Source: http://www.legalmeetspractical.com/va-vetbiz-verification-program/va-vetbiz-verification-program/
Timestamp: 2019-04-20 17:14:34
Document Index: 268648684

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VA VetBiz Verification Program FAQs - Legal Meets Practical
Verification in the Department of Veterans Affairs (VA) VetBiz Vendor Information Pages (VIP) Program (the “VA VetBiz Verification Program”) may be challenging, but it can be done with the right preparation, guidance and research. Below is a list of commonly-asked questions and answers. For coverage on other VetBiz topics – like audits, cancellations, tips for verification, special issues (such as joint ventures, multiple businesses in VetBiz, community property issues, trusts, and caregivers) – access my comprehensive VetBiz guidebook HERE.
If you have further questions about the VA VetBiz Verification Program, please contact me at scs@legalmeetspractical.com. There’s no charge for questions or an initial consultation. I also offer in-depth VetBiz services including preparing an initial application, participating in the pre-determination and pre-decision processes, and in submitting a request for reconsideration. Also, I am currently offering a promotional discount for tailored VetBiz corporate documents (by-laws or an operating agreement).
VA VetBiz Verification Generally
What is the VA VetsFirst Contracting Program?
What are the VA VetBiz Vendor Information Pages (VIP?)
What is VA VetBiz verification?
Is VA VetBiz verification required for non-VA contracts?
What are the requirements for a business to become verified?
What does “veteran-owned” mean?
What does “veteran-controlled” mean?
What are some common issues that can prevent my business from being verified?
What are the benefits to VA VetBiz verification?
Where do I apply for verification?
What documents must I submit with my VA VetBiz verification application?
Where can I go for assistance with VA VetBiz verification?
How long will I wait for a verification determination?
What are my chances for a successful verification?
How can I increase my chances for a successful verification?
What is the new pre-determination process?
What is the new pre-decision process?
If verification is denied to my business, what are my options?
VA VetBiz Simplified Renewal and Renewal Generally
When do I apply for reverification?
How do I apply for reverification?
What happens if I don’t apply for reverification before my VetBiz listing expires?
VA VetBiz Cancellation Procedures
What is “cancellation?”
What are the procedures for cancellation?
Can a business appeal the CVE’s decision to cancel its verified status?
What happens to the Veterans First Contracting Program contracts a business is currently performing?
VA VetBiz Audits
When may the CVE audit a VetBiz-Verified business?
Why will the CVE audit? (i.e., should you panic?)
What happens if I don’t provide documentation in time?
What happens if the CVE finds eligibility issues during an audit?
Will the two-year verification period start over upon successful audit completion?
1. What is the VA Vets First Contracting Program?
The Vets First Contracting Program within the Department of Veterans Affairs (VA) is a contracting program created for both Veteran-Owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBS). Approved businesses are eligible to participate in VOSB and SDVOSB set-asides issued by VA. They are eligible to subcontract with VA’s large prime contractors in acquisitions where additional evaluation credit is given for such subcontracting relationships. They are also eligible to participate in the VA’s Veteran-Owned Small Business Mentor-Protégé Program.
2. What are the VA VetBiz Vendor Information Pages (VIP?)
The VA VetBiz Vendor Information Pages (VIP) is a database that lists all businesses that have been verified as VOSBs and/or SDVOSBs by the Center for Verification and Evaluation (CVE), which is the VA office charged with the verification process. A business must be listed in the VIP database in order to compete for a VA set-aside opportunity for veteran businesses.
3. What is VA VetBiz verification?
Verification is the process by which the CVE determines whether a business is eligible to participate in the Vets First Contracting Program. (A business deemed eligible is “verified” as opposed to “certified.”).
4. Is VA VetBiz verification required for non-VA contracts?
As of now, VetBiz verification is not required to compete for VOSB and SDVOSB set-asides issued by federal agencies other than the VA. However, the Federal Aviation Administration has adopted a regulation requiring VetBiz verification for its SDVOSB set-asides, and there has been conjecture that the VA’s VetBiz Verification Program may ultimately apply government-wide. When this happens, the Small Business Administration will likely administer the program instead of the VA. For immediate purposes, however, verification will probably not be required for other federal procurement opportunities for at least two years. This is due largely in part to the fact that the CVE is still developing the verification process.
