6098 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 

PART 380—RATES AND TERMS FOR 

CERTAIN ELIGIBLE 

NONSUBSCRIPTION TRANSMISSIONS, 

NEW SUBSCRIPTION SERVICES AND 

THE MAKING OF EPHEMERAL 

REPRODUCTIONS 

■ 1. The authority citation for part 380 

of title 37 of the Code of Federal 

Regulations as follows: 

Authority: 17 U.S.C. 112(e), 114(f), 

804(b)(3). 

■ 2. Section 380.3 is amended by 

revising paragraph (b) to read as follows: 

§ 380.3 Royalty fees for the public 

performance of sound recordings and for 

ephemeral recordings. 

* * * * * 

(b) Minimum fee—(1) Commercial 

Webcasters. Each Commercial 

Webcaster will pay an annual, 

nonrefundable minimum fee of $500 for 

each calendar year or part of a calendar 

year of the period 2006–2010 during 

which it is a Licensee pursuant to 17 

U.S.C. 112(e) or 114. This annual 

minimum fee is payable for each 

individual channel and each individual 

station maintained by Commercial 

Webcasters, and is also payable for each 

individual Side Channel maintained by 

Broadcasters who are Commercial 

Webcasters, provided that a Commercial 

Webcaster shall not be required to pay 

more than $50,000 per calendar year in 

minimum fees in the aggregate (for 100 

or more channels or stations). The 

minimum fee payable under 17 U.S.C. 

112 is deemed to be included within the 

minimum fee payable under 17 U.S.C. 

114. Upon payment of the minimum fee, 

the Commercial Webcaster will receive 

a credit in the amount of the minimum 

fee against any royalty fees payable in 

the same calendar year. 

(2) Noncommercial Webcasters. Each 

Noncommercial Webcaster will pay an 

annual, nonrefundable minimum fee of 

$500 for each calendar year or part of a 

calendar year of the license period 

during which they are Licensees 

pursuant to licenses under 17 U.S.C. 

114. This annual minimum fee is 

payable for each individual channel and 

each individual station maintained by 

Noncommercial Webcasters and is also 

payable for each individual Side 

Channel maintained by Broadcasters 

who are Licensees. The minimum fee 

payable under 17 U.S.C. 112 is deemed 

to be included within the minimum fee 

payable under 17 U.S.C. 114. Upon 

payment of the minimum fee, the 

Licensee will receive a credit in the 

amount of the minimum fee against any 

additional royalty fees payable in the 

same calendar year. 

Dated: February 2, 2010. 

James Scott Sledge, 

Chief U.S. Copyright Royalty Judge. 

[FR Doc. 2010–2644 Filed 2–5–10; 8:45 am] 

BILLING CODE 1410–72–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 74 

RIN 2900–AM78 

VA Veteran-Owned Small Business 

Verification Guidelines 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule with request for 

comments. 

SUMMARY: This document affirms as 

final, with changes, an interim final rule 

that implements portions of the 

Veterans Benefits, Health Care, and 

Information Technology Act of 2006. 

This law requires the Department of 

Veterans Affairs (VA) to verify 

ownership and control of veteranowned small businesses, including 

service-disabled veteran-owned small 

businesses. This final rule defines the 

eligibility requirements for businesses to 

obtain ‘‘verified’’ status, explains 

examination procedures, and establishes 

records retention and review processes. 

The final rule retains the interim final 

rule with changes based on the 

comments received. This document 

additionally implements new interim 

final requirements, that eligible owners 

work full-time in the business for which 

they have applied for acceptance in the 

Verification Program, changes the time 

period for issuance of reconsideration 

decisions from 30 to 60 days, and 

changes the distribution of profits for 

limited liability companies and 

employee stock ownership plans and 

solicits comments on these regulatory 

amendments only. 

DATES: Effective Date: February 8, 2010. 

Comment Date: Comments on the 

interim final amendments only must be 

received on or before March 10, 2010. 

ADDRESSES: Written comments may be 

submitted through http:// 

www.Regulations.gov; by mail or hand 

delivery to the Director, Regulations 

Management (02REG), Department of 

Veterans Affairs, 810 Vermont Ave., 

NW., Room 1068, Washington, DC 

20420; or by fax to (202) 273–9026. 

Comments should indicate that they are 

submitted in response to RIN 2900– 

AM78—‘‘VA Veteran-Owned Small 

Business Verification Guidelines.’’ 

Copies of comments received will be 

available for public inspection in the 

Office of Regulation Policy and 

Management, Room 1063B, between the 

hours of 8 a.m. and 4:30 p.m., Monday 

through Friday (except holidays). Please 

call (202) 461–4902 (this is not a tollfree number) for an appointment. In 

addition, during the comment period, 

comments may be viewed online 

through the Federal Docket Management 

System (FDMS) at http:// 

www.Regulations.gov. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Gail Wegner, Acting Director, Center for 

Veterans Enterprise (00VE), Department 

of Veterans Affairs, 810 Vermont Ave., 

NW., Washington, DC 20420, phone 

(202) 303–3260 x5239. 

SUPPLEMENTARY INFORMATION: 

In an interim final rule published in 

the Federal Register on May 19, 2008 

(73 FR 29024), we established new 38 

CFR part 74 setting forth a mechanism 

for verifying ownership and control of 

veteran-owned small businesses 

(VOSBs), including service-disabled 

veteran-owned small businesses 

(SDVOSBs). We provided a 60-day 

comment period which ended on July 

18, 2008. We received comments from 

five commenters. The issues raised in 

the comments are discussed below. 

Based on the rationale set forth in the 

interim final rule and in this document, 

we are adopting the provisions of the 

interim final rule as a final rule with 

changes explained below. Due to the 

nature of the changes and for the 

convenience of the reader, the 

regulation text portion of this document 

restates all of revised part 74. 

a. Eligibility of surviving spouses. One 

commenter expressed the opinion that a 

surviving spouse of a veteran who had 

any disability rating should be 

permitted to maintain a VOSB or a 

SDVOSB for as long as the spouse owns 

and controls the business. 

The rule is consistent with Congress’s 

limitation set forth in 38 U.S.C. 

8127(h)(3), which permits the surviving 

spouse to maintain the status of a VOSB 

or SDVOSB only if the veteran was rated 

as 100 percent disabled or the veteran 

dies as a result of a service-connected 

disability. VA does not have authority 

under section 8127 to expand VOSB or 

SDVOSB status as the commenter 

suggests. We will not make any changes 

to the rule based on the comment. 

b. Yearly verification. One commenter 

suggested that an annual signed 

statement by the veteran business owner 

stating there are no changes in 

ownership or control should be 

sufficient to protect the Department’s 

interests. If ownership or control 

changes, it should be mandated that the 

business owner report it immediately to 

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Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 6099 

the Center for Veterans Enterprise 

(CVE), and the CVE may determine it 

necessary to redo the verification 

application process entirely. 38 CFR 

74.3(e) and 74.21(c)(10) established that 

a business has up to 60 days after a 

change of ownership to file a new VA 

Form 0877, VetBiz VIP Verification 

Program application. This timeframe 

was established with sensitivity to the 

needs of surviving spouses and others 

who may have significant demands due 

to health or medical challenges. 38 CFR 

74.15 also establishes that eligibility is 

limited to 1 year. VA has determined 

that annual examinations are necessary 

to ensure the integrity of the 

Verification Program. This is consistent 

with the annual Federal size 

recertification requirement in the 

Central Contractor Registry. 

c. Examination visits should 

concentrate on management and control 

of operations to establish that a 

company is truly independent and not 

a representative of a non-veteran-owned 

business employing the veteran on a 

commission or fee basis. Two 

commenters expressed concern about 

legitimate parties controlling veteranowned small businesses. One 

commenter suggested that examination 

visits should examine the actual 

business relationship among the 

partners, to include: Individuals who 

control bank account number, terms, 

lines of credit, sale price of goods and 

services, contracts for purchase of goods 

and services, and acceptance of 

quotations from suppliers. This 

commenter also recommended 

reviewing records to establish that the 

eligible party and not the non-veteran is 

receiving funds from payments and 

distributing funds to employees and 

contractors and to ensure that there is 

no record of a payment, including a 

percentage or commission, to the 

eligible party from a non-veteran. The 

second commenter recommended that 

examination visits of pharmaceutical 

distributors include inspection of 

Pedigree or E-Pedigree filings, stateissued pharmaceutical licenses, and the 

product liability insurance policy to 

ensure that the business name and 

manager/owner signatures match and 

that insurance policies are current and 

have an aggregate value of 5 million 

dollars. We make no changes to the rule 

based on this comment. 38 CFR 74.3–4 

address examples of ownership and 

control. 38 CFR 74.20(b) establishes that 

the scope of examination is not limited 

to the documents identified in that 

section. It only establishes that 

examiners shall review those documents 

as a minimum and provides the CVE 

with the flexibility to examine other 

records. VA has determined for 

administrative purposes, it is not 

practical to have specific document 

review requirements for particular 

industries. The rule provides VA the 

discretion to review any pertinent 

documents necessary to satisfy 

Verification requirements. 

d. Site visits. One commenter 

recommended that the Department 

conduct an on-site visit at the 

applicant’s place of business for 100 

percent of the applications found to be 

complete. The site visit must include 

attendance by the veteran owner(s) and 

executive management team (if 

applicable). The purpose of the visit 

would be to substantiate information on 

the application and to review business 

operations. Any conflicts would be 

subject to a second review. The site visit 

would be mandatory for the initial 

application and subsequent visits would 

occur every three years as part of the 

recertification process, or more 

frequently at the applicant’s discretion. 

