., 1st sess., June, hearing, 106th Cong., 1st sess., June 23, 1999, Serial No. 106-20 (Washington, DC: GPO, 23, 1999, Serial No. 106-20 (Washington, DC: GPO,
1999), pp. 167-187; and Rep. James 1999), pp. 167-187; and Rep. James ~~T alent, “~~ Talent, “Veterans Entrepreneurship and Small BusinessVeterans Entrepreneurship and Small Business Development Act of Development Act of
1999,” House floor debate, 1999,” House floor debate, Congressional Record, vol. 145, part 94 (June 29, 1999), p. H5022. , vol. 145, part 94 (June 29, 1999), p. H5022.
52 U.S.52 U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, H.R. 1568: The Veterans Entrepreneurship and Small Business
~~Developm ent~~Development Act of 1999, 106th Cong., 1st sess., June 23, 1999, Serial No. 106-20 (Washington, DC: GPO, 1999), pp. , 106th Cong., 1st sess., June 23, 1999, Serial No. 106-20 (Washington, DC: GPO, 1999), pp.
3, 10; U.S.3, 10; U.S. Congress,Congress, House Committee on Small Business,House Committee on Small Business, ~~Veterans~~ Veterans Entrepreneurship and ~~Sm all~~Small Business
~~Developm ent~~Development Act of 1999, report to accompany H.R. 1568, 106th Cong., 1st sess., June, report to accompany H.R. 1568, 106th Cong., 1st sess., June 29, 1999, H.Rept. 106-206, Part 29, 1999, H.Rept. 106-206, Part
1 (Washington, DC: GPO, 1999), pp. 14, 15; and U.S.1 (Washington, DC: GPO, 1999), pp. 14, 15; and U.S. Congress, Congress, ~~Sen ate~~Senate Committee on Small Business, Committee on Small Business, Veterans
Entrepreneurship and ~~Sm all Business Developm ent~~Small Business Development Act of 1999 , report to accompany H.R. 1568, 106th Cong., 1st sess., , report to accompany H.R. 1568, 106th Cong., 1st sess.,
~~August~~ August 9, 1999, S.Rept. 106-136 (Washington, DC: GPO, 1999), pp. 3, 10. 9, 1999, S.Rept. 106-136 (Washington, DC: GPO, 1999), pp. 3, 10.
53 Rep. James 53 Rep. James ~~T alent~~Talent, “Veterans Entrepreneurship and Small Business, “Veterans Entrepreneurship and Small Business Development Act of 1999,” House floor debate, Development Act of 1999,” House floor debate,
Congressional Record, vol. 145, part 94 (June 29, 1999), p. H5022. , vol. 145, part 94 (June 29, 1999), p. H5022.
54 U.S. 54 U.S. Congress, Senate Committee on Small Business,Congress, Senate Committee on Small Business, Veterans Entrepreneurship and Small Business Development
Act of 1999, report to accompany H.R. 1568, 106th Cong., 1st sess., August, report to accompany H.R. 1568, 106th Cong., 1st sess., August 4, 1999, S.Rept. 106-136 (Washington, DC: 4, 1999, S.Rept. 106-136 (Washington, DC:
GPO, 1999), p. 2. GPO, 1999), p. 2.
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“the Federal government has done an abysmal job of providing federal contracting opportunities “the Federal government has done an abysmal job of providing federal contracting opportunities
for our veterans” (for our veterans” (seesee Table 2).5555
During the 108th Congress, Representative Rick Renzi introduced H.R. 1460, the Veterans During the 108th Congress, Representative Rick Renzi introduced H.R. 1460, the Veterans
Entrepreneurship and Benefits Improvement Act of 2003. The Entrepreneurship and Benefits Improvement Act of 2003. The ~~bil~~ bill, among other provisions, , among other provisions,
would have authorized federal agencies to set aside contracts for and award sole source contracts would have authorized federal agencies to set aside contracts for and award sole source contracts
(capped at $5 (capped at $5 ~~mil ion~~ million for manufacturing contracts and $3 for manufacturing contracts and $3 ~~mil ion~~million for other contracts, including for other contracts, including
any options) to SDVOSBs as a means to help federal agencies meet the 3% goal. The any options) to SDVOSBs as a means to help federal agencies meet the 3% goal. The ~~bil~~ bill, as , as
amended, was reported by the House Committee on Veterans’ Affairs on June 5, 2003, and passed amended, was reported by the House Committee on Veterans’ Affairs on June 5, 2003, and passed
by the House unanimously on June 24, 2003. by the House unanimously on June 24, 2003.
In the meantime, H.R. 2297, the Veterans Benefits Act of 2003, introduced in the House on June In the meantime, H.R. 2297, the Veterans Benefits Act of 2003, introduced in the House on June
2, 2003, was reported by the House Committee on Veterans’ Affairs on July 15, 2003, and passed 2, 2003, was reported by the House Committee on Veterans’ Affairs on July 15, 2003, and passed
by the House unanimously on July 15, 2003. The House by the House unanimously on July 15, 2003. The House ~~bil~~ bill did not mention SDVOSB sole did not mention SDVOSB sole
source or set-aside authority. During Senate consideration, the source or set-aside authority. During Senate consideration, the ~~bil~~ bill was amended to include the was amended to include the
legislativelegislative language concerning SDVOSBs’ set-aside and sole source authority in H.R. 1460 (as language concerning SDVOSBs’ set-aside and sole source authority in H.R. 1460 (as
agreed to in the Senate on November 11, 2003). The House agreed to the Senate amendment agreed to in the Senate on November 11, 2003). The House agreed to the Senate amendment
(which included SDVOSB set-aside and sole source authority) by voice vote on November 20, (which included SDVOSB set-aside and sole source authority) by voice vote on November 20,
2003. President George W. Bush signed the 2003. President George W. Bush signed the ~~bil~~ bill into law (P.L. 108-183, the Veterans Benefits Act into law (P.L. 108-183, the Veterans Benefits Act
of 2003) on December 16, 2003. The act created what is currently known as the SDVOSB of 2003) on December 16, 2003. The act created what is currently known as the SDVOSB
Procurement Program. Procurement Program.