5. What are the requirements for a business to become verified?
Businesses eligible to participate in the Veterans First Contracting Program must meet the VA’s definition of a “service-disabled veteran-owned small business” or a “veteran-owned small business.” An SDVOSB is a business that is:
Not less than 51%…owned by one or more service disabled veterans, or in the case of any publicly owned business, (has) not less than 51% of the stock owned by one or more service disabled veterans; AND
The management and daily business operations is controlled by one or more service-disabled veterans, or, in the case of a veteran with a severe and permanent disability, a spouse or permanent caregiver of the veteran; AND
It is “small” under the applicable NAICS codes.
A VOSB meets substantially the same definition, with the absence of the provisions referring to service-disabled veterans.
6. What does “veteran-owned” mean?
The VA defines “ownership” within its Veteran-Owned Small Business Verification Guidelines, which are contained at 38 CFR Part 74. “Ownership” is defined at 38 CFR 74.3, which provides that in order for a business to be “veteran-owned,” the veteran must unconditionally and directly own at least 51% of the business. As this definition is nuanced, veteran business owners are encouraged to review the regulation (here) and the VA’s Verification Assistance Briefs on ownership issues (here). In determining whether a business is veteran-owned, one of the most important factors the CVE will examine is the business’ corporate documents, which must clearly demonstrate veteran ownership. Two clauses of corporate documents cause the most frequent issues with demonstrating veteran ownership: transfer restrictions and withdrawal of members.
7. What does “veteran-controlled” mean?
The VA defines “control” within its Veteran-Owned Small Business Verification Guidelines, which are contained at 38 CFR Part 74. “Control” is defined at 38 CFR 74.4: ” ‘Control’ means both the day-to-day management and long-term decisionmaking authority.” As this definition is nuanced, veteran business owners are encouraged to review the regulation (here) and the VA’s Verification Assistance Briefs on control issues (here). In determining whether a business is veteran-controlled, one of the most important factors the CVE will examine is the business’ corporate documents, which must clearly demonstrate veteran control. Corporate documents must show that the veteran is the highest-ranked officer, contain language demonstrating how the veteran controls the day-to-day operations and strategic policy, and must make it clear that important company decisions cannot occur without the veteran’s presence and consent.
8. What are some common issues that can prevent my business from being verified?
Even if your corporate documents are written perfectly, there are still some issues that can prevent a company from being verified. Common issues include:
Dependence on non-veterans or non-veteran-owned entities. For example, if a company receives a sizable capital contribution from a non-veteran owner, this may show undue influence. The CVE will also look into members’ involvement with other companies or individuals to determine whether these relationships affect the operation of the company or its business decisions. For example, if a company is a father-son enterprise where the father is a non-veteran, if he allows the son to use commercial space and equipment he owns to start up his new business, the CVE may find undue influence by a non-veteran (the father) unless an explanation is given that can adequately explain how the help doesn’t impair the son’s ability to exercise independent business judgment. Always, the determination is fact-specific.
Outside Employment. Outside employment is perhaps the most problematic issue because of the lack of substance to define the CVE’s bright-line “full-time” requirement.
The CVE’s regulations read that a veteran must devote “full-time” to a business during the regular hours of a business of that nature. It does not define “full-time,” and this term is absent from the SBA’s regulations relating to its SDVOSB program. There is also no standard for what the veteran must prove in order to establish that he works “full-time” for the company. Accordingly, for a company where the veteran does work elsewhere, the CVE’s evaluation of outside employment can sometimes truly go either way.
If the veteran upon whom eligibility is based works at another job, he must show how he is still able to manage the applicant business on a “full-time” basis. A Letter of Explanation addressing this should include at least the following: the amount of time each week spent at the applicant concern, the duties performed at the applicant concern, why the outside employment doesn’t interfere with responsibilities to the applicant concern, and why working odd hours is “normal” for a business of that nature (assuming the veteran is engaged elsewhere during “regular” office hours). Again, whether the explanation will pass muster is fact-specific.