Such initial site visits would be 

performed within 60 days of receipt of 

the complete application package. The 

site visit would be at no cost to the 

business, and the government would 

agree that there would not be 

unscheduled site visits. 

In the interim final rule, 38 CFR 

74.20(a) provided that the Department 

reserves the right to conduct random 

verification examinations of applicants. 

Also, the interim final rule provided at 

38 CFR 74.20(b) that VA could 

determine to conduct all or part of the 

verification examination at the 

applicant’s offices. First, VA is revising 

38 CFR 74.20(a) to clarify that its intent 

was that verification examinations, 

including site visits, may be random 

and unannounced. Next, in addressing 

the commenter, conducting 100 percent 

site visits upon receipt of complete 

applications is not in the best interests 

of the Department as many of the 

businesses that are seeking verification 

are brand new and have not yet applied 

for any Federal or VA contracts. Also 

VA finds that mandatory site visits 

could be an unnecessary burden to 

vendors when VA can adequately verify 

firms through other means, such as 

document review. The Department will 

monitor awards to companies in the 

Verification Program and make 

decisions on which companies to 

inspect using a combination of factors, 

including staffing and funding. VA does 

not have the resources to conduct 100 

percent site visit for all applicant firms 

in the VIP database. We will not make 

any changes to the rule based on the 

comment. 

e. Relationship between VA’s 

Verification Program and the 

government-wide SDVOSB protest 

process under the Federal Acquisition 

Regulations (FAR), 48 CFR 19.302 and 

19.307. One commenter sought 

clarification on the relationship between 

the Department’s Verification Program 

and the protest procedures contained in 

the FAR. Specifically, a question was 

submitted regarding the Department’s 

intended action when the Small 

Business Administration finds a firm 

ineligible due to a protest decision. 

We agree with the commenter that 

clarification is needed, and § 74.2(e) has 

been added to include guidance in these 

cases. Any firm registered in the VA 

VetBiz VIP database that is found to be 

ineligible due to an SBA protest 

decision or other negative finding will 

be immediately removed from the 

VetBiz VIP database. 

f. Appeals of verification application 

denial or program cancellation 

decisions. One respondent 

recommended that the Department 

establish an appeals process for matters 

limited to the Verification Program. 

Requests for reconsideration of 

application denial decisions are 

addressed in 38 CFR 74.13, ‘‘Can an 

applicant ask CVE to reconsider its 

initial decision to deny an application?’’ 

The language has been revised to add 

the mailing address for submission of 

requests for reconsideration. The 

Director, CVE, shall make the decision 

on requests for reconsideration of 

application denials, and 38 CFR 

74.13(b) has been revised to reflect that 

the timeframe for the issuance of a 

decision has changed from 30 days to 60 

days to allow for a thorough 

consideration of the applicant’s request. 

The decision of the Director, CVE shall 

be final with no further appeal rights. 

This document additionally revises the 

interim final requirement, for the 

issuance of a decision from 30 days to 

60 days, to allow for a more thorough 

consideration of the applicant’s request 

and solicits comments on this regulatory 

amendment. 

With regard to businesses that are 

already participants in the Verification 

program, the rule provides procedures 

for cancellation of verified status, as 

described in 38 CFR 74.22. The interim 

final rule provided that the Director, 

CVE would issue cancellation decisions. 

The final rule has been modified such 

that the Director, CVE issues a Notice of 

Verified Status Cancellation; however, a 

participant may appeal this notice to the 

Executive Director, Office of Small and 

Disadvantaged Business Utilization. 

Section 74.22(e) provides that the 

Executive Director, Office of Small and 

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6100 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 

Disadvantaged Business Utilization and 

Center for Veterans Enterprise shall 

render a decision on such an appeal 

within 60 days after receipt. 

g. Full-time control: One commenter 

suggested that the Department revise 38 

CFR 74.4(c)(1) to require the eligible 

party to work full-time in order to 

establish control of the firm. The 

commenter suggested that the original 

language which requires owners ‘‘show 

sustained and significant time invested 

in the business’’ is insufficient to protect 

the interests of the program and of the 

Department. The commenter offered 

alternate language that would ‘‘require 

the veteran to devote the majority of his/ 

her time to managing the concern.’’ This 

commenter further recommended 

‘‘permitting the veteran to be engaged in 

outside employment/management 

activities only where he/she can show 

that doing so won’t have a significant 

impact on his/her ability to run the 

VOSB or SDVOSB.’’ 

Based on this comment, we have 

revised § 74.4(c)(1) to clarify the issue of 

control of a VOSB and SDVOSB. In lieu 

of the commenter’s suggested language, 

VA has revised the interim final rule to 

require an eligible owner have only one 

business in the program at one time and 

must work full-time in the business. VA 

has determined that this revision will 

ensure the integrity of the program. In 

addition, VA has defined ‘‘full-time’’ in 

38 CFR 74.1. The public is invited to 

comment on the requirement for fulltime work in the business. 

h. Ownership: Profits and 

distributions. Two comments were 

received concerning 38 CFR 74.3. One 

respondent recommended revising 

74.3(a) to adopt language from the 

Internal Revenue Code, 26 U.S.C. 

1563(c)(2)(B), which states that stock in 

a corporation that is held by an 

employees’ trust described in section 

401(a) of the Code will be treated as 

‘‘excluded stock’’ if 5 or fewer persons 

who are individuals, estates, or trusts 

own 50 percent or more of the total 

combined voting power of the 

corporation. Under this proposed 

language, if 4 individuals own 10 

percent each and an Employee Stock 

Ownership Plan (ESOP) owns 60 

percent, the stock held by the ESOP 

would be treated as excluded stock, and 

the four individuals would be treated as 

owning 100 percent of the outstanding 

stock. In this example, eligible parties 

would be required to own 51 percent or 

more of the outstanding stock 

(excluding the ESOP stock). Conversely, 

if there were 10 shareholders who own 

9 percent each and an ESOP that owns 

10 percent, the ESOP stock would be 

treated as outstanding stock. In this 

case, eligible parties would be required 

to own 51 percent of all outstanding 

stock, including the ESOP stock. 

The original text required that 

veterans own 51 percent of the 

outstanding stock (including employee 

stock ownership trusts). VA accepts this 

comment and has revised 38 CFR 

74.3(a). The net effect of this change is 

that a company that is closely held by 

veterans would qualify regardless of the 

size of the ESOP. Alternatively, a firm 

that is not closely held by veterans will 

find it much more difficult to qualify for 

the Verification Program. This 

commenter noted that there are a 

number of government programs that 

are designed to encourage employee 

ownership as a technique to encourage 

teamwork, reduce employee turnover, 

and increase productivity. Adopting this 

change affects a small number of VOSBs 

and SDVOSBs that have adopted ESOPs 

and is consistent with the intent and 

spirit of public policy objectives. 

The second commenter recommended 

expanding 38 CFR 74.3(d) to state that 

a veteran’s ability to share in the profits 

of a concern should be commensurate 

with the extent of his/her ownership 

interest in that concern. Such revision 

would also cover limited liability 

companies (LLC) and partnership 

structures. For instance, if a VOSB owns 

51 percent of an LLC, he/she would be 

entitled to receive 51 percent of the 

profits of that LLC. 

VA accepts this comment and has 

revised 38 CFR 74.3(d)(3) to include a 

partnership or an LLC. Additionally, 38 

CFR 74.3(d)(4) has been added to state 

that an eligible individual’s ability to 

share in the profits of the concern 

should be commensurate with the 

extent of his/her ownership interest in 

that concern. This document 

additionally revises the interim final 

requirement for the evaluation of profits 

and distributions to determine 

ownership interest in ESOPs and LLCs 

and solicits comments on this regulatory 

amendment. 

Other Non-Substantive Changes to the 

Final Rule: The Changes Below Serve 

To Clarify Particular Items From the 

Interim Final Rule in This Final Rule 

The section headings of §§ 74.1, 

74.11, 74.12, 74.15, and 74.21 have been 

revised to include the word ‘‘Program’’ 

following verification. 