SDVOSB Contracting Data
As shown iAs shown in Table 2, the dollar amount of contracts awarded to SDVOSBs has the dollar amount of contracts awarded to SDVOSBs has ~~general y~~generally
increased from year-to-year, and the 3% government-wide SDVOSB procurement goal was met increased from year-to-year, and the 3% government-wide SDVOSB procurement goal was met
for the first time in FY2012 and in each fiscal year since then. The percentage of federal for the first time in FY2012 and in each fiscal year since then. The percentage of federal ~~smal~~
small business eligiblebusiness eligible contract dollars awarded to SDVOSBs, including the required double counting contract dollars awarded to SDVOSBs, including the required double counting
of specific types of contracts since FY2019, is used to determine if the goal has been achieved of specific types of contracts since FY2019, is used to determine if the goal has been achieved
(see the third column for FY2019 and FY2020 and the fourth column for previous years). (see the third column for FY2019 and FY2020 and the fourth column for previous years).

~~55 U.S. Congress, House~~ 55 U.S. Congress, House Committee on Veterans’ Affairs, H.R. 1460Committee on Veterans’ Affairs, H.R. 1460, the Veterans Entrepreneurship Act of 2003; H.R.
1712, the Veterans Federal ~~Procurem ent~~Procurement Opportunity Act of 2003; and H.R. 1716, the Veterans Earn and Learn Act , ,
hearing, 108th Cong., 1st sess.,hearing, 108th Cong., 1st sess., April 30, 2003, Serial No. 108-10 (Washington, DC: GPO, 2003), pp. 33, 34; and U.S. April 30, 2003, Serial No. 108-10 (Washington, DC: GPO, 2003), pp. 33, 34; and U.S.
Congress, HouseCongress, House Committee on Veterans’ Affairs, Committee on Veterans’ Affairs, Veterans Entrepreneurship and Benefits Improvement Act of 2003 , ,
report to accompany H.R. 1460, 108th Cong., 1st sess., June 5, 2003, H.Rept. 108-142, part 1 (Washington, DC: GPO, report to accompany H.R. 1460, 108th Cong., 1st sess., June 5, 2003, H.Rept. 108-142, part 1 (Washington, DC: GPO,
2003), p. 6. 2003), p. 6.
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Table 2. Service-Disabled Veteran-Owned Small Business (SDVOSB) Contract
Awards, Amount and Percentage of Small Business Eligible Contracts, FY2001-
FY2020
($ in ($ in ~~bil ions~~billions) )
% of Small
Business
Eligible
Federal
Contracts
(including
% of Small
required
Business
double
Eligible
counting, see
Federal
Fiscal Year
Amount
Table notes)
Contracts
2020 2020
$23.707 $23.707
4.28% 4.28%
4.23% 4.23%
2019 2019
$21.782 $21.782
4.39% 4.39%
4.34% 4.34%
2018 2018
$20.618 $20.618
NA NA
4.27% 4.27%
2017 2017
$17.938 $17.938
NA NA
4.05% 4.05%
2016 2016
$16.337 $16.337
NA NA
3.98% 3.98%
2015 2015
$13.832 $13.832
NA NA
3.93% 3.93%
2014 2014
$13.495 $13.495
NA NA
3.68% 3.68%
2013 2013
$12.023 $12.023
NA NA
3.38% 3.38%
2012 2012
$12.256 $12.256
NA NA
3.03% 3.03%
2011 2011
$11.206 $11.206
NA NA
2.65% 2.65%
2010 2010
$10.793 $10.793
NA NA
2.50% 2.50%
2009 2009
$8.751 $8.751
NA NA
1.98% 1.98%
2008 2008
$6.267 $6.267
NA NA
1.39% 1.39%
2007 2007
$3.816 $3.816
NA NA
1.01% 1.01%
2006 2006
$2.960 $2.960
NA NA
0.87% 0.87%
2005 2005
$1.940 $1.940
NA NA
0.61% 0.61%
2004 2004
$1.200 $1.200
NA NA
0.38% 0.38%
2003 2003
$0.549 $0.549
NA NA
0.20% 0.20%
2002 2002
$0.298 $0.298
NA NA
0.13% 0.13%
2001 2001
$0.554 $0.554
NA NA
0.25% 0.25%
Sources: U.S. Congress,: U.S. Congress, House CommitteeHouse Committee ~~on Smal Business, Subcommittee~~ on Small Business, Subcommittee on Regulatory Reformon Regulatory Reform and and
Oversight,Oversight, SBA’s Procurement Assistance Programs,, hearing, 109th Cong., 2nd sess.,hearing, 109th Cong., 2nd sess., March 30, 2006, serialMarch 30, 2006, serial no. 109-no. 109-
45 (Washington, DC: GPO, 2006), p. 31 [FY2001-FY2004]; U.S. General45 (Washington, DC: GPO, 2006), p. 31 [FY2001-FY2004]; U.S. General ~~Services Administration~~ Services Administration (GSA), (GSA),
“Sam.Gov Data Bank, Static: “Sam.Gov Data Bank, Static: ~~Smal Business~~ Small Business Goaling Report [FY2005-FY2020],” at https://sam.gov/reports/Goaling Report [FY2005-FY2020],” at https://sam.gov/reports/
awards/static; GSA,awards/static; GSA, “Federal Procurement Data System—Next“Federal Procurement Data System—Next Generation,” accessed on August 14, 2020 Generation,” accessed on August 14, 2020
(WOSB and (WOSB and ~~economical y~~ economically disadvantaged WOSB [EDWOSB] set-aside and sole source awards, FY2011-FY2019); disadvantaged WOSB [EDWOSB] set-aside and sole source awards, FY2011-FY2019);
and data generated using GSA, “Sam.Govand data generated using GSA, “Sam.Gov Data Bank, Ad Hoc report,”Data Bank, Ad Hoc report,” August 2, 2021 [2020], at https://sam.gov/August 2, 2021 [2020], at https://sam.gov/
reports/awards/adhoc. reports/awards/adhoc.