Delegating Authority. In business, it makes sense for a business owner to delegate responsibilities to senior staff members. However, when a business operates this way, it is important to be cognizant of how this can be perceived by the CVE. If an employee other than the veteran signs proposals, acts in an executive function, and makes long-term decisions, the CVE might take this to mean that the veteran is not “controlling” the company. Accordingly, Letters of Explanation may be required to show how delegation of tasks is done for the benefit of the business and “under the veteran’s direction, authority, and approval, with the veteran always retaining authority and control over all daily and long-term business decisions.” (The excerpt in quotes is key language to use, but again, whether a delegation of authority passes muster is fact-specific. You may be noticing a theme here…).
Acting Remotely. In the electronic age, and especially because so many companies use virtual offices, many company members work remotely. If this is the case, the veteran will need to explain how the practice of members working remotely does not interfere with the veteran’s ability to control the company. Again, this is a fact-specific determination. However, both the CVE and the United States Court of Federal Claims (CoFC) have held that there is substantial leeway in allowing veterans to operate remotely: in KWV, Inc. v. U.S., 12-882C (2013), the CoFC upheld the CVE’s determination that a veteran controlled his Rhode Island-based company even though he spent six months of the year in sunny Florida. In that case, the CoFC noted that the veteran had no other jobs, was able to conduct work electronically and via telephone, and traveled to Rhode Island when face-to-face meetings were necessary.
9. What are the benefits to VA VetBiz verification?
Approved firms are eligible to participate in VOSB and SDVOSB set-asides issued by VA. They are eligible to subcontract with VA’s large prime contractors in acquisitions where additional evaluation credit. They were once eligible to participate in VA’s Veteran-Owned Small Business Mentor-Protégé Program, but this Program is now defunct. Also, being able to claim SDVOSB or VOSB status may be an effective marketing tool as it relates to pursuing both teaming opportunities and civilian contracts.
10. Where do I apply for verification?
Businesses may apply for verification in the VA VetBiz Verification Program at: http://www.vetbiz.gov.
11. What documents must I submit with my VA VetBiz verification application?
A veteran-owned business must submit a number of documents with its electronic application, including: financial documents, corporate documents, required licenses, and resumes of key personnel. If any required documents are missing, or not necessary for the veteran-owned business, it must submit a Letter of Explanation (LOE). Also, if the documents submitted raise an issue with eligibility (for example, if a resume reflects outside employment, or if the bank signatory card reflects that a non-veteran is a signatory), an LOE must be submitted in that instance as well. As a rule of thumb, it is best to keep an LOE as simple and as concise as possible. A list of required documents may be accessed on the VetBiz website here.
Also keep in mind that the CVE may request any other documents it deems necessary to assess eligibility. This can include a DBA certificate, 1099 information, a DD-214, and a Certificate of Good Standing.
Further, be aware that there is no alternative (or recourse) to a veteran business owner who is uncomfortable with providing certain information to the CVE, such as a tax return. Some veterans have been able to successfully redact certain tax/financial information if they properly follow (and cite to) the guidance of NIST Special Publication 800-122, IRS Publication 1075, and OMB M-10-23 and OMB Memorandum M-07-1616. CVE examiners/evaluators guidance are supposed to follow these guidelines.
12. Where can I go for assistance with VA VetBiz verification?
The VA offers a number of resources and training tools to assist with the verification process. These include:
The VA’s Verification Assistance Briefs, which clarify the rules associated with 38 CFR Part 74. These briefs are based on an analysis of issues that cause the majority of denials. However, verification counselors have found numerous errors and inconsistencies with these briefs. Access the briefs at: http://www.va.gov/osdbu/verification/assistance/briefs.asp, but please exercise caution when using them.
The VA’s Verification Counseling Program, which was developed to assist business owners to understand 38 CFR Part 74, guide them through the Verification Self-Assistance tool, answer general questions, and help them address issues in their application. These individuals are all either with local Procurement Technical Assistance Centers (PTACs) or Veterans Service Organizations (VSOs). Access the listing of counselors at: http://www.va.gov/osdbu/verification/assistance/counselors.asp.An experienced attorney or consultant, who can draft corporate documents and LOEs and act as a representative.