The definition of small business 

concern has been revised for purpose of 

consistency to refer to the FAR Part 2 

definition of small business. 

The definition of surviving spouse has 

been revised to add ‘‘or died as a direct 

result of a service-connected disability’’ 

to be consistent with the statutory 

definition at 38 U.S.C. 8127(h)(3). 

The term ‘‘in the line of duty’’ in the 

definition of veteran has been changed 

to ‘‘in line of duty’’ to be consistent with 

the term of art as used in title 38 of the 

United States Code. 

The options for transmitting decisions 

on applications and requests for 

reconsideration have been clarified, as 

stated in 38 CFR 74.11(g) and 74.13(g), 

to include mail, commercial carrier, 

facsimile, or other electronic means. 

VA has revised language in 38 CFR 

74.14 to clarify the time period for 

reapplication for admission to the VA 

VetBiz VIP Verification Program. ‘‘Or 

participant’’ has been added to address 

those concerns whose verification status 

is cancelled. 

Administrative Procedure Act 

Regarding the new interim final 

amendments published within this final 

rule at 38 CFR 74.1 and 74.4(c)(1), 

pursuant to 5 U.S.C. 553(b)(3)(B) and 

(d)(3), we find that there is good cause 

to dispense with advance public notice 

and opportunity to comment and with 

the 30-day delayed effective date. 

Advance solicitation of comments on 

the additional interim final provisions 

would be impracticable and contrary to 

the public interest, as it could delay 

VA’s examination and verification 

procedures. VA has good cause to 

publish the interim final provisions in 

light of the urgent need to ensure that 

business concerns are being properly 

characterized as VOSBs or SDVOSBs, 

which is accomplished through 

verification of ownership and control. 

Immediate implementation of these 

provisions is consistent with the prior 

interim final rule and permits VA to 

continue reviewing basic information 

necessary to the verification process. 

This information is necessary even if, as 

a result of any additional comments 

received after publication of this notice, 

VA needs to further revise any of the 

rules set forth herein. Accordingly, VA 

has found good cause for the additional 

interim final provisions to become 

effective upon publication. 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this final rule will not have a significant 

economic impact on a substantial 

number of small entities as they are 

defined in the Regulatory Flexibility 

Act, 5 U.S.C. 601–612. 

This final rule would generally be 

small business neutral as it applies only 

to applying for verified status in the 

VetBiz.gov VIP database. The overall 

impact of the final rule will be of benefit 

to small businesses owned by veterans 

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Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 6101 

or service-disabled veterans. VA 

estimates the cost to an individual 

business to be less than $100.00 for 70– 

75 percent of the businesses seeking 

verification, and the average cost to the 

entire population of veterans seeking to 

become verified is less than $325.00 on 

average. A related rule describes the 

effect that verified businesses will have 

in the Department’s acquisition 

regulation. This impact is discussed in 

the proposed rule modifying the VA 

Acquisition Regulation which was 

published in the Federal Register at 73 

FR 49141 on August 20, 2008. On this 

basis, the Secretary certifies that the 

adoption of this final rule would not 

have a significant economic impact on 

a substantial number of small entities as 

they are defined in the Regulatory 

Flexibility Act, 5 U.S.C. 601–612. 

Therefore, under 5 U.S.C. 605(b), this 

regulation is exempt from the initial and 

final regulatory flexibility analysis 

requirements of sections 603 and 604. 

Executive Order 12866 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

when regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety, and other advantages; 

distributive impacts; and equity). The 

Executive Order classifies a ‘‘significant 

regulatory action,’’ requiring review by 

the Office of Management and Budget 

(OMB) unless OMB waives such review, 

as any regulatory action that is likely to 

result in a rule that may: (1) Have an 

annual effect on the economy of $100 

million or more or adversely affect in a 

material way the economy, a sector of 

the economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

The economic, interagency, 

budgetary, legal, and policy 

implications of this rule have been 

examined and it has been determined to 

be a significant regulatory action under 

the Executive Order. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

issuing any rule that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

given year. This rule would have no 

such effect on State, local, and tribal 

governments, or on the private sector. 

Paperwork Reduction Act 

This final rule contains provisions 

that constitute collections of 

information under the Paperwork 

Reduction Act (44 U.S.C. 3501–3521). 

OMB has approved these collections 

and has assigned control number 2900– 

0675. VA displays this control number 

under the applicable sections of the 

regulations in this final rule. OMB 

assigns control numbers to collections 

of information it approves. VA may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

Catalog of Federal Domestic Assistance 

This final rule affects the verification 

guidelines of veteran-owned small 

businesses, for which there is no Catalog 

of Federal Domestic Assistance program 

number. 

List of Subjects in 38 CFR Part 74 

Administrative practice and 

procedures, Privacy, Reporting and 

recordkeeping requirements, Small 

business, Veteran, Veteran-owned small 

business, Verification. 

Approved: October 5, 2009. 

John R. Gingrich, 

Chief of Staff, Department of Veterans Affairs. 

■ Accordingly, the interim final rule 

adding 38 CFR Part 74, which was 

published in the Federal Register at 73 

FR 29024, on May 19, 2008, is adopted 

as a final rule with changes, as follows: 

PART 74—VETERANS SMALL 

BUSINESS REGULATIONS 

General Guidelines 

Sec. 

74.1 What definitions are important for 

VetBiz Vendor Information Pages (VIP) 

Verification Program? 

74.2 What are the eligibility requirements a 

concern must meet for VetBiz VIP 

Verification Program? 

74.3 Who does the Center for Veterans 

Enterprise (CVE) consider to own a 

veteran-owned small business? 

74.4 Who does CVE consider to control a 

veteran-owned small business? 

74.5 How does CVE determine affiliation? 

Application Guidelines 

74.10 Where must an application be filed? 

74.11 How does CVE process applications 

for VetBiz VIP Verification Program? 

74.12 What must a concern submit to apply 

for VetBiz VIP Verification Program? 

74.13 Can an applicant ask CVE to 

reconsider its initial decision to deny an 

application? 

74.14 Can an applicant or participant 

reapply for admission to the VetBiz VIP 

Verification Program? 

74.15 What length of time may a business 

participate in VetBiz VIP Verification 

Program? 

Oversight Guidelines 

74.20 What is a verification examination 

and what will CVE examine? 

74.21 What are the ways a business may 

exit VetBiz VIP Verification Program 

status? 

74.22 What are the procedures for 

cancellation? 

Records Management 

74.25 What types of personally identifiable 

information will VA collect? 

74.26 What types of business information 

will VA collect? 

74.27 How will VA store information? 

74.28 Who may examine records? 

74.29 When will VA dispose of records? 

Authority: 38 U.S.C. 501, 513, and as 

noted in specific sections. 

General Guidelines 

§ 74.1 What definitions are important for 

VetBiz Vendor Information Pages (VIP) 

Verification Program? 

For the purposes of part 74, the 

following definitions apply. 

Center for Veterans Enterprise (CVE) 

is an office within the U.S. Department 

of Veterans Affairs (VA) and is a 

subdivision of VA’s Office of Small and 

Disadvantaged Business Utilization. The 

CVE helps veterans interested in 

forming or expanding their own small 

businesses. It also helps VA contracting 

offices identify veteran-owned small 

businesses and works with the Small 

Business Administration’s Veterans 

Business Development Officers and 

Small Business Development Centers 

nationwide regarding veterans’ business 

financing, management, and technical 

assistance needs. 

Days are calendar days. In computing 

any period of time described in part 74, 

the day from which the period begins to 

run is not counted, and when the last 

day of the period is a Saturday, Sunday, 

or Federal holiday, the period extends 

to the next day that is not a Saturday, 

Sunday, or Federal holiday. Similarly, 

in circumstances where CVE is closed 

for all or part of the last day, the period 

extends to the next day on which the 

agency is open. 

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Day-to-day management means 

supervising the executive team, 

formulating sound policies and setting 

strategic direction. 

Day-to-day operations mean the 

marketing, production, sales, and 

administrative functions of the firm. 

Eligible individual means a veteran, 

service-disabled veteran or surviving 

spouse, as defined in this section. 

Full-time means working at the 

business during the normal working 

hours, which equate to Monday through 

Friday, approximately 9 a.m. to 5 p.m. 

Immediate family member means 

father, mother, husband, wife, son, 

daughter, brother, sister, grandfather, 

grandmother, grandson, granddaughter, 

father-in-law, and mother-in-law. 

Joint venture is an association of two 

or more small business concerns to 

engage in and carry out a single, specific 

business venture for joint profit, for 

which purpose they combine their 

efforts, property, money, skill, or 

knowledge, but not on a continuing or 

permanent basis for conducting 

business generally. For VA contracts, a 

joint venture must be in the form of a 

separate legal entity. 

Negative control includes, but is not 

limited to, instances where a minority 

shareholder has the ability, under the 

concern’s chapter, by-laws, or 

shareholder’s agreement, to prevent a 

quorum or otherwise block action by the 

board of directors or shareholders. 

