The Department of Veterans Affairs (the “VA”) issued a Notice of Proposed Rulemaking last week seeking input on ways to clarify and simplify the “veteran-owned small business” (“VOSB”) verification program. The VA has been criticized in recent months for its inefficient verification process, which – in attempting to cull out fraudulent companies from those legitimately owned and controlled by veterans – has resulted in a rejection rate of over 60% of new service-disabled veteran-owned small business (“SDVOSB”) applicants. At the same time, the VA has come under fire from the Government Accountability Office and the VA's Office of Inspector General for the persistence of fraud in the program.

In its Notice of Proposed Rulemaking, the VA states that it wants to “encourage more VOSBs to apply for verification,” while at the same time discouraging fraudulent applicants. To that end, the VA is seeking comments from any interested party regarding amendments to the VOSB regulations. Although any comments related to the improvement of the VOSB regulations and program are invited, the VA specifically seeks comments on the following eight questions:

  1. What could be changed to improve the clarity of the regulations? Where might bright lines be drawn to more clearly indicate compliance with the regulations and reduce potential for misinterpretation? Where might the addition of bright line tests create unintended consequences?
  2. It has been suggested that VA should develop a list that would clearly delineate what constitutes ownership and control and what constitutes lack of control or ownership. Should a list like this be included in the rule, and if so, what should be on the list?
  3. Are there changes to VA's regulations that could be made to reduce the economic impact on VOSBs?
  4. Are there changes to VA Form 0877 (application) that could streamline the process?
  5. What verification process improvements could help to increase efficiency and reduce burden for VOSBs?
  6. What additional training tools or assistance might be offered to create more clarity for stakeholders and help them more efficiently and effectively navigate the verification regulations?
  7. What documents, records, or other materials could the Office for the Center for Veterans Enterprise use to distinguish legitimate VOSBs/SDVOSBs from businesses that fraudulently seek contracts from the Government?
  8. Would a special Hotline to report suspected ineligible VOSBs/SDVOSBs help the Government ensure that contracts are awarded to legitimate VOSBs/SDVOSBs?

For VOSBs and SDVOSBs that have struggled with the VA’s subjective verification regulations – especially those pertaining to ownership and control (see our previous post here) – the Notice of Proposed Rulemaking provides an excellent opportunity to make your voice heard. Comments are due July 12, 2013.