Notes: The : The ~~smal~~ small business eligiblebusiness eligible baseline excludes certain contracts that the U.S.baseline excludes certain contracts that the U.S. ~~Smal~~ Small Business Business
AdministrationAdministration (SBA) has determined(SBA) has determined ~~do not realistical y~~ do not realistically reflect the potential for reflect the potential for ~~smal~~ small business participation in business participation in
federal procurement (such as those awarded to mandatory and directed sources), contracts funded federal procurement (such as those awarded to mandatory and directed sources), contracts funded
predominatelypredominately from agency-generated sourcesfrom agency-generated sources (i.e.,(i.e., nonappropriated funds), contracts not covered by the nonappropriated funds), contracts not covered by the
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Federal Federal Acquisition Regulations System,Acquisition Regulations System, acquisitions on behalf of foreign governments, and contracts not acquisitions on behalf of foreign governments, and contracts not
reported in the GSA’sreported in the GSA’s ~~Federal~~ Federal Procurement Data System—Next Generation (such as government procurement Procurement Data System—Next Generation (such as government procurement
card purchases and contracts valued less than $10,000). About 15%-18% of card purchases and contracts valued less than $10,000). About 15%-18% of al all federal contracts are excluded in federal contracts are excluded in
any given fiscal year. any given fiscal year.
In FY2019 and FY2020, in accordance with federal law, the SBA provided double credit, for scorecard purposes In FY2019 and FY2020, in accordance with federal law, the SBA provided double credit, for scorecard purposes
only, for primeonly, for prime contracts awarded in disastercontracts awarded in disaster areas that are awarded as a local set-aside and a areas that are awarded as a local set-aside and a ~~smal~~ small business or business or
other socioeconomicother socioeconomic set-aside when the vendor state is the sameset-aside when the vendor state is the same as the place of performanceas the place of performance (see 15 U.S.C. (see 15 U.S.C.
§644(f)) and for prime§644(f)) and for prime contracts awarded to businessescontracts awarded to businesses in Puerto Rico and covered territoriesin Puerto Rico and covered territories dated on or after dated on or after
August 13, 2018, and only for awards that do not already qualify for double credit under 15 U.S.C. §August 13, 2018, and only for awards that do not already qualify for double credit under 15 U.S.C. §~~6 44~~644(f) (see (f) (see
15 U.S.C.15 U.S.C. §644(x)(1)). With double credits,§644(x)(1)). With double credits, ~~SDVOSBs~~ SDVOSBs received $22.0 bil ion in received $22.0 bil ion in ~~smal~~ small business eligiblebusiness eligible contracts in contracts in
FY2019 and $23.9 bil ion in FY2020. See SBA,FY2019 and $23.9 bil ion in FY2020. See SBA, ~~“Smal~~ “Small Business Procurement ScorecardBusiness Procurement Scorecard Overview,”Overview,” at at
https://www.sba.gov/document/support-https://www.sba.gov/document/support-~~smal~~ small-business-procurement-scorecard-overview.-business-procurement-scorecard-overview.
For comparative purposes For comparative purposes, Figure 1 shows the percentage of shows the percentage of ~~smal~~ small business eligible federal business eligible federal
contracts awarded to contracts awarded to ~~smal businesses general y~~small businesses generally, SDBs, WOSBs, SDVOSBs, and HUBZone , SDBs, WOSBs, SDVOSBs, and HUBZone
~~smal~~ small businesses from FY2005 through FY2020.businesses from FY2005 through FY2020.
As detailed in the figure’s notes, the As detailed in the figure’s notes, the ~~smal~~ small business eligible baseline excludes certain contracts business eligible baseline excludes certain contracts
that the SBAthat the SBA has determined do not has determined do not ~~realistical y~~ realistically reflect the potential for reflect the potential for ~~smal~~ small business business
participation in federal procurement. About 15%-18% of participation in federal procurement. About 15%-18% of al all federal contracts are excluded in any federal contracts are excluded in any
given fiscal year. given fiscal year.
The federal government has had difficulty meeting the WOSB and HUBZone The federal government has had difficulty meeting the WOSB and HUBZone ~~smal~~ small business business
procurement goals. The 5% WOSB procurement goal was achieved in 2 of the 16 fiscal years procurement goals. The 5% WOSB procurement goal was achieved in 2 of the 16 fiscal years
(FY2015 and FY2019) reported in the figure. The 3% HUBZone(FY2015 and FY2019) reported in the figure. The 3% HUBZone procurement goal was not procurement goal was not
achieved in any of the 16 fiscal years. achieved in any of the 16 fiscal years.
In contrast, the 23% In contrast, the 23% ~~smal~~ small business procurement goal was achieved in 9 of the 16 fiscal years business procurement goal was achieved in 9 of the 16 fiscal years
reported in the figure (FY2005 and FY2013-FY2020), including the past 8 fiscal years. The 5% reported in the figure (FY2005 and FY2013-FY2020), including the past 8 fiscal years. The 5%
SDB procurement goal was achieved in each of the 16 fiscal years. The 3% SDVOSB SDB procurement goal was achieved in each of the 16 fiscal years. The 3% SDVOSB
procurement goal was achieved in 9 of the 16 fiscal years (FY2012-FY2020), including the last 9 procurement goal was achieved in 9 of the 16 fiscal years (FY2012-FY2020), including the last 9
fiscal years. fiscal years.
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Service-Disabled Veteran-Owned Small Business Procurement Program

Figure 1. Small Business Contracting, Performance, by Type of Small Business,
FY2005-FY2020
(percentage of (percentage of ~~smal~~ small business eligible federal contracts) business eligible federal contracts)

Sources: U.S. GeneralU.S. General ~~Services Administration~~ Services Administration (GSA), “Sam.Gov Data Bank, Static: Smal(GSA), “Sam.Gov Data Bank, Static: Smal Business Goaling Business Goaling
Report [FY2005-FY2020],” at https://sam.gov/reports/awards/static; and U.S. Report [FY2005-FY2020],” at https://sam.gov/reports/awards/static; and U.S. ~~Smal~~ Small Business Administration Business Administration
(SBA), “Government-Wide(SBA), “Government-Wide Performance:Performance: FY2020 FY2020 ~~Smal~~ Small Business Procurement Scorecard,”Business Procurement Scorecard,” data as of Aprildata as of April 15, 15,
2021, at https://www.sba.gov/document/support-2021, at https://www.sba.gov/document/support-~~smal~~ small-business-procurement-scorecard-overview. -business-procurement-scorecard-overview.