Non-veteran means any individual 

who does not claim veteran status, or 

upon whose status an applicant or 

participant does not rely in qualifying 

for VetBiz Vendor Information Pages 

(VIP) Verification Program participation. 

Office of Small and Disadvantaged 

Business Utilization is the office within 

the Department of Veterans Affairs that 

establishes and monitors small business 

program goals at the prime and 

subcontract levels and which functions 

as the ombudsman for veterans and 

service-disabled veterans seeking 

procurement opportunities with the 

Department. 

Participant means a veteran-owned 

small business concern that has verified 

status in the VetBiz Vendor Information 

Pages database. 

Primary industry classification means 

the six-digit North American Industry 

Classification System (NAICS) code 

designation which best describes the 

primary business activity of the 

participant. The NAICS code 

designations are described in the North 

American Industry Classification 

System (NAICS) Manual published by 

the U.S. Office of Management and 

Budget. 

Principal place of business means the 

business location where the individuals 

who manage the concern’s day-to-day 

operations spend most working hours 

and where top management’s current 

business records are kept. If the office 

from which management is directed and 

where the current business records are 

kept are in different locations, CVE will 

determine the principal place of 

business for program purposes. 

Same or similar line of business 

means business activities within the 

same three-digit ‘‘Major Group’’ of the 

NAICS Manual as the primary industry 

classification of the applicant or 

participant. The phrase ‘‘same business 

area’’ is synonymous with this 

definition. 

Service-disabled veteran is a veteran 

who possesses either a disability rating 

letter issued by the Department of 

Veterans Affairs, establishing a serviceconnected rating between 0 and 100 

percent, or a disability determination 

from the Department of Defense. 

Service-disabled veteran-owned small 

business concern is a business not less 

than 51 percent of which is owned by 

one or more service-disabled veterans, 

or in the case of any publicly owned 

business, not less than 51 percent of the 

stock of which is owned by one or more 

service-disabled veterans; the 

management and daily business 

operations of which are controlled by 

one or more service-disabled veterans, 

or in the case of a veteran with a 

permanent and severe disability, a 

spouse or permanent caregiver of such 

veteran. In addition, some businesses 

may be owned and operated by an 

eligible surviving spouse. Reservists or 

members of the National Guard disabled 

from a disease or injury incurred or 

aggravated in line of duty or while in 

training status also qualify. 

Small business concern is—CVE 

applies the small business concern 

definition established by 48 CFR 2.101. 

Surviving spouse is any individual 

identified as such by VA’s Veterans 

Benefits Administration and listed in its 

database of veterans and family 

members. To be eligible for VetBiz VIP 

Verification, the following conditions 

must apply: 

(1) If the death of the veteran causes 

the small business concern to be less 

than 51 percent owned by one or more 

veterans, the surviving spouse of such 

veteran who acquires ownership rights 

in such small business shall, for the 

period described in paragraph (2) of this 

definition, be treated as if the surviving 

spouse were that veteran for the purpose 

of maintaining the status of the small 

business concern as a service-disabled 

veteran-owned small business. 

(2) The period referred to in 

paragraph (1) of this definition is the 

period beginning on the date on which 

the veteran dies and ending on the 

earliest of the following dates: 

(i) The date on which the surviving 

spouse remarries; 

(ii) The date on which the surviving 

spouse relinquishes an ownership 

interest in the small business concern; 

(iii) The date that is 10 years after the 

date of the veteran’s death; or 

(iv) The date on which the business 

concern is no longer small under 

Federal small business size standards. 

(3) The veteran must have had a 100 

percent service-connected disability or 

died as a direct result of a serviceconnected disability. 

Note to definition of surviving spouse: For 

program eligibility purposes, the surviving 

spouse has the same rights and entitlements 

of the service-disabled veteran who 

transferred ownership upon his or her death. 

Unconditional ownership means 

ownership that is not subject to 

conditions precedent, conditions 

subsequent, executory agreements, 

voting trusts, restrictions on or 

assignments of voting rights, or other 

arrangements causing or potentially 

causing ownership benefits to go to 

another (other than after death or 

incapacity). The pledge or encumbrance 

of stock or other ownership interest as 

collateral, including seller-financed 

transactions, does not affect the 

unconditional nature of ownership if 

the terms follow normal commercial 

practices and the owner retains control 

absent violations of the terms. 

VA is the U.S. Department of Veterans 

Affairs. 

Vendor Information Pages (VIP) is a 

database of businesses eligible to 

participate in VA’s Veteran-owned 

Small Business Program. The online 

database may be accessed at no charge 

via the Internet at http:// 

www.VetBiz.gov. 

Verification eligibility period is a 12- 

month period that begins on the date the 

Center for Veterans Enterprise issues the 

approval letter establishing verified 

status. The participant must submit a 

new application each year to continue 

eligibility. 

VetBiz.gov (VetBiz) is a Web portal 

VA maintains at http://www.VetBiz.gov. 

It hosts the Vendor Information Pages 

database. 

Veteran is a person who served on 

active duty with the U.S. Army, Air 

Force, Navy, Marine Corps or Coast 

Guard, for any length of time and at any 

place and who was discharged or 

released under conditions other than 

dishonorable. Reservists or members of 

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the National Guard called to Federal 

active duty or disabled from a disease or 

injury incurred or aggravated in line of 

duty or while in training status also 

qualify as a veteran. 

Veteran-owned small business 

concern (VOSB) is a small business 

concern that is not less than 51 percent 

owned by one or more veterans, or in 

the case of any publicly owned 

business, not less than 51 percent of the 

stock of which is owned by one or more 

veterans; the management and daily 

business operations of which are 

controlled by one or more veterans and 

qualifies as ‘‘small’’ for Federal business 

size standard purposes. All servicedisabled veteran-owned small business 

concerns (SDVOSBs) are also, by 

definition, veteran-owned small 

business concerns. When used in these 

guidelines, the term ‘‘VOSB’’ includes 

SDVOSBs. 

Veterans Affairs Acquisition 

Regulation (VAAR) is the set of rules 

that specifically govern requirements 

exclusive to the U.S. Department of 

Veterans Affairs (VA) prime and 

subcontracting actions. The VAAR is 

chapter 8 of title 48, Code of Federal 

Regulations, and supplements the 

Federal Acquisition Regulation (FAR), 

which contains guidance applicable to 

most Federal agencies. 

§ 74.2 What are the eligibility requirements 

a concern must meet for VetBiz VIP 

Verification Program? 

(a) Ownership and control. A small 

business concern must be 

unconditionally owned and controlled 

by one or more eligible veterans, 

service-disabled veterans or surviving 

spouses, have completed the online 

Vendor Information Pages database 

forms at http://www.VetBiz.gov, and has 

been examined by VA’s Center for 

Veterans Enterprise. Such businesses 

appear in the VIP database as ‘‘verified.’’ 

(b) Good character. Veterans, servicedisabled veterans and surviving spouses 

with ownership interests in VetBiz 

verified businesses must have good 

character. Debarred or suspended 

concerns or concerns owned or 

controlled by debarred or suspended 

persons are ineligible for VetBiz VIP 

Verification. 

(c) False Statements. If, during the 

processing of an application, CVE 

determines that an applicant has 

knowingly submitted false information, 

regardless of whether correct 

information would cause CVE to deny 

the application, and regardless of 

whether correct information was given 

to CVE in accompanying documents, 

CVE will deny the application. If, after 

verifying the Participant’s eligibility, 

CVE discovers that false information has 

been knowingly submitted by a firm, 

CVE will remove the ‘‘verified’’ status 

from the VIP database and notify the 

business by phone and mail. Whenever 

CVE determines that the applicant 

submitted false information, the matter 

will be referred to the Office of 

Inspector General for review. In 

addition, the CVE will request that 

debarment proceedings be initiated by 

the Department. 

(d) Federal financial obligations. 

Neither a firm nor any of its eligible 

individuals that fails to pay significant 

financial obligations owed to the 

Federal Government, including 

unresolved tax liens and defaults on 

Federal loans or other Federally assisted 

financing, is eligible for VetBiz VIP 

Verification. 

(e) U.S. Small Business 

Administration (SBA) Protest Decisions. 

Any firm registered in the VetBiz VIP 

database that is found to be ineligible 

due to an SBA protest decision or other 

negative finding will be immediately 

removed from the VetBiz VIP database. 

Until such time as CVE receives official 

notification that the firm has proven 

that it has successfully overcome the 

grounds for the determination or that 

the SBA decision is overturned on 

appeal, the firm will not be eligible to 

participate in the 38 U.S.C. 8127 

program. 

§ 74.3 Who does the Center for Veterans 

Enterprise (CVE) consider to own a veteranowned small business? 

An applicant or participant must be at 

least 51 percent unconditionally and 

directly owned by one or more veterans 

or service-disabled veterans. 

