Newcomers to the federal marketplace are often surprised when they learn that eligibility for the VA’s SDVOSB and VOSB preference programs are based on the status of the contractor’s owners–and have nothing to do with how many veterans the contractor employs.

While the SDVOSB/VOSB eligibility rules aren’t changing, VA Contracting Officers now have authority to give preference to offeors that employ veterans on a full-time basis. A new VA Acquisition Policy Flash provides guidance to VA Contracting Officers on implementing 38 U.S.C. 8129, a statute that took effect in January 2021 and provided Congressional authority for offering such a preference.

The underlying statute, 38 USC 8129, is short and sweet. Regarding the employment preference, it says:

(a) Preference –

(1) In awarding a contract for the procurement of goods or services, the [VA] may give a preference to offerors that employ veterans on a full-time basis.

(2) The [VA] shall determine such preference based on the percentage of the full-time employees of the offeror who are veterans.

The statute also include a section (b), which provides that an offeror who “willfully and intentionally” misrepresents the veteran status of its employees may be debarred for a minimum of five years. That’s a harsh penalty, so offerors will need to take care to be scrupulously honest when it comes to reporting their employment of veterans.

Turning back to the preference itself, the VA released Acquisition Policy Flash 21-28 on September 9. The Policy Flash provides additional detail to allow VA Contracting Officers to effectively implement the preference.

The Policy Flash makes clear that the preference is optional, not mandatory. The Policy Flash states that “[a]s the Program Office develops their evaluation criteria, they should consult with their contracting officer to determine if inclusion of this preference is appropriate for their acquisition.” The Policy Flash indiciates that the evaluation preference may be used in both FAR Part 15 and FAR Part 13 acquisitions.

If the VA elects to use the preference, the Policy Flash provides sample language that can be included in solicitations to implement the preference. The sample language requires offerors to identify their total number of employees at proposal submission and total number of full-time veteran employees as of the same date. The VA may give higher ratings to companies that provide “information that allows the VA to verify the assertion independently,” such as “[p]ast or current compliance notifications from [the] Department of Labor for the offeror’s submitted [VETS-4212] compliance report.”

The sample language would advise offerors that the VA reserves the right to award a higher score or rating to offerors who employ at least a certain minimum percentage of veterans. The Policy Flash does not provide a one-size-fits-all minimum percentage, however; this will be up to individual Program Offices and Contracting Officers to determine on a case-by-case basis.

The sample language also addresses ongoing employment of veterans. For instance, one of the samples would include this language in contracts:

The offeror, if awarded the contract, must make a good faith effort to maintain its Veterans employment numbers as provided at time of proposal submission and incorporated into the basic contract.  The awarded offeror will be required in the contract to submit a periodic report to report compliance.  The contractor’s efforts towards, and results in, maintaining or exceeding its Veterans employment numbers may be considered by the CO in his/her evaluation of the contractor’s past performance on future contracts.

The Policy Flash advises Contracting Officers to add additional terms to the contract regarding how the contractor can show that it is compliant, such as what information to submit to the VA and how often to submit it. But the Policy Flash does not dictate the specifics; again, this is left to individual Contracting Officers to determine.

The VA exists to serve veterans, which is why the VA alone has a statutory requirement to give top preference to SDVOSBs and VOSBs in its contracting. But beyond these preference programs, it makes sense that the VA should also have the right to consider how many veterans a contractor employs.

My colleagues and I will be curious to see how frequently this new authority is used in upcoming VA acquistions and what individual VA Contracting Officers will decide regarding discretionary calls like the minimum percentage of veteran employees required to earn a higher score. As we see how this new authority is applied in practice, we will keep the contracting community updated.

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