Notes: The The ~~smal~~ small business eligiblebusiness eligible baseline excludes certain contracts that the SBA has determinedbaseline excludes certain contracts that the SBA has determined do not do not
~~realistical y~~ realistically reflect the potential for reflect the potential for ~~smal~~ small business participation in federal procurement (such as those awarded business participation in federal procurement (such as those awarded
to mandatory and directed sources),to mandatory and directed sources), contracts funded predominately fromcontracts funded predominately from ~~agen cy~~ agency-generated sources-generated sources (i.e., (i.e.,
nonappropriated funds), contracts not coverednonappropriated funds), contracts not covered by the Federalby the Federal Acquisition Regulations System,Acquisition Regulations System, acquisitions on acquisitions on
behalf of foreign governments,behalf of foreign governments, and contracts not reported in the GSA’sand contracts not reported in the GSA’s Federal ProcurementFederal Procurement Data System—Data System—
Next Generation (such as government procurementNext Generation (such as government procurement card purchases and contracts valued lesscard purchases and contracts valued less than $10,000). than $10,000).
About 15%-18% of About 15%-18% of al all federal contracts are excluded in any given fiscal year. federal contracts are excluded in any given fiscal year.
SDVOSB Set-Aside and Sole Source Contract Authority Use
The procurement figures provided The procurement figures provided inin Table 2 andand Figure 1 encompass encompass al all SDVOSB federal SDVOSB federal
contracts, including contracts awarded through an open competition with no contracts, including contracts awarded through an open competition with no ~~smal~~ small business-business-
related preferences, through another related preferences, through another ~~smal~~ small business preference program (8(a), WOSB, HUBZone, business preference program (8(a), WOSB, HUBZone,
etc.), through an SDVOSB sole source award, and through an SDVOSB set-aside award. As a etc.), through an SDVOSB sole source award, and through an SDVOSB set-aside award. As a
result, it is useful to know the extent to which the SDVOSB Procurement Program (the provision result, it is useful to know the extent to which the SDVOSB Procurement Program (the provision
of SDVOSB set-aside and sole source awards) is being used by federal procurement officers. of SDVOSB set-aside and sole source awards) is being used by federal procurement officers.
In FY2020, about 37.0% of In FY2020, about 37.0% of al all SDVOSB contracts were awarded with an SDVOSB preference SDVOSB contracts were awarded with an SDVOSB preference
(1.0% by an SDVOSB sole source award and 36.0% by an SDVOSB set-aside award), 30.6% (1.0% by an SDVOSB sole source award and 36.0% by an SDVOSB set-aside award), 30.6%
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were awarded through another were awarded through another ~~smal~~ small business preference program, and 32.4% were awarded in business preference program, and 32.4% were awarded in
open competition.56 open competition.56
For comparative purposes, in FY2020 For comparative purposes, in FY2020
 about 15.7% of  about 15.7% of ~~al HUBZone~~ all HUBZone contracts were awarded with an HUBZone contracts were awarded with an HUBZone
preference (0.5% by an HUBZone sole source award, 14.8% by an HUBZone preference (0.5% by an HUBZone sole source award, 14.8% by an HUBZone
set-aside award, and 0.4% with a price evaluation preference), 55.0% were set-aside award, and 0.4% with a price evaluation preference), 55.0% were
awarded through another awarded through another ~~smal~~ small business preference program, and 29.3% were business preference program, and 29.3% were
awarded in open competition;57 awarded in open competition;57
 about 4.6% of  about 4.6% of al all WOSB contracts were awarded with a WOSB preference (0.4% WOSB contracts were awarded with a WOSB preference (0.4%
by a WOSB sole source award and 4.2% by a WOSB set-aside award), 61.2% by a WOSB sole source award and 4.2% by a WOSB set-aside award), 61.2%
were awarded through another were awarded through another ~~smal~~ small business preference program, and 34.2% business preference program, and 34.2%
were awarded in open competition;58 and were awarded in open competition;58 and
 about 60.1% of  about 60.1% of al all 8(a) contracts were awarded with an 8(a) preference (32.7% 8(a) contracts were awarded with an 8(a) preference (32.7%
by an 8(a) sole source award and 27.4% by an 8(a) set-aside award), 33.4% were by an 8(a) sole source award and 27.4% by an 8(a) set-aside award), 33.4% were
awarded through another awarded through another ~~smal~~ small business preference program, and 6.5% were business preference program, and 6.5% were
awarded in open competition.59 awarded in open competition.59
VA’s VOSB and SDVOSB Procurement Goals and
Certification Requirements
As the SDVOSB program got underway, some Members were concerned that As the SDVOSB program got underway, some Members were concerned that ~~al owing~~allowing
SDVOSBs to self-certify their status might not be a sufficient safeguard against fraud. The only SDVOSBs to self-certify their status might not be a sufficient safeguard against fraud. The only
process in place to detect fraud in the SDVOSB program at that time involved a formal bid process in place to detect fraud in the SDVOSB program at that time involved a formal bid
protest process at the SBA, where interested parties to a contract award could protest if they felt a protest process at the SBA, where interested parties to a contract award could protest if they felt a
firm misrepresented its firm misrepresented its ~~smal~~ small business size or SDVOSBbusiness size or SDVOSB ~~eligibility~~ eligibility in its bid submission. in its bid submission.