(a) Ownership must be direct. 

Ownership by one or more veterans or 

service-disabled veterans must be direct 

ownership. An applicant or participant 

owned principally by another business 

entity or by a trust (including employee 

stock ownership plans [ESOP]) that is in 

turn owned by one or more veterans or 

service-disabled veterans does not meet 

this requirement. However, ownership 

by a trust, such as a living trust, may be 

treated as the functional equivalent of 

ownership by a veteran or servicedisabled veteran where the trust is 

revocable, and the veteran or servicedisabled veteran is the grantor, a trustee, 

and the sole current beneficiary of the 

trust. For employee stock ownership 

plans where 5 or fewer persons who are 

individuals, estates, or trusts own 50 

percent or more of the total combined 

voting power of the corporation, the 

employee plan will be determined to be 

‘‘excluded stock’’ and eligible parties 

must control 51 percent or more of the 

combined voting power of the 

corporation. For employee stock 

ownership plans where greater than 5 

persons who are individuals, estates, or 

trusts own 50 percent or more of the 

total stock, eligible parties must control 

51 percent or more of the combined 

voting power of the corporation, 

including the ESOP stock. 

(b) Ownership must be unconditional. 

Ownership by one or more veterans or 

service-disabled veterans must be 

unconditional ownership. Ownership 

must not be subject to conditions 

precedent, conditions subsequent, 

executory agreements, voting trusts, 

restrictions on assignments of voting 

rights, or other arrangements causing or 

potentially causing ownership benefits 

to go to another (other than after death 

or incapacity). The pledge or 

encumbrance of stock or other 

ownership interest as collateral, 

including seller-financed transactions, 

does not affect the unconditional nature 

of ownership if the terms follow normal 

commercial practices and the owner 

retains control absent violations of the 

terms. In particular, CVE will evaluate 

ownership according to the following 

criteria for specific types of small 

business concerns. 

(1) Ownership of a partnership. In the 

case of a concern that is a partnership, 

at least 51 percent of every class of 

partnership interest must be 

unconditionally owned by one or more 

veterans or service-disabled veterans. 

The ownership must be reflected in the 

concern’s partnership agreement. 

(2) Ownership of a limited liability 

company. In the case of a concern that 

is a limited liability company, at least 

51 percent of each class of member 

interest must be unconditionally owned 

by one or more veterans or servicedisabled veterans. 

(3) Ownership of a corporation. In the 

case of a concern that is a corporation, 

at least 51 percent of each class of 

voting stock outstanding and 51 percent 

of the aggregate of all stock outstanding 

must be unconditionally owned by one 

or more veterans or service-disabled 

veterans. 

(c) Stock options’ effect on ownership. 

In determining unconditional 

ownership, CVE will disregard any 

unexercised stock options or similar 

agreements held by veterans or servicedisabled veterans. However, any 

unexercised stock options or similar 

agreements (including rights to convert 

non-voting stock or debentures into 

voting stock) held by non-veterans will 

be treated as exercised, except for any 

ownership interests that are held by 

investment companies licensed under 

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part 107 of title 13, Code of Federal 

Regulations. 

(d) Profits and distributions. One or 

more veterans or service-disabled 

veterans must be entitled to receive: 

(1) At least 51 percent of the annual 

distribution of profits paid to the 

owners of a corporate, partnership, or 

LLC applicant concern; 

(2) 100 percent of the value of each 

share of stock owned by them in the 

event that the stock is sold; and 

(3) At least 51 percent of the retained 

earnings of the concern and 100 percent 

of the unencumbered value of each 

share of stock owned in the event of 

dissolution of the corporation, 

partnership, or LLC. 

(4) An eligible individual’s ability to 

share in the profits of the concern 

should be commensurate with the 

extent of his/her ownership interest in 

that concern. 

(e) Change of ownership. (1) A 

participant may remain eligible after a 

change in its ownership or business 

structure, so long as one or more 

veterans or service-disabled veterans 

own and control it after the change and 

the participant files a new application 

identifying the new veteran owners or 

their new business interest. 

(2) Any participant that is performing 

contracts and desires to substitute one 

veteran owner for another shall submit 

a proposed novation agreement and 

supporting documentation in 

accordance with FAR Subpart 42.12 to 

the contracting officer prior to the 

substitution or change of ownership for 

approval. 

(3) Where the transfer results from the 

death or incapacity due to a serious, 

long-term illness or injury of an eligible 

principal, prior approval is not required, 

but the concern must file a new 

application with contracting officer and 

CVE within 60 days of the change. 

Existing contracts may be performed to 

the end of the instant term. However, no 

options may be exercised. 

(4) Continued eligibility of the 

participant with new ownership and the 

award of any new contracts require that 

CVE verify all eligibility requirements 

are met by the concern and the new 

owners. 

(f) Community property laws given 

effect. In determining ownership 

interests when an owner resides in any 

of the community property States or 

territories of the United States, CVE 

considers applicable State community 

property laws. If only one spouse claims 

veteran status, that spouse’s ownership 

interest will be considered 

unconditionally held only to the extent 

it is vested by the community property 

laws. 

§ 74.4 Who does CVE consider to control 

a veteran-owned small business? 

(a) Control means both the day-to-day 

management and long-term decisionmaking authority for the VOSB. Many 

persons share control of a concern, 

including each of those occupying the 

following positions: Officer, director, 

general partner, managing partner, 

managing member and manager. In 

addition, key employees who possess 

expertise or responsibilities related to 

the concern’s primary economic activity 

may share significant control of the 

concern. CVE will consider the control 

potential of such key employees on a 

case-by-case basis. 

(b) Control is not the same as 

ownership, although both may reside in 

the same person. CVE regards control as 

including both the strategic policy 

setting exercised by boards of directors 

and the day-to-day management and 

administration of business operations. 

An applicant or participant’s 

management and daily business 

operations must be conducted by one or 

more veterans or service-disabled 

veterans. Individuals managing the 

concern must have managerial 

experience of the extent and complexity 

needed to run the concern. A veteran 

need not have the technical expertise or 

possess a required license to be found 

to control an applicant or participant if 

he or she can demonstrate that he or she 

has ultimate managerial and supervisory 

control over those who possess the 

required licenses or technical expertise. 

However, where a critical license is held 

by a non-veteran having an equity 

interest in the applicant or participant 

firm, the non-veteran may be found to 

control the firm. 

(c)(1) An applicant or participant 

must be controlled by one or more 

veterans or service-disabled veterans 

who possess requisite management 

capabilities. With the exception of jointventure agreements, an eligible owner 

may only have one business 

participating in the Verification Program 

at one time and must work full-time in 

the business as defined in § 74.1. 

(2) An eligible full-time manager must 

hold the highest officer position 

(usually President or Chief Executive 

Officer) in the applicant or participant. 

(3) One or more veterans or servicedisabled veteran owners who manage 

the applicant or participant must devote 

full-time to the business during the 

normal working hours of firms in the 

same or similar line of business. Work 

in a wholly-owned subsidiary of the 

applicant or participant may be 

considered to meet the requirement of 

full-time devotion. This applies only to 

a subsidiary owned by the VOSB itself, 

and not to firms in which the veteran 

has a mere ownership interest. 

(4) Except as provided in paragraph 

(d)(1) of this section, a veteran owner’s 

unexercised right to cause a change in 

the management of the applicant 

concern does not in itself constitute 

veteran control, regardless of how 

quickly or easily the right could be 

exercised. 

(d) In the case of a partnership, one 

or more veterans or service-disabled 

veterans must serve as general partners, 

with control over all partnership 

decisions. A partnership in which no 

veteran is a general partner will be 

ineligible for participation. 

(e) In the case of a limited liability 

company, one or more veterans or 

service-disabled veterans must serve as 

management members, with control 

over all decisions of the limited liability 

company. 

(f) One or more veterans or servicedisabled veterans must control the 

board of directors of a corporate 

applicant or participant. 

(1) CVE will deem veterans or servicedisabled veterans to control the board of 

directors where: 

(i) A single veteran owns 100 percent 

of all voting stock of an applicant or 

participant concern; 

(ii) A single veteran owns at least 51 

percent of all voting stock of an 

applicant or participant, the individual 

is on the board of directors and no super 

majority voting requirements exist for 

shareholders to approve corporation 

actions. Where supermajority voting 

requirements are provided for in the 

concern’s articles of incorporation, its 

by-laws, or by State law, the veteran 

must own at least the percent of the 

voting stock needed to overcome any 

such supermajority voting requirements; 

or 

(iii) No single veteran owns 51 

percent of all voting stock but multiple 

veterans in combination do own at least 

51 percent of all voting stock, each such 

veteran is on the board of directors, no 

supermajority voting requirements exist, 

and the veteran shareholders can 

demonstrate that they have made 

enforceable arrangements to permit one 

of them to vote the stock of all as a block 

without a shareholder meeting. Where 

the concern has supermajority voting 

requirements, the veteran shareholders 

must own at least that percentage of 

voting stock needed to overcome any 

such supermajority ownership 

requirements. 

