As part of the 2024 revisions to the Uniform Guidance, the Office of Management and Budget (OMB) expanded the list of targeted businesses for socioeconomic contracting consideration to include veteran-owned businesses. The revised language of 2 C.F.R. 200.321 encourages local governments that are contracting using federal financial assistance to consider veteran-owned businesses when possible. But where can local governments search for veteran-owned businesses? This blog post provides a brief background on veteran-owned businesses and recommends three places where local governments can look when considering veteran-owned businesses for contracting opportunities involving federal financial assistance.

Background on Veteran-Owned Businesses and Federal Contracting

According to the Congressional Research Service, the Small Business Administration (SBA) has, since 1974,  given support to businesses owned by veterans of the Armed Forces. Over time, Congress has formalized the recognition and use of veteran-owned businesses for the purposes of federal government contracting. As described in more detail below, the SBA is now responsible for certification of veteran-owned small businesses (VOSBs) and service-disabled veteran-owned small businesses (SDVOSBs).

Current Administration of Certification

The SBA’s certification program is called VetCert, and it was implemented by the SBA through rulemaking that took effect on January 1, 2023. This rulemaking followed the enactment of the National Defense Authorization Act for Fiscal Year 2021, which transferred the veteran-owned business certification function from the Department of Veterans Affairs (VA) to the SBA. Prior to this transfer, VOSBs and SDVOSBs either had to be verified by the VA’s Center for Verification and Evaluation (CVE) to be eligible for contract opportunities with the VA, or these businesses had to self-certify their status with the SBA to qualify for sole source or set-aside contracts with other federal agencies. Now, all veteran-owned business certification occurs through the SBA for contracting opportunities with all federal agencies, including the VA. The VA maintains an Office of Small & Disadvantaged Business Utilization (OSDBU) that focuses on technical assistance for veterans in obtaining federal contracting opportunities.

Definitions

The SBA certifies both VOSBs and SDVOSBs. In order to be eligible as a VOSB, a business must be at least 51% owned and controlled by one or more veterans and must be a “small” business according to SBA’s size standards. The term “veteran” is defined in 38 U.S.C. 101(2) and means a person who served in the active military, naval, or air service, and who was discharged or released under conditions other than dishonorable. To qualify as a SDVOSB, a business must be at least 51% owned and controlled by one or more veterans rated as service-disabled by the VA. Alternatively, if a veteran has a permanent and total disability, a business can satisfy the control prong of SDVOSB qualification if its daily business operations are controlled by the spouse or permanent caregiver of a veteran. All SDVOSBs are also recognized as VOSBs.

Benefits to Certified Businesses

Certification makes certain federal resources and contracting opportunities available to veteran-owned businesses. Most notably, SDVOSBs are eligible for sole-source and competitive set-aside contracts across the federal government. In fact, the federal government has a 5% goal for federal contract participation by SDVOSBs. This goal was previously 3% and was increased by Sec. 864 of the National Defense Authorization Act for Fiscal Year 2024, P.L. 118-31. According to the United States Government Accountability Office, the federal government committed to $759 billion in contracts during fiscal year 2023. Thus, a goal of 5% amounts to more than $37 billion in contracts for SDVOSBs.

Additionally, the VA has a specific program, the Vets First Contracting Program, which is governed by the Veterans Affairs Acquisition Regulations, Subpart 819.70. Under this program, certified VOSBs may compete for sole-source and set-aside contracts from the VA. Certification has other benefits, including access to resources offered by the Office of Veterans Business Development, exclusive funding opportunities, and entrepreneurship training programs.

2024 Revisions to the Uniform Guidance Include Consideration of Veteran-Owned Businesses

Under the 2024 revisions to the Uniform Guidance, consideration of veteran-owned businesses now extends beyond federal government contracting. Pursuant to 2 C.F.R. 200.321, veteran-owned businesses are one of the targeted businesses for consideration when recipients or subrecipients are contracting using federal financial assistance. “Considering” a veteran-owned business means that, when possible, a local government should:

1. Include these business types on solicitation lists;
2. Solicit these business types whenever they are deemed eligible as potential sources;
3. Divide procurement transactions into separate procurements to permit maximum participation by these business types;
4. Establish delivery schedules to encourage participation by these business types;
5. Utilize organizations such as the Small Business Administration for advertising; and
6. Require a contractor under a federal award to make these same considerations for subcontracts.

Remember that this consideration is relevant for all procurements above the micro-purchase threshold, which is $10,000 as a default under the Uniform Guidance. Local governments should also consider targeted businesses, including veteran-owned businesses, when contracting using non-competitive procurement, such as sole source or emergency procurement.

Where Local Governments Can Search for Veteran-Owned Businesses

In order to “consider” veteran-owned businesses, local governments will need to search for these businesses. However, “veteran-owned business” is not a category for certification of Historically Underutilized Businesses (HUBs) under state law, which means that local governments cannot use the electronic vendor portal (eVP) to advertise to or search for veteran-owned businesses.

Instead, local governments can search for veteran-owned businesses using one of several federal government websites.

• First, the VA hosts a site called VetBiz, where one can search for VOSBs, SDVOSBs, or both, with additional filters such as service area, NAICS code, and women-owned small business. According to this site, there are 4,334 veteran-owned businesses available to provide goods and services in North Carolina, ranging from providing laboratory equipment to cyber consulting services. Due to the recent transition of the certification and verification of veteran-owned businesses to the SBA, some of the businesses in the VetBiz database were verified or self-certified under prior programs. A local government can still rely on these certifications for the purposes of 2 C.F.R. 200.321 so long as the certification or verification has not expired.
• The SBA also has a Dynamic Small Business Search, which allows for searches using similar criteria as VetBiz. One notable difference of the SBA’s Dynamic Small Business Search, though, is the “location of profile” versus use of “service areas” in the VA’s VetBiz database. Location of profile means that the business’ address is in North Carolina, whereas a business that serves North Carolina may be located outside of the state. Thus, the SBA Dynamic Small Business Search has narrower criteria and a search on that site for VOSBs in North Carolina returns only 218 businesses.
• Finally, another place to search for veteran-owned businesses is gov. The search features of SAM.gov are not intuitive, so this video, created for the purposes of this blog post, explains how to find VOSBs and SDVOSBs on the site. As of the date of this blog post, there are 2,668 veteran owned businesses in North Carolina according to SAM.gov. There are also private, third-party companies that provide certification of veteran-owned businesses, but a search on the preceding sites should be sufficient.

If you have questions about searching for veteran-owned businesses or other socioeconomic contracting considerations, please contact me at cuccaro@sog.unc.edu.