Due to VA’s relatively low VOSB and SDVOSB procurement levels (4.5% for VOSBs and 2.3% Due to VA’s relatively low VOSB and SDVOSB procurement levels (4.5% for VOSBs and 2.3%
for SDVOSBs in FY2005) and concerned that SDVOSBs were not being verified by VA, for SDVOSBs in FY2005) and concerned that SDVOSBs were not being verified by VA,
Representative John Boozman introduced H.R. 3082, the Veteran-Owned Representative John Boozman introduced H.R. 3082, the Veteran-Owned ~~Smal~~ Small Business Business
Promotion Act of 2005 (later retitled the Veterans Promotion Act of 2005 (later retitled the Veterans ~~Smal~~ Small Business and Memorial Affairs Act of Business and Memorial Affairs Act of
2006), on June 28, 2005.60 The 2006), on June 28, 2005.60 The ~~bil~~ bill would have required VAwould have required VA to award at least 9.0% of the total to award at least 9.0% of the total
value of its prime and subcontract awards to VOSBs, with at least one-third of that amount value of its prime and subcontract awards to VOSBs, with at least one-third of that amount
awarded to SDVOSBs. Among other provisions, VA would have been required to establish a awarded to SDVOSBs. Among other provisions, VA would have been required to establish a
~~VOSB~~ VOSB database, verify that the business owner is a veteran or a service-disabled veteran, and, database, verify that the business owner is a veteran or a service-disabled veteran, and,
when providing preferences, provide SDVOSBs first priority and VOSBs second priority. The when providing preferences, provide SDVOSBs first priority and VOSBs second priority. The ~~bil~~
bill would have also would have also ~~al owed~~allowed surviving spouses who inherit ownership rights in the surviving spouses who inherit ownership rights in the ~~smal~~ small business to business to
be treated as if they were that veteran. The Committee on Veterans’ Affairs reported the be treated as if they were that veteran. The Committee on Veterans’ Affairs reported the ~~bil~~ bill, as , as
amended and retitled, on July 24, 2006, and the House agreed to the amended and retitled, on July 24, 2006, and the House agreed to the ~~bil~~ bill by voice vote that same by voice vote that same
~~day.~~

day. 56 Data generated using56 Data generated using GSA,GSA, “Sam.Gov data bank,” August“Sam.Gov data bank,” August 3, 2021, at https://sam.gov/reports/awards/adhoc. 3, 2021, at https://sam.gov/reports/awards/adhoc.
57 Data generated using57 Data generated using GSA,GSA, “Sam.Gov data bank,” August“Sam.Gov data bank,” August 3, 2021, at https://sam.gov/reports/awards/adhoc. 3, 2021, at https://sam.gov/reports/awards/adhoc.
58 Data generated using58 Data generated using GSA,GSA, “Sam.Gov data bank,” August“Sam.Gov data bank,” August 3, 2021, at https://sam.gov/reports/awards/adhoc. 3, 2021, at https://sam.gov/reports/awards/adhoc.
59 Data generated using59 Data generated using GSA,GSA, “Sam.Gov data bank,” August“Sam.Gov data bank,” August 3, 2021, at https://sam.gov/reports/awards/adhoc. 3, 2021, at https://sam.gov/reports/awards/adhoc.
60 U.S.60 U.S. Congress, HouseCongress, House Committee on Veterans’ Affairs, Committee on Veterans’ Affairs, Veterans Small Business and Memorial Affairs Act of 2006, ,
report to accompany H.R. 3082, 109th Cong., 2nd sess., Julyreport to accompany H.R. 3082, 109th Cong., 2nd sess., July 24, 2006, H.Rept. 109-592 (24, 2006, H.Rept. 109-592 (~~Washingt on~~Washington, DC: GPO, 2006), , DC: GPO, 2006),
pp. 15-17. pp. 15-17.
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The amended The amended ~~bil~~ bill would have required VA’s Secretary to establish procurement goals for VOSBs would have required VA’s Secretary to establish procurement goals for VOSBs
and SDVOSBs each fiscal year. The SDVOSB goal had to be not less than the government-wide and SDVOSBs each fiscal year. The SDVOSB goal had to be not less than the government-wide
SDVOSB procurement goal for that fiscal year (currently 3%). Also, when providing preferences, SDVOSB procurement goal for that fiscal year (currently 3%). Also, when providing preferences,
VAVA would be required to provide SDVOSBs first priority and VOSBs second priority. VA would would be required to provide SDVOSBs first priority and VOSBs second priority. VA would
also be required to maintain a database of VOSBs and, at a minimum, verify that the owner was a also be required to maintain a database of VOSBs and, at a minimum, verify that the owner was a
veteran or service-disabled veteran. Listing in this database would be required as a condition for veteran or service-disabled veteran. Listing in this database would be required as a condition for
participating in the VAparticipating in the VA procurement program. The procurement program. The ~~bil~~ bill would have would have ~~al owed~~allowed surviving spouses who surviving spouses who
inherit ownership rights in the inherit ownership rights in the ~~smal~~ small business to be treated as if they were that veteran until the business to be treated as if they were that veteran until the
date on which the surviving spouse remarries, relinquishes an ownership interest in the date on which the surviving spouse remarries, relinquishes an ownership interest in the ~~smal~~
small business, or the date that is 10 years after the veteran’s death. business, or the date that is 10 years after the veteran’s death.
In 2006, these provisions (with an additional requirement that the surviving spouse was married In 2006, these provisions (with an additional requirement that the surviving spouse was married
to a veteran with a 100% disability rating or who died as a result of a service-connected to a veteran with a 100% disability rating or who died as a result of a service-connected
disability) were added by the House on December 8, 2006, to S. 3421, an act to authorize major disability) were added by the House on December 8, 2006, to S. 3421, an act to authorize major
medical facility projects and major medical facility leases for the Department of Veterans Affairs medical facility projects and major medical facility leases for the Department of Veterans Affairs
for Fiscal Years 2006 and 2007, and for other purposes (retitled the Veterans Benefits, Health for Fiscal Years 2006 and 2007, and for other purposes (retitled the Veterans Benefits, Health
Care, and Information Technology Act of 2006 by House amendment). The Senate agreed to the Care, and Information Technology Act of 2006 by House amendment). The Senate agreed to the
House amendments by unanimous consent the following day and President George W. Bush House amendments by unanimous consent the following day and President George W. Bush
signed the signed the ~~bil~~ bill into law on December 22, 2006 (P.L. 109-461, the Veterans Benefits, Health Care, into law on December 22, 2006 (P.L. 109-461, the Veterans Benefits, Health Care,
and Information Technology Act of 2006). and Information Technology Act of 2006).