(2) Where an applicant or participant 

does not meet the requirements set forth 

in paragraph (d)(1) of this section, the 

veteran(s) upon whom eligibility is 

based must control the board of 

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directors through actual numbers of 

voting directors or, where permitted by 

state law, through weighted voting (e.g., 

in a concern having a two-person board 

of directors where one individual on the 

board is a veteran and one is not, the 

veteran vote must be weighted—worth 

more than one vote—in order for the 

concern to be eligible for VetBiz VIP 

Verification). Where a concern seeks to 

comply with this paragraph: 

(i) Provisions for the establishment of 

a quorum cannot permit non-veteran 

directors to control the board of 

directors, directly or indirectly; 

(ii) Any executive committee of the 

board of directors must be controlled by 

veteran directors unless the executive 

committee can only make 

recommendations to and cannot 

independently exercise the authority of 

the board of directors. 

(3) Non-voting, advisory, or honorary 

directors may be appointed without 

affecting veterans’ or service-disabled 

veterans’ control of the board of 

directors. 

(4) Arrangements regarding the 

structure and voting rights of the board 

of directors must comply with 

applicable state law. 

(g) Non-veterans may be involved in 

the management of an applicant or 

participant, and may be stockholders, 

partners, limited liability members, 

officers, or directors of the applicant or 

participant. With the exception of a 

spouse or personal caregiver who 

represents a severely disabled veteran 

owner, no such non-veteran or 

immediate family member may: 

(1) Exercise actual control or have the 

power to control the applicant or 

participant; 

(2) Be a former employer or a 

principal of a former employer of any 

affiliated business of the applicant or 

participant, unless it is determined by 

the CVE that the relationship between 

the former employer or principal and 

the eligible individual or applicant 

concern does not give the former 

employer actual control or the potential 

to control the applicant or participant 

and such relationship is in the best 

interests of the participant firm; or 

(3) Receive compensation from the 

applicant or participant in any form as 

directors, officers or employees, 

including dividends, that exceeds the 

compensation to be received by the 

highest officer (usually chief executive 

officer or president). The highest 

ranking officer may elect to take a lower 

salary than a non-veteran only upon 

demonstrating that it helps the 

applicant or participant. 

(h) Non-veterans who transfer 

majority stock ownership or control of 

the firm to an immediate family member 

within 2 years prior to the application 

and remain involved in the firm as a 

stockholder, officer, director, or key 

employee of the firm are presumed to 

control the firm. The presumption may 

be rebutted by showing that the 

transferee has independent management 

experience necessary to control the 

operation of the firm, and indeed is 

participating in the management of the 

firm. 

(i) Non-veterans or entities may be 

found to control or have the power to 

control in any of the following 

circumstances, which are illustrative 

only and not all inclusive: 

(1) Non-veterans control the board of 

directors of the applicant or participant, 

either directly through majority voting 

membership, or indirectly, where the 

by-laws allow non-veterans effectively 

to prevent a quorum or block actions 

proposed by the veterans or servicedisabled veterans. 

(2) A non-veteran or entity, having an 

equity interest in the applicant or 

participant, provides critical financial or 

bonding support or a critical license to 

the applicant or participant which 

directly or indirectly allows the nonveteran significantly to influence 

business decisions of the participant, 

unless an exception is authorized by the 

Office of Small and Disadvantaged 

Business Utilization. 

(3) A non-veteran or entity controls 

the applicant or participant or an 

individual veteran owner through loan 

arrangements. Providing a loan guaranty 

on commercially reasonable terms does 

not, by itself, give a non-veteran or 

entity the power to control a firm. 

(4) Business relationships exist with 

non-veterans or entities which cause 

such dependence that the applicant or 

participant cannot exercise independent 

business judgment without great 

economic risk. 

§ 74.5 How does CVE determine 

affiliation? 

The Center for Veterans Enterprise 

applies the affiliation rules established 

by the Small Business Administration in 

13 CFR part 121. 

Application Guidelines 

§ 74.10 Where must an application be 

filed? 

An application for VetBiz VIP 

Verification status must be 

electronically filed in the Vendor 

Information Pages database located in 

the Center for Veterans Enterprise’s Web 

portal, http://www.VetBiz.gov. 

Guidelines and forms are located on the 

Web portal. Upon receipt of the 

applicant’s electronic submission, an 

acknowledgment message will be 

dispatched to the concern, containing 

estimated processing time and other 

information. Address information for 

the CVE is also contained on the Web 

portal. Correspondence may be 

dispatched to: Director, Center for 

Veterans Enterprise (00VE), U.S. 

Department of Veterans Affairs, 810 

Vermont Avenue, NW., Washington, DC 

20420. 

(The Office of Management and 

Budget has approved the information 

collection requirements in this section 

under control number 2900–0675.) 

§ 74.11 How does CVE process 

applications for VetBiz VIP Verification 

Program? 

(a) The Director, Center for Veterans 

Enterprise, is authorized to approve or 

deny applications for VetBiz VIP 

Verification. The CVE will receive, 

review and evaluate all VetBiz VIP 

Verification applications. CVE will 

advise each applicant within 30 days, 

when practicable, after the receipt of an 

application whether the application is 

complete and suitable for evaluation 

and, if not, what additional information 

or clarification is required to complete 

the application. CVE will process an 

application for VetBiz VIP Verification 

status within 60 days, when practicable, 

of receipt of a complete application 

package. Incomplete application 

packages will not be processed. 

(b) CVE, in its sole discretion, may 

request clarification of information 

contained in the application at any time 

in the eligibility determination process. 

CVE will take into account any 

clarifications made by an applicant in 

response to a request for such by CVE. 

(c) An applicant’s eligibility will be 

based on circumstances existing on the 

date of application, except where 

clarification is made pursuant to 

paragraph (b) of this section or as 

provided in paragraph (d) of this 

section. 

(d) Changed circumstances for an 

applicant occurring subsequent to its 

application and which adversely affect 

eligibility will be considered and may 

constitute grounds for denial of the 

application. The applicant must inform 

CVE of any changed circumstances that 

could adversely affect its eligibility for 

the program (i.e., ownership or control 

changes) during its application review. 

Failure to inform CVE of any such 

changed circumstances constitutes good 

cause for which CVE may withdraw 

verified status for the participant if noncompliance is discovered after a 

participant has been verified. 

(e) The decision of the Director, CVE, 

to approve or deny an application will 

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6106 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 

be in writing. A decision to deny 

verification status will state the specific 

reasons for denial, and will inform the 

applicant of any appeal rights. 

(f) If the Director, CVE, approves the 

application, the date of the approval 

letter is the date of participant 

verification for purposes of determining 

the participant’s verification eligibility 

term. 

(g) The decision may be sent by mail, 

commercial carrier, facsimile 

transmission, or other electronic means. 

(The Office of Management and 

Budget has approved the information 

collection requirements in this section 

under control number 2900–0675.) 

§ 74.12 What must a concern submit to 

apply for VetBiz VIP Verification Program? 

Each VetBiz VIP Verification 

applicant must submit the electronic 

forms and attachments CVE requires. 

All electronic forms are available on the 

VetBiz.gov Vendor Information Pages 

database Web pages. At the time the 

applicant dispatches the electronic 

forms, the applicant must also retain on 

file at the principal place of business a 

completed copy of the electronic forms 

supplemented by manual records that 

will be used in verification 

examinations. These forms and 

attachments will include, but not be 

limited to, financial statements, Federal 

personal and business tax returns, 

payroll records and personal history 

statements. An applicant must also 

retain in the application file IRS Form 

4506, Request for Copy or Transcript of 

Tax Form. These materials shall be filed 

together to maximize efficiency of 

verification examination visits. Together 

with the electronic documents, these 

manual records will provide the CVE 

verification examiner with sufficient 

information to establish the 

management, control and operating 

status of the business on the date of 

submission. 

(The Office of Management and 

Budget has approved the information 

collection requirements in this section 

under control number 2900–0675.) 

§ 74.13 Can an applicant ask CVE to 

reconsider its initial decision to deny an 

application? 

(a) An applicant may request that the 

Director, CVE, reconsider his or her 

decision to deny an application by filing 

a request for reconsideration with CVE 

within 30 days of receipt of CVE’s 

denial decision. ‘‘Filing’’ means a 

document is received by CVE by 5:30 

p.m., eastern time, on that day. 

Documents may be filed by hand 

delivery, mail, commercial carrier, or 

facsimile transmission. Hand delivery 

and other means of delivery may not be 

practicable during certain periods due, 

for example, to security concerns or 

equipment failures. The filing party 

bears the risk that the delivery method 

chosen will not result in timely receipt 

at CVE. Submit requests for 

reconsideration to: Director, Center for 

Veterans Enterprise (00VE), U.S. 