The VA’s Verification Self-Assessment Tool, which enables veteran business-owners to do a comprehensive review of the entire VA regulation and check their business models against the requirements of 38 CFR Part 74. Access the self-assessment tool at: http://gcctech.fluidsurveys.com/s/Verification_Self_Assessment_Tool/.
LinkedIn and public forums. Many businesses have gone through the process and have war stories and practical tips. If you have a specific question, it’s likely that someone will be willing to help you based on personal experience. But know that though their experience might sound analogous to yours, there might be a factual distinction that makes a difference to the CVE in assessing eligibility.
An experienced attorney or consultant, who can draft corporate documents and LOEs and act as a representative.
13. How long will I wait for a verification determination?
The VA recently published on its website a table that lists average verification processing times. According to the table, as of April 2015 it takes an average of 40 days upon receipt of a complete application for the CVE to make an initial determination. (Access the table here). It should be noted, however, that this number is incredibly skewed. When a company has to withdraw its application (which happens if the CVE asks for a document it cannot produce, or if the CVE makes a pre-decision finding of ineligibility), that company is not included in the statistics. Even more impactful, every time the CVE asks a company for additional documentation, the clock stops. The CVE always asks for additional documentation.
Some issues may slow applications. These include: failure to submit all required documents, inconsistent information in the application compared with the System for Award Management (SAM), and the need for clarification or additional information.
14. What are my chances for a successful verification?
The VA recently published on its website a table that lists verification success rates. According to the table, there is a 95% verification rate. (Access the table here). HOWEVER, this number is extremely skewed, as the VA has implemented a new “pre-decision” process where, rather than accepting a denial, a business may withdraw its application. As there is absolutely no incentive for accepting a denial, most/all veterans will opt to withdraw their business. In this case, the application is not counted as a denial in the CVE’s posted statistics. (Lean more about the pre-decision process here). Because of this new pre-decision process, it is very difficult to determine the “real” verification rate.
Everything relating to VetBiz is very facts-specific. Keep in mind that your chances for a successful verification depend largely on the preparation you invest in your application and the individual circumstances surrounding your business.
15. How can I increase my chances for a successful verification?
The VA VetBiz Verification Program is a relatively new system that is still evolving. As such, most (if not all) veteran business owners will tell you that the process is flawed, frustrating, non-sensicaland difficult to navigate. (Access the GAO report analyzing the VA VetBiz Verification Program here). However, the process has been improved slightly over the last six months due to revamping of the VetBiz website and resources available, and the new pre-determination and pre-decision processes.
With that being said, given the right preparation, a VetBiz application can be successful. It is important that you understand the requirements of 38 CFR Part 74, as the CVE has stressed that a significant percentage of applications are denied due to the misapplication or misunderstanding of this regulation. Take advantage of the tools and resources offered by the CVE, and don’t be afraid to reach out to verified companies; after going through this process, there is a good chance they’ll be willing to offer some guidance or insight (or at least empathy).
Also, it is crucial that you revisit your corporate documents. Issues with corporate documents are responsible for the vast majority of denials, as evidenced by a pie chart (Top 10 Reasons for Denial) recently posted on the VetBiz website. Corporate documents demonstrate veteran ownership and veteran control, and just one provision can result in a denial (or placement in the pre-determination process rather than receiving an approval). Accordingly, it may be worth it to hire an attorney or consultant who can review your corporate documents to eliminate any issues.
16. What is the new pre-determination process?
The pre-determination process allows businesses to fix “easily correctable” issues with their corporate documents instead of immediately receiving a denial letter. The CVE will notify the business of the problematic clause(s), and the business will be able to fix those clauses and resubmit the corporate document via its VetBiz portal. The business must notify CVE within 48 hours of the decision to take part in this process; and it must submit the required corrected documents within five business days.