In FY2021, VA’s procurement goals In FY2021, VA’s procurement goals ~~are~~were at least 17.0% for VOSBs and at least 15.0% for at least 17.0% for VOSBs and at least 15.0% for
SDVOSBs. In FY2020, VASDVOSBs. In FY2020, VA awarded 22.0% of its contracts to VOSBs and 22.5% to SDVOSBs awarded 22.0% of its contracts to VOSBs and 22.5% to SDVOSBs
(15.3% using either a VOSB or SDVOSB set-aside).61 (15.3% using either a VOSB or SDVOSB set-aside).61
VA-SBA Coordination Issues
For many years, VA and the SBAFor many years, VA and the SBA had similar, but not identical, regulations concerning SDVOSB had similar, but not identical, regulations concerning SDVOSB
eligibility.eligibility. As examples, VA’s regulations required the veteran to be the businesses’ highest As examples, VA’s regulations required the veteran to be the businesses’ highest
compensated employee, SBA’s regulations did not; and by statute, surviving spouses of deceased compensated employee, SBA’s regulations did not; and by statute, surviving spouses of deceased
veterans may be eligibleveterans may be eligible for SDVOSBfor SDVOSB verification by VAverification by VA under specified circumstances, but they under specified circumstances, but they
were not eligiblewere not eligible under SBA’s regulations. Because of these and other differences, some under SBA’s regulations. Because of these and other differences, some
companies qualified as an SDVOSB under VA standards but not under SBA standards, and vice companies qualified as an SDVOSB under VA standards but not under SBA standards, and vice
versa.62versa.62
To address this issue, P.L. 114-328, the National Defense Authorization Act for Fiscal Year 2017, To address this issue, P.L. 114-328, the National Defense Authorization Act for Fiscal Year 2017,
required the use of SBArequired the use of SBA regulations to determine VOSBregulations to determine VOSB and SDVOSB ownership and control, and SDVOSB ownership and control,

~~61 U.S.~~ 61 U.S. Department of Veterans Affairs (VA), Department of Veterans Affairs (VA), FY 2022 Budget Submission: Supplemental Information and Appendices,
~~Volum e~~Volume 1 of 4, May 2021, p. 25, at https://www.va.gov/budget/docs/summary/, May 2021, p. 25, at https://www.va.gov/budget/docs/summary/
fy2022VAbudgetVolumeIsupplementalInformationAndAppendices.pdffy2022VAbudgetVolumeIsupplementalInformationAndAppendices.pdf . .
62 A veteran “means a person who served in the active military, naval, air, or space service, and who was 62 A veteran “means a person who served in the active military, naval, air, or space service, and who was ~~discha rged~~ discharged or or
releasedreleased therefrom under conditions other than dishonorable.” See 38 U.S.C.therefrom under conditions other than dishonorable.” See 38 U.S.C. §101(2).§101(2).
A service-disabled A service-disabled veteran (see 13 C.F.R. §125.11) is veteran (see 13 C.F.R. §125.11) is
a veteran who possesses a veteran who possesses either a valid disabilityeither a valid disability rating letter issuedrating letter issued by the Department of Veterans by the Department of Veterans
Affairs, establishingAffairs, establishing a service-connected rating between 0 and 100 percent, or a valid disability a service-connected rating between 0 and 100 percent, or a valid disability
determination from the Department of Defense or is registered in the Beneficiary Identification and determination from the Department of Defense or is registered in the Beneficiary Identification and
RecordsRecords Locator Subsystem maintained by Department of Veterans Locator Subsystem maintained by Department of Veterans ~~Af fairs~~Affairs’ Veterans Benefits ’ Veterans Benefits
Administration as a service-disabledAdministration as a service-disabled veteran. Reservists or members of the National Guardveteran. Reservists or members of the National Guard disabled disabled
from a diseasefrom a disease or injury incurred or aggravated in line of duty or whileor injury incurred or aggravated in line of duty or while in training status also in training status also
qualify. qualify.
Also, the business Also, the business must be small, asmust be small, as defined in §3(q) of the Smalldefined in §3(q) of the Small ~~Business~~ Business Act (15 U.S.C.Act (15 U.S.C. §632(q)) and the SBA’s §632(q)) and the SBA’s
implementing regulations (13 C.F.R. §125). implementing regulations (13 C.F.R. §125).
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~~al owed~~allowed VA to continue to determine whether individuals are veterans or service-disabled VA to continue to determine whether individuals are veterans or service-disabled
veterans, and directed that veterans, and directed that ~~chal enges~~challenges to a VOSB’s or SDVOSB’s status based on ownership or to a VOSB’s or SDVOSB’s status based on ownership or
control were to be decided by the SBA’s Office of Hearings and Appeals’ administrative judges. control were to be decided by the SBA’s Office of Hearings and Appeals’ administrative judges.
The law applied VA’s statutory language The law applied VA’s statutory language ~~al owing~~allowing surviving spouses under specified surviving spouses under specified
circumstances to be eligible for SDVOSB status to circumstances to be eligible for SDVOSB status to al all SDVOSBs, eliminatingSDVOSBs, eliminating that discrepancy. that discrepancy.
In addition, P.L. 116-283 (see In addition, P.L. 116-283 (see “Introduction”) requires VA to transfer, by January 1, 2023, the requires VA to transfer, by January 1, 2023, the
maintenance of VA’s database of SDVOSBs interested in participating in VA’s maintenance of VA’s database of SDVOSBs interested in participating in VA’s ~~smal~~ small business business
contracting program to the SBA, provide compensation to the SBA for doing so, and abolish VA’s contracting program to the SBA, provide compensation to the SBA for doing so, and abolish VA’s
Center for Verification and Evaluation and transfer its function to the SBA. VACenter for Verification and Evaluation and transfer its function to the SBA. VA is to continue to is to continue to
determine whether an individualdetermine whether an individual qualifies as a veteran or service-disabled veteran. qualifies as a veteran or service-disabled veteran.