Department of Veterans Affairs, 810 

Vermont Avenue, NW., Washington, DC 

20420. A formal decision will be issued 

within 60 days after receipt. 

(b) The Director, CVE, will issue a 

written decision within 60 days, when 

practicable, of receipt of the applicant’s 

request. The Director, CVE, may either 

approve the application, deny it on the 

same grounds as the original decision, 

or deny it on other grounds. If denied, 

the Director, CVE, will explain why the 

applicant is not eligible for the VetBiz 

VIP Verification and give specific 

reasons for the denial. 

(c) If the Director, CVE, denies the 

application solely on issues not raised 

in the initial denial, the applicant may 

ask for reconsideration as if it were an 

initial denial. 

(d) If CVE determines that a concern 

may not qualify as small, they may 

directly deny an application for VetBiz 

VIP Verification or may request a formal 

size determination from the U.S. Small 

Business Administration (SBA). A 

concern whose application is denied 

because it is other than a small business 

concern by CVE may request a formal 

size determination from the SBA 

Associate Administrator, Office of 

Government Contracting (ATTN: 

Director, Office of Size Standards), 409 

3rd Street, SW., Washington, DC 20416. 

A favorable determination by SBA will 

enable the firm to immediately submit 

a new VetBiz VIP Verification. 

(e) A denial decision that is based on 

the failure to meet any veteran or 

service-disabled veteran eligibility 

criteria is not subject to a request for 

reconsideration and is the final decision 

of CVE. 

(f) Except as provided in paragraph (c) 

of this section, the decision on the 

request for reconsideration shall be 

final. 

(g) The decision may be sent by mail, 

commercial carrier, facsimile 

transmission, or other electronic means. 

§ 74.14 Can an applicant or participant 

reapply for admission to the VetBiz VIP 

Verification Program? 

Once an application, a request for 

reconsideration, or an appeal to a 

cancellation notice, as applicable, has 

been denied, the applicant or 

participant shall be required to wait for 

a period of 6 months before a new 

application will be processed by CVE. 

§ 74.15 What length of time may a 

business participate in VetBiz VIP 

Verification Program? 

(a) A participant receives an eligibility 

term of 1 year from the date of CVE’s 

approval letter establishing verified 

status. The participant must maintain its 

eligibility during its tenure and must 

inform CVE of any changes that would 

adversely affect its eligibility. The 

eligibility term may be shortened by 

cancellation by CVE or voluntary 

withdrawal by the participant (i.e., no 

longer eligible as a small business 

concern), as provided for in this 

subpart. 

(b) When at least 50 percent of the 

assets of a concern are the same as those 

of an affiliated business, the concern 

will not be eligible for verification. 

(c) CVE may initiate a verification 

examination whenever it receives 

credible information calling into the 

question a participant’s eligibility as a 

VOSB. Upon its completion of the 

examination, CVE will issue a written 

decision regarding the continued 

eligibility status of the questioned 

participant. 

(d) If CVE finds that the participant 

does not qualify as a VOSB, the 

procedures at § 74.22 will apply. 

(e) If CVE finds that the participant 

continues to qualify as a VOSB, the 

program term remains in effect. 

Oversight Guidelines 

§ 74.20 What is a verification examination 

and what will CVE examine? 

(a) General. A verification 

examination is an investigation by CVE 

officials, which verifies the accuracy of 

any statement or information provided 

as part of the VetBiz VIP Verification 

application process. Thus, examiners 

may verify that the concern currently 

meets the eligibility requirements, and 

that it met such requirements at the time 

of its application or its most recent size 

recertification. An examination may be 

conducted on a random, unannounced 

basis, or upon receipt of specific and 

credible information alleging that a 

participant no longer meets eligibility 

requirements. 

(b) Scope of examination. CVE may 

conduct the examination, or parts of the 

program examination, at one or all of 

the participant’s offices. CVE will 

determine the location of the 

examination. Examiners may review any 

information related to the concern’s 

eligibility requirements including, but 

not limited to, documentation related to 

the legal structure, ownership and 

control of the concern. As a minimum, 

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Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 6107 

examiners shall review all documents 

supporting the application, as described 

in § 74.12. These include: Financial 

statements; Federal personal and 

business tax returns; personal history 

statements; and Request for Copy or 

Transcript of Tax Form (IRS Form 4506) 

for up to 3 years. Other documents, 

which may be reviewed include (if 

applicable): Articles of Incorporation/ 

Organization; corporate by-laws or 

operating agreements; organizational, 

annual and board/member meeting 

records; stock ledgers and certificates; 

State-issued Certificates of Good 

Standing; contract, lease and loan 

agreements; payroll records; bank 

account signature cards; and licenses. 

§ 74.21 What are the ways a business may 

exit VetBiz VIP Verification Program status? 

A participant may: 

(a) Voluntarily cancel its status by 

submitting a written request to CVE 

requesting that the ‘‘verified’’ status 

button be removed from the Vendor 

Information Pages database; or 

(b) Delete its record entirely from the 

Vendor Information Pages database; or 

(c) CVE may cancel the ‘‘verified’’ 

status button for good cause upon 

formal notice to the participant. 

Examples of good cause include, but are 

not limited to, the following: 

(1) Submission of false information in 

the participant’s VetBiz VIP Verification 

application. 

(2) Failure by the participant to 

maintain its eligibility for program 

participation. 

(3) Failure by the participant for any 

reason, including the death of an 

individual upon whom eligibility was 

based, to maintain ownership, 

management, and control by veterans, 

service-disabled veterans or surviving 

spouses. 

(4) Failure by the concern to disclose 

to CVE the extent to which non-veteran 

persons or firms participate in the 

management of the participant. 

(5) Debarment, suspension, voluntary 

exclusion, or ineligibility of the 

participant or its owners. 

(6) A pattern of failure to make 

required submissions or responses to 

CVE in a timely manner, including a 

failure to make available financial 

statements, requested tax returns, 

reports, information requested by CVE 

or VA’s Office of Inspector General, or 

other requested information or data 

within 30 days of the date of request. 

(7) Cessation of the participant’s 

business operations. 

(8) Failure by the concern to pay or 

repay significant financial obligations 

owed to the Federal Government. 

(9) Failure by the concern to obtain 

and keep current any and all required 

permits, licenses, and charters, 

including suspension or revocation of 

any professional license required to 

operate the business. 

(10) Failure by the concern to provide 

an updated application (VA Form 0877) 

within 60 days of any change in 

ownership. 

(d) The examples of good cause listed 

in paragraph (c) of this section are 

intended to be illustrative only. Other 

grounds for canceling a participant’s 

verified status include any other cause 

of so serious or compelling a nature that 

it affects the present responsibility of 

the participant. 

§ 74.22 What are the procedures for 

cancellation? 

(a) General. When CVE believes that 

a participant’s verified status should be 

cancelled prior to the expiration of its 

eligibility term, CVE will notify the 

participant in writing. The Notice of 

Proposed Cancellation Letter will set 

forth the specific facts and reasons for 

CVE’s findings, and will notify the 

participant that it has 30 days from the 

date it receives the letter to submit a 

written response to CVE explaining why 

the proposed ground(s) should not 

justify cancellation. 

(b) Recommendation and decision. 

Following the 30-day response period, 

the Director, CVE, will consider any 

information submitted by the 

participant. Upon determining that 

cancellation is not warranted, the 

Director, CVE, will notify the 

participant in writing. If cancellation 

appears warranted, the Director, CVE, 

will make a decision whether to cancel 

the participant’s verified status. 

(c) Notice requirements. Upon 

deciding that cancellation is warranted, 

the Director, CVE, will issue a Notice of 

Verified Status Cancellation. The Notice 

will set forth the specific facts and 

reasons for the decision, and will advise 

the concern that it may re-apply after it 

has met all eligibility criteria. 

(d) Effect of verified status 

cancellation. After the effective date of 

cancellation, a participant is no longer 

eligible to appear as ‘‘verified’’ in the 

VetBiz VIP database. However, such 

concern is obligated to perform 

previously awarded contracts to the 

completion of their existing term of 

performance. 

(e) Appeals. A participant may file an 

appeal with the Executive Director, 

Office of Small and Disadvantaged 

Business Utilization and Center for 

Veterans Enterprise, concerning the 

Notice of Verified Status Cancellation 

within 30 days of receipt of CVE’s 

cancellation decision. ‘‘Filing’’ means a 

document is received by CVE by 5:30 

p.m., eastern time, on that day. 