This process helps businesses not be denied based on a technicality. However, businesses should be very careful if they choose this process, as it is a one-shot opportunity. CVE will only review corrected documents once, and if they do not pass muster, the business will be denied. I am aware of one situation where a business forgot to sign the document they corrected, and rather than accommodate the company and allow them to resubmit, the CVE required them to withdraw and then spent nearly two months to verify them.
17. What is the new pre-decision process?
The pre-decision process allows SDVOSBs and VOSBs to withdraw their applications rather than receive a denial letter. The CVE will send a business a notification stating that it has completed an evaluation of its application for verification, but the “findings” of that evaluation include issues that preclude verification. Accordingly, the business can choose to do nothing and receive a denial, or it can choose to withdraw its application. The decision to withdraw must be communicated to the CVE within 48 hours, and then the withdrawal must be completed within 48 hours.
If the business chooses the denial, it can then either request reconsideration within thirty days or reapply after six months. (This option has no incentive, as a request for reconsideration will take longer to process than the option to withdraw and resubmit). If the business chooses to withdraw, it will be able to immediately resubmit after correcting the issues identified in the CVE’s findings enumerated in the pre-decision letter. As these findings may include more serious issues, such as dependence on non-veteran entities or the failure to meet the full-time employment requirement, the business should take the time to understand the basis for ineligibility and how to correct the problems with its application to the CVE’s satisfaction.
18. If verification is denied to my business, what are my options?
If verification is denied to your business, you have two options: 1) wait six months to reapply; or 2) file a request for reconsideration within 30 days of receipt of your Notice of Rights letter (denial letter).
Also, the CVE has recently implemented a pre-decision process. In this process, rather than send you a denial letter, the CVE will send you a notice of “findings” which outlines the reasons prohibiting your business from verification. You are given two choices: withdraw your application or receive a denial letter. The advantage to receiving these “findings” is that they provide you with a blueprint of what you will need to fix with your business before you reapply. If you withdraw your application after receiving this notice, you may re-submit at any time. This pre-decision process is fairly new, taking effect in early August of 2013.
1. What is simplified renewal?
Simplified renewal no longer exists, and there is debate over whether it ever did exist. Through simplified renewal, businesses confirmed that they had gone through no changes since the last time they were verified, and received an approval letter only a week later. However, businesses had to meet specific criteria to be eligible to complete this process, and I know of no businesses that did so.
In the summer of 2014, the CVE did away with simplified renewal and issued a Fact Sheet about the reverification process. Access more information about this development here.
2. When do I apply for reverification?
Businesses can apply for renewal within 120 days of the expiration of its listing in the VIP database. They are encouraged to apply as early as possible in order to prevent any issues with ensuring continuous listing. A business should receive a notice from CVE of the pending expiration of its listing.
3. How do I apply for reverification?
The steps for reverification are as follows:
Login to VIP.
Under Actions in the Account Summary, click “Reverify.”
Update owner information and sign a new VA Form 0877
Review the previous application and update all necessary documentation.
Complete the questionnaire to verify any changes in ownership/control.
The process then follows the same stages as an initial verification.
4. What happens if I don’t apply for renewal before my VetBiz renewal expires?
If a veteran business owner fails to apply for renewal prior to the expiration of the business’ listing in the VIP database, they will be removed from the database and required to file an initial application to the VA VetBiz Verification Program. If you start the process before your verification expires, but you are still going through the verification stages when your two-year period ends, you’ll have a gap in verification.
VA VetBiz Cancellation
1. What is “cancellation?”
Cancellation is rare, but it happens. This is when something happens to prematurely yank a business from the VetBiz registry before the end of its two-year verification period. This might happen because a size protest revealed an eligibility problem, because a veteran dies or abandons the company (and the CVE finds out about it), an audit that dug up some “dirt” (or where the business simply failed to provide requeted information), or because of some other event that establishes a business as ineligible for the Veterans First Contracting Program.
2. What are the procedures for cancellation?
First, 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.
Second, following the 30-day response period, the Director of the CVE will consider any information submitted by the participant. Upon determining that cancellation is not warranted, the CVE will notify the participant in writing. If cancellation appears warranted, the CVE makes a decision (signed off on by the Director) whether to cancel the participant’s verified status.