The SBA is also required to establish a government-wide SDVOSB certification and periodic The SBA is also required to establish a government-wide SDVOSB certification and periodic
recertification process by January 1, 2023. This requirement was designed to address concerns recertification process by January 1, 2023. This requirement was designed to address concerns
about the potential for fraud in the SDVOSB program. For example, in 2009, the Government about the potential for fraud in the SDVOSB program. For example, in 2009, the Government
Accountability Office (GAO) concluded that the SBA’s reliance on bid protests to investigate Accountability Office (GAO) concluded that the SBA’s reliance on bid protests to investigate
~~al egations~~allegations of SDVOSB program fraud “has of SDVOSB program fraud “has ~~al owed~~allowed ineligible ineligible firms to receive firms to receive ~~mil ions~~millions of dollars of dollars
in federal contracts,” and the only efforts to put fraud prevention controls in place prior to in federal contracts,” and the only efforts to put fraud prevention controls in place prior to
contract bidding are those at VAcontract bidding are those at VA (and those controls apply only to VA contracts).63(and those controls apply only to VA contracts).63
The GAO argued thatThe GAO argued that
a well-designed fraud-prevention system should consist of three crucial elements: (1) up a well-designed fraud-prevention system should consist of three crucial elements: (1) up --
front preventive controls,front preventive controls, (2) detection(2) detection and monitoring, and (3) investigationsand monitoring, and (3) investigations and and
prosecutions.prosecutions. ~~For the SDVOSB program this would mean (1) front -end controls over~~
~~program eligibility prior to contract award, (2) fraud detection and monitoring of firms~~
~~already receiving SDVOSB contracts, and (3) the aggressive pursuit and prosecution of~~
~~individuals committing fraud to include suspension and debarment, or requirement~~ For the SDVOSB program this would mean (1) front-end controls over program eligibility prior to contract award, (2) fraud detection and monitoring of firms already receiving SDVOSB contracts, and (3) the aggressive pursuit and prosecution of individuals committing fraud to include suspension and debarment, or requirement to to
terminate the contract.64 terminate the contract.64
In response to the GAO’s findings, the SBA argued that it was In response to the GAO’s findings, the SBA argued that it was
only authorized to perform eligibility reviews in a protest situation, including where the only authorized to perform eligibility reviews in a protest situation, including where the
SBA itself has reason to believe that a firm has misrepresented its SDVOSB status. In this SBA itself has reason to believe that a firm has misrepresented its SDVOSB status. In this
area, the SBA believes that it has been diligent and responsible as all protest determinations area, the SBA believes that it has been diligent and responsible as all protest determinations
have been provided to the appropriate contracting officer in a timely manner.65 have been provided to the appropriate contracting officer in a timely manner.65
Later, the SBA indicated that “our self-certification program for the service-disabled community Later, the SBA indicated that “our self-certification program for the service-disabled community
for the rest of the Federal government has been effective in self-policing itself” and expanding the for the rest of the Federal government has been effective in self-policing itself” and expanding the
SBA’s role to certify SBA’s role to certify al all SDVOSBs would have “significant SDVOSBs would have “significant ~~al ocations~~allocations questions.”66 63 U.S. ~~questions.”66~~

~~63 U.S.~~ Government Accountability Office (GAO), Service-DisabledGovernment Accountability Office (GAO), Service-Disabled Veteran-Owned SmallVeteran-Owned Small ~~Business~~ Business Program: Case Program: Case
StudiesStudies ~~Show Fraud and Abuse Allowed Ineligible~~ Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts, GAO-10-108, Firms to Obtain Millions of Dollars in Contracts, GAO-10-108,
October 23, 2009, p. 21, at https://www.gao.gov/products/gao-10-108 (hereinafter GAO, Service-DisabledOctober 23, 2009, p. 21, at https://www.gao.gov/products/gao-10-108 (hereinafter GAO, Service-Disabled Veteran-Veteran-
OwnedOwned ~~Small Business~~ Small Business Program). Program).
64 GAO, 64 GAO, Service-Disabled Veteran-Owned Small Business Program , p. 16. , p. 16.
65 GAO,65 GAO, Service-Disabled Veteran-Owned Small Business Program , pp. 27, 28. , pp. 27, 28.
66 U.S.66 U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, Subcommittee on Subcommittee on ~~Contract ing~~Contracting and Workforce, and House and Workforce, and House
Committee on Veterans’ Affairs, Subcommittee on Oversight and Investigations, Committee on Veterans’ Affairs, Subcommittee on Oversight and Investigations, Consistently Inconsistent: Challenges
for Service-Disabled Veteran-Owned ~~Sm all~~Small Businesses, joint hearing, 113th Cong., 1st sess., March 19, 2013, Doc. No. , joint hearing, 113th Cong., 1st sess., March 19, 2013, Doc. No.
113-006 (Washington, DC: GPO, 2013), pp. 25, 32. 113-006 (Washington, DC: GPO, 2013), pp. 25, 32.
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Legislation of Interest
~~Several bil s~~During the 116th Congress, P.L. 116-315, the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020, authorized the Department of Veterans Affairs to provide contracting preference to contractors that employ veterans on a full-time basis, with the preference based on the percentage of the contractor’s full-time employees that are veterans.67 Several bills have been introduced during the 117th Congress that would affect the SDVOSB have been introduced during the 117th Congress that would affect the SDVOSB
program: program:
 H.R. 3065, the Expanding Contracting Opportunities for  H.R. 3065, the Expanding Contracting Opportunities for ~~Smal~~ Small Businesses Act of Businesses Act of
2021, would increase the sole source limit for WOSBs, SDBs, HUBZone 2021, would increase the sole source limit for WOSBs, SDBs, HUBZone ~~smal~~
small businesses, and SDVOSBs to $10 businesses, and SDVOSBs to $10 ~~mil ion~~ million for manufacturing contracts and $8 for manufacturing contracts and $8
~~mil ion~~ million for other contracts, including any options. for other contracts, including any options.