Documents may be filed by hand 

delivery, mail, commercial carrier, or 

facsimile transmission. Hand delivery 

and other means of delivery may not be 

practicable during certain periods due, 

for example, to security concerns or 

equipment failures. The filing party 

bears the risk that the delivery method 

chosen will not result in timely receipt 

at CVE. Submit appeals to: Executive 

Director, Office of Small and 

Disadvantaged Business Utilization and 

Center for Veterans Enterprise (00VE), 

U.S. Department of Veterans Affairs, 810 

Vermont Avenue, NW., Washington, DC 

20420. A formal decision will be issued 

within 60 days after receipt. The 

decision on the appeal shall be final. 

Records Management 

§ 74.25 What types of personally 

identifiable information will VA collect? 

In order to establish owner eligibility, 

the Department will collect individual 

names and Social Security numbers for 

veterans, service-disabled veterans and 

surviving spouses who represent 

themselves as having ownership and 

control interests in a specific business 

seeking to obtain verified status. 

§ 74.26 What types of business 

information will VA collect? 

VA will examine a variety of business 

records. See § 74.12, ‘‘What is a 

verification examination and what will 

CVE examine?’’ 

§ 74.27 How will VA store information? 

VA intends to store records provided 

to complete the VetBiz Vendor 

Information Pages registration fully 

electronically on the Department’s 

secure servers. CVE personnel will 

compare information provided 

concerning owners who have veteran 

status, service-disabled veteran status or 

surviving spouse status against 

electronic records maintained by the 

Department’s Veterans Benefits 

Administration. Records collected 

during examination visits will be 

scanned onto portable media and fully 

secured in the Center for Veterans 

Enterprise, located in Washington, DC. 

§ 74.28 Who may examine records? 

Personnel from the Department of 

Veterans Affairs, Center for Veterans 

Enterprise and its agents, including 

personnel from the Small Business 

Administration, may examine records to 

ascertain the ownership and control of 

the applicant or participant. 

§ 74.29 When will VA dispose of records? 

The records, including those 

pertaining to businesses not determined 

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6108 Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / Rules and Regulations 

1Request of United States Postal Service to Add 

Canada Post-United States Postal Service 

Contractual Bilateral Agreement for Inbound 

Competitive Services to the Competitive Product 

List and Notice of Filing (Under Seal) the Enabling 

Governors’ Decision and Agreement, November 25, 

2009 (Request). 

2 Docket No. MC2009–7, Order Concerning 

Bilateral Agreement with Canada Post for Inbound 

Market Dominant Services, December 31, 2008 

(Order No. 163). 

3Attachment 1 to the Request. 

4Attachment 2 to the Request. 

5Attachment 3 to the Request. 

6Attachment 4 to the Request. The Postal Service 

erroneously noted in its Request that an Attachment 

5 which contained the application for non-public 

treatment was filed. The application for non-public 

treatment is Attachment 4; there is no Attachment 

5. 

7See Attachment 1 to the Request. 

8PRC Order No. 351, Notice and Order 

Concerning Bilateral Agreement with Canada Post 

for Inbound Competitive Services, December 1, 

2009 (Order No. 351). 

9Public Representative Comments in Response to 

United States Postal Service Request to Add Canada 

Post-United States Postal Service Contractual 

Bilateral Agreement for Competitive Services to the 

Competitive Products List, and Notice of Filing 

Agreement and Enabling Governors’ Decision 

to be eligible for the program, will be 

kept intact and in good condition for 

seven years following a program 

examination or the date of the last 

Notice of Verified Status Approval 

letter. Longer retention will not be 

required unless a written request is 

received from the Government 

Accountability Office not later than 30 

days prior to the end of the retention 

period. 

(Authority: 38 U.S.C. 8127(f)) 

[FR Doc. 2010–2648 Filed 2–5–10; 8:45 am] 

BILLING CODE P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3020 

[Docket Nos. MC2010–14 and CP2010–13; 

Order No. 376] 

New Postal Product 

AGENCY: Postal Regulatory Commission. 

ACTION: Final rule. 

SUMMARY: The Commission is adding 

Canada Post-United States Postal 

Service Contractual Bilateral Agreement 

for Inbound Competitive Services to the 

Competitive Product List. This action is 

consistent with a postal reform law. 

Republication of the lists of market 

dominant and competitive products is 

also consistent with statutory 

requirements. 

DATES: Effective February 8, 2010 and is 

applicable beginning December 30, 

2009. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

202–789–6820 or 

stephen.sharfman@prc.gov. 

SUPPLEMENTARY INFORMATION: Regulatory 

History, 74 FR 65169 (December 9, 

2009). 

Table of Contents 

I. Introduction 

II. Background 

III. Comments 

IV. Commission Analysis 

V. Ordering Paragraphs 

I. Introduction 

The Postal Service seeks to add a new 

product, Canada Post-United States 

Postal Service Contractual Bilateral 

Agreement for Inbound Competitive 

Services, to the Competitive Product 

List. For the reasons discussed below, 

the Commission approves the Request. 

II. Background 

On November 25, 2009, the Postal 

Service filed a formal request pursuant 

to 39 U.S.C. 3642 and 39 CFR 3020.30 

et seq. to add the Canada Post-United 

States Postal Service Contractual 

Bilateral Agreement for Inbound 

Competitive Services (Bilateral 

Agreement or Agreement) to the 

Competitive Product List.1 The Postal 

Service asserts that the Bilateral 

Agreement is a competitive product ‘‘not 

of general applicability’’ within the 

meaning of 39 U.S.C. 3632(b)(3). This 

Request has been assigned Docket No. 

MC2010–14. 

The Postal Service 

contemporaneously filed notice, 

pursuant to 39 U.S.C. 3632(b)(3) and 39 

CFR 3015.5, that the Governors have 

established prices and classifications 

not of general applicability for inbound 

competitive services as reflected in the 

Bilateral Agreement. More specifically, 

the Bilateral Agreement, which has been 

assigned Docket No. CP2010–13, 

governs Inbound Parcel Post and 

Xpresspost-USA from Canada. 

The Postal Service acknowledges an 

existing bilateral agreement with 

Canada Post for inbound competitive 

services, which is set to expire at the 

end of calendar year 2009. Id. at 3. The 

Postal Service asserts that the proposed 

MCS language in Docket No. MC2010– 

14 ‘‘resembles the language’’ for the 

existing bilateral agreement and that the 

differences ‘‘reflect changes to certain 

operational details’’ including a 

reclassification of Canada Post’s 

‘‘Xpresspost-USA’’ product from a 

market dominant product to a 

competitive product. Id. The 

Commission reviewed and approved 

that bilateral agreement in Docket Nos. 

CP2009–9 and MC2009–8. The 

Commission had previously approved 

the ‘‘Xpresspost-USA’’ product as a 

market dominant product in Docket No. 

MC2009–7.2 Qualifying that approval, 

however, the Commission noted that 

‘‘Xpresspost exhibits characteristics of a 

competitive product.’’ Id. at 7. 

In support of its Request, the Postal 

Service filed the following materials: (1) 

A redacted version of the Governors’ 

Decision including proposed MCS 

language, a management analysis of the 

Bilateral Agreement, certification of 

compliance with 39 U.S.C. 3633(a), and 

certification of the Governors’ vote;3 (2) 

a Statement of Supporting Justification 

as required by 39 CFR 3020.32;4 (3) a 

redacted version of the agreement;5 and 

(4) an application for non-public 

treatment of pricing and supporting 

documents filed under seal.6 Request at 

2. 

The Bilateral Agreement covers 

parcels arriving in the United States by 

surface transportation rather than air. 

Governors’ Decision No. 09–16.7 The 

Bilateral Agreement also covers 

Xpresspost, a Canadian service for 

documents, packets, and light-weight 

packages. Id. The Bilateral Agreement 

allows Canada Post to tender surface 

parcels and Xpresspost to the Postal 

Service at negotiated prices rather than 

the default prices set by the Universal 

Postal Union. Id. The Bilateral 

Agreement is effective January 1, 2010 

and continues until December 31, 2011. 

Id., Attachment 3, at 7. 

In the Statement of Supporting 

Justification, Lea Emerson, Executive 

Director, International Postal Affairs, 

asserts that ‘‘[t]he addition of the 

[Bilateral] Agreement as a competitive 

product will enable the Commission to 

verify that the agreement covers its 

attributable costs and enables 

competitive products, as a whole, to 

make a positive contribution to coverage 

of institutional costs.’’ Id., Attachment 2, 

at 2. Joseph Moeller, Manager, 

Regulatory Reporting and Cost Analysis, 

Finance Department, certifies that the 

contract complies with 39 U.S.C. 

3633(a). Id., Attachment 1, Attachment 

C. He observes that the Bilateral 

Agreement ‘‘should not impair the 

ability of competitive products on the 

whole to cover an appropriate share of 

institutional costs.’’ Id. 

In Order No. 351, the Commission 

gave notice of the two dockets, 

appointed a public representative, and 

provided the public with an opportunity 

to comment.8

III. Comments 

Comments were filed by the Public 

Representative.9 No other interested 

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