Legal Meets Practical: Accessible Solutions

New CVE Rule Tries to Keep It Simple

As many of you may have heard, the VA’s Center for Verification and Evaluation (“CVE”) is considering an interim final rule to require firms to go through the VetBiz verification process every three years, not two. (Verification is necessary for firms interested in competing for SDVOSB or VOSB set-aside contracts issued by the VA). This is a welcome change for many, simply because the verification process is tedious and cumbersome, and it’s obviously preferable to be spared from it for an extra year.

The VA gave the following reason for the change:

“This change is appropriate because VA conducts a robust examination of personal and company documentation to verify ownership and control by Veterans of applicant businesses. In addition to verifying individual owners’ service- disabled veteran status or veteran status, in accordance with 38 CFR 74.20(b), VA reviews an applicant’s: [lists the required documentation]. Given the depth of this review, annual or biennial re-verification examinations have become an unnecessary administrative burden on both applicants/participants and VA.”

I’m all for simplifying the VA’s verification process, which has gone sharply downhill over the last few months due to new processes. However, I don’t believe this rule should apply to newly-formed companies that obtain verified status shortly thereafter. Requiring these companies to go through re-verification every two years provides a needed check, as firms can go through considerable changes during that time period. This is especially true for start-up firms that speed through the verification process due to the fact that they have very little documentation to provide. After they are verified and begin building their infrastructure and performing contracts, that’s when eligibility issues arise. As such, to permit those firms to remain verified for three years undermines the integrity of the program. It also puts those firms at risk, as the verification process provides an official audit of their eligibility for the set-aside contracts they depend upon for financial viability. (As such, if anything is wrong, it can be pointed out and corrected during the verification process). Accordingly, I believe the three-year rule should only apply to firms that have already been re-verified once.

If the VA wants to simplify the verification process, how about doing away with requesting tax returns? Not only is that requirement invasive, but especially for the non-veteran business owner it is complexly irrelevant. Why on earth does the CVE need the non-veteran business owner’s spouse’s W2? The CVE states that the tax return is necessary to see where the business owners are receiving their revenue, but how is that really relevant? A business should not have to withdraw because the veteran can’t find the W2 that shows he earns $3K a year as a referee for a high school basketball team. Nor should it have to withdraw because the non-veteran’s spouse holds her W2 hostage (which, ironically, undermines the “control” the VA is so concerned with the veteran having).

What do you think? How can the CVE simplify its process? Also, if you want to comment on the new three-year rule, the VA is accepting comments through April 24. Go here for specific instructions for submitting a comment.

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4 Responses to “New CVE Rule Tries to Keep It Simple”

  1. Yay for streamlining! Hopefully it makes it easier for veteran owned businesses to flourish.

  2. Ms. Schauerte, your company and blog are much appreciated and I don’t think I’ve ever disagreed with anything you’ve ever posted – – until now. I don’t dispute your argument, I think rather think it’s misplaced/not relevant to the real world. 1) the SDVOSB certification is already the most rigorous of any socio-economic category; 2) you’re primarily maybe focused on VA work, and we do no VA work but wanted the CVE Cert to demonstrate to anyone who may ask; 3) other Agencies of course do not require CVE and in fact allow self-cert, so why put SDVOSBs through the rigor every 2 years, 4) I think we’re required by law to inform CVE of changes in status; 4 I believe a competitor can protest if they thinks an SDVOSB is no longer an SDVOSB, 5) 8(a)s have a nine-year life and only need to check in annually, 6) WOSBs can self-certify and even if they go through the cert is simple and they just need to check in every year, 7) the CVE and SBA are supposed to merge their process – – let’s wait and see what happens; 8) talked to the VA last week and the person who answered the phone (and their immediate supervisor) had no knowledge whatsoever of this, so since our recert is due March 24 we need to submit recert now, and they told us that some time during the long delay in the reviewing process may hear about this and then actually implement the rule and then reject our recertification with the requirement to re-submit next year (effective communication in VA appears non-existent). Bottom line, you’re advocating for more work for SDVOSBs – – already a group more rigorously managed than any other group.

    • Hi Mr. Sanden,

      I feel like I fight with the CVE on a regular basis (I have stories relating to about every issue you can possibly imagine, and it’s maddening because I feel like I have logical solutions for many. . . none of which will ever be implemented). Worse, because of process changes, they are now citing a TEN WEEK wait time from the time a company hits “submit” to when an analyst first looks at the application. You can’t tell me that’s because of Kingdomware! (I would love to know how many more applications they got after Kingdomware, because I doubt it’s the influx they represent it is).

      I’m only saying that the two-year rule applies once, however – after a company is first verified, because so many changes can come in the first three years of business and the CVE doesn’t really have a mechanism to penalize companies for not reporting changes (the only check is a protest or a random audit). But, I do think your point is very valid relating to the requirements of the other certification programs being much less rigorous, as I agree the administrative burden should be comparable across the board. I don’t think we’d disagree so strongly if the process itself wasn’t so burdensome and broken.

      What about others reading the blog? This is good fodder for the comments due on April 24 – now I’m going to amend mine to clarifying that I advocate for the three-year rule for every company except companies that started business within a year of applying for VetBiz the first time around (i.e., only those companies that had very minimal amount of paperwork to provide to the VA have to re-verify in two years, and only one time). I believe those companies would be very easy to track. . . but then again, we’re talking about the VA.

      Sarah

  3. It just took us 2 1/2 years, yes years, to get re-certified by the CVE. They gave me one years ‘intent to excersize options’ letters so I could still bid a job or two but limited me greatly on the job process. I hope the CVE does go to the 3 year certification system. I believe I would be out of business otherwise.

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