 S.Amdt. 2443 to S.Amdt. 2137 to H.R. 3684, the Infrastructure Investment and  S.Amdt. 2443 to S.Amdt. 2137 to H.R. 3684, the Infrastructure Investment and
Jobs Act, would have increased the sole source limit for WOSBs, SDBs, Jobs Act, would have increased the sole source limit for WOSBs, SDBs,
HUBZoneHUBZone ~~smal~~ small businesses, and SDVOSBs to $10 businesses, and SDVOSBs to $10 ~~mil ion~~ million for manufacturing for manufacturing
contracts and $8 contracts and $8 ~~mil ion~~million for other contracts, including any options. The for other contracts, including any options. The
amendment would have also increased the government-wide procurement goal amendment would have also increased the government-wide procurement goal
for for ~~smal businesses general y~~small businesses generally to 25%; for HUBZone to 25%; for HUBZone ~~smal~~ small businesses to 4%; for businesses to 4%; for
SDBs to 11% in FY2022, 12% in FY2023, 13% in FY2024, and 15% in FY2025 SDBs to 11% in FY2022, 12% in FY2023, 13% in FY2024, and 15% in FY2025
and each fiscal year thereafter; for WOSBs to 6% for each of FY2022 and and each fiscal year thereafter; for WOSBs to 6% for each of FY2022 and
FY2023 and 7% in FY2024 and each fiscal year thereafter; and for SDVOSBs to FY2023 and 7% in FY2024 and each fiscal year thereafter; and for SDVOSBs to
5%. 5%.
Concluding Observations
Congressional oversight of the SBA’s implementation of the SDVOSBCongressional oversight of the SBA’s implementation of the SDVOSB certification process, certification process,
which Congress imposed to deter fraud and promote uniformity of treatment among SDVOSBs, which Congress imposed to deter fraud and promote uniformity of treatment among SDVOSBs,
is likely to be a congressional priority for the next several years. For example, Members may is likely to be a congressional priority for the next several years. For example, Members may
consider the following questions: consider the following questions:
  ~~Wil~~ Will the SBA’s SDVOSB certification process, which is likely to include an the SBA’s SDVOSB certification process, which is likely to include an
online application portal, be user-friendly and free of technical difficulties, such online application portal, be user-friendly and free of technical difficulties, such
as those experienced by the SBA’s Paycheck Protection Program and Shuttered as those experienced by the SBA’s Paycheck Protection Program and Shuttered
Venue Operators Grant program’s online application portals?Venue Operators Grant program’s online application portals?6768
  ~~Wil~~ Will the SDVOSB documentation requirements be onerous? the SDVOSB documentation requirements be onerous?
  ~~Wil~~ Will the documentation requirements prove effective in deterring fraud? the documentation requirements prove effective in deterring fraud?
  ~~Wil~~ Will the SDVOSB certification decision be made in a timely manner? the SDVOSB certification decision be made in a timely manner?
  ~~Wil~~ Will the SBA have sufficient administrative capacity to manage its increased the SBA have sufficient administrative capacity to manage its increased
responsibilities to ensure an orderly transition from VA to the SBA? responsibilities to ensure an orderly transition from VA to the SBA?
67 U.S. Department of Veterans Affairs, Office of Acquisition and Logistics (OAL), “Acquisition Policy Flash! 21-28,” at https://www.va.gov/oal/business/pps/flash21-28.asp. 68 For additional information and analysis of the Paycheck Protection Program and Shuttered Venue Operators Grant program, see CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options, by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry; and CRS Report R46689, SBA Shuttered Venue Operators Grant Program (SVOG), by Robert Jay Dilger and Sean Lowry. Congressional Research Service 21 link to page 24 Service-Disabled Veteran-Owned Small Business Procurement Program Congress may also continue monitoring federal agency performance in meeting the SDVOSB 3% Congress may also continue monitoring federal agency performance in meeting the SDVOSB 3%
government-wide procurement goal. As mentioned, the federal government has met the SDVOSB government-wide procurement goal. As mentioned, the federal government has met the SDVOSB
3% procurement goal every year since FY2012, leading some SDVOSB advocates to seek a 3% procurement goal every year since FY2012, leading some SDVOSB advocates to seek a
higher threshold (see S.Amdt. 2443 in higher threshold (see S.Amdt. 2443 in “Legislation of Interest””). Advocates of doing so argue that ). Advocates of doing so argue that
increasing the SDVOSBincreasing the SDVOSB procurement goal could lead to more contracting with SDVOSBs and procurement goal could lead to more contracting with SDVOSBs and
~~smal businesses general y~~small businesses generally. Others worry that it could redistribute available . Others worry that it could redistribute available ~~smal~~ small business business
contract dollars from other types of contract dollars from other types of ~~smal~~ small businesses to SDVOSBs and result in no businesses to SDVOSBs and result in no ~~overal~~
overall increase in increase in ~~smal~~ small business contracting. business contracting. ~~Stil~~ Still others worry that increasing other small business ~~others worry that increasing other smal business~~

~~67 For additional information and analysis of the Paycheck Protection Program and Shuttered Venue Operators Grant~~
~~program, see CRS Report R46284, COVID-19 Relief Assistance to Sm all Businesses: Issues and Policy Options, by~~
~~Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry ; and CRS Report R46689,~~ ~~SBA Shuttered Venue Operators~~
~~Grant Program (SVOG), by Robert Jay Dilger and Sean Lowry.~~
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procurement goals, such as the proposed significant increase for SDBs (see the aforementioned procurement goals, such as the proposed significant increase for SDBs (see the aforementioned
S.Amdt. 2443), could adversely affect the volume of SDVOSB contracts. S.Amdt. 2443), could adversely affect the volume of SDVOSB contracts.
Congress could also examine the pros and cons of legislation concerning sole source contract Congress could also examine the pros and cons of legislation concerning sole source contract
limits, including proposals to increase the limits, exclude options in the determination of those limits, including proposals to increase the limits, exclude options in the determination of those
limits, or both. limits, or both.

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Author Information

Robert Jay Dilger Robert Jay Dilger

Senior Specialist in American National Government Senior Specialist in American National Government

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