Third, if it is decided that cancellation is warranted, the 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. At this point, the business will be withdrawn from the Program and may reapply once it meets all eligibility criteria.
3. Can a business appeal the CVE’s decision to cancel its verified status?
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. It is unclear how successful these appeals are; it might be more productive to reapply and assume you’ll be un-verified for a few months.
4. What happens to the Veterans First Contracting Program contracts a cancelled business is currently performing?
A cancelled business may (and is obligated to) finish the set-aside contracts it is currently performing. However, the business’ cancellation may affect the VA’s decision to exercise an option year.
1. When may the CVE audit a VetBiz-verified business?
The CVE may audit a business under four separate scenarios: 1) pre-verification (very rare, generally happens when an examiner finds a red flag such as shared office space/equipment/employees with a non-verified business and wants to take a look at the actual logistics); 2) due to a “fraud tip” from a seemingly valid source; 3) truly randomly (most common); and 4) pseudo-randomly. The last category addresses those businesses that are more “high risk:” ones where the veteran is heavily involved with other businesses, or where one person is the majority owner of two businesses in VetBiz, or where the veteran works remotely. The CVE might want to “randomly” check in to see how these businesses truly operate.
Verified businesses may be audited after 90 days of the last verification. The CVE will not audit within 90 days of the end of a verification period.
2. Why will the CVE audit? (ie, should you panic?)
As long as you are a legitimate VOSB or SDVOSB, you shouldn’t panic. If you’re non-conventional (such as if you are a veteran with two companies in VetBiz), just know that it might raise an eyebrow, and the CVE might flag you as “high risk” when it verifies you and make a note to check in on you later. That’s their job. Otherwise, just consider yourself unlucky, but not targeted.
3. What is the audit process?
The audit process is fairly simple. The CVE will send an auditor to your place of business. He will ask you questions about your business, its operation; and he will also ask for a number of documents that would be submitted in a re-verification application. (He most likely won’t ask for every single document on the Required Documents List). If the auditor shows up at your business and no one is there (for example, if it is a home-based business and you’re running errands at the time), he will try to get in touch with you.
Almost always, the business will not have all of the documents necessary to conduct the audit. If this is the case, the auditor (called an “on-site examiner”) will send a follow-up email asking that certain documents be uploaded to the VetBiz portal. Sometimes the auditor will open up certain sections of the portal to upload the documents; and sometimes all of the sections will be accessible. Clearly label the documents; and when you can, place them in the appropriate section.
4. Can I prepare?
Actually, yes. When the examiner shows up, have every document ready that you would need if you were going through re-verification that very day. This effectively means to keep a file folder on your computer labeled “VetBiz Audit” with your current documentation. If that’s too tedious – which it may be – just make sure the information is readily onhand so it can be pulled for the examiner when he’s there.
5. What happens if I don’t provide documentation in time?
An auditor will not give you much time to provide documentation, generally only a few days. If you fail to meet the deadline, the CVE will issue you a Notice of Proposed Cancellation that effectively states that you failed to comply and gives you one last chance to provide the required documents. If you provide the documents at that time, you’re in compliance; however, if you fail to do so, the CVE will issue you a Notice of Verified Status cancellation.
Long story short, you’ll have some time to “cure,” but don’t put yourself in that position.
6. What happens if the CVE finds eligibility issues during an audit?
This is similar to what happens during the Examination stage of the verification process. If an eligibility issue is uncovered, the auditor will ask additional questions. If these questions are not answered satisfactorily, the CVE may initiate Cancellation Procedures.
7. Will the two-year period start over upon successful audit completion?
No. An audit is not a “full” examination for eligibility, so the verification period will not start over upon the successful completion of an audit.
FURTHER EDUCATION ON THE VETBIZ PROCESS:
I recently gave a PowerPoint presentation on the VetBiz process on behalf of the National Veteran-Owned Business Association (NaVOBA). You may access the slides and a recording of the presentation on the NaVOBA website at: http://www.navoba.com/Article/webinars. Also, access the VetBiz Guidebook, which covers these issues/points (and many more) here.