Set-aside program created for veteran-owned businesses

The Small Business Administration established a new small-business set-aside program today. The program allows contracting officers to set aside federal contracts for service-disabled, veteran-owned small businesses.

The program was established with the publication of an interim final rule in the Federal Register. An interim final rule goes into effect immediately, but allows the SBA to gather public comments on the rule so that it may be improved in the future, according to the SBA.

"The regulations being issued today will ensure that those great Americans who served our country proudly continue to have fair and open access to contracting opportunities," said SBA Administrator Hector Barreto.

The new set-aside program was authorized by the Veterans Benefits Act of 2003.

Federal agencies are supposed to award 3 percent of contracting dollars to service-disabled, veteran-owned small businesses, but have fallen far short of that goal, according to the interim rule.

According to the Federal Procurement Data System, in fiscal 2002 service-disabled, veteran-owned small businesses were awarded $299 million in federal contracts, or 0.13 percent of all federal contracts.

The program allows contracting officers to set aside contracts for service-disabled, veteran-owned small businesses when there is a reasonable expectation that two or more of those businesses will submit bids at a fair market price. It also allows sole-source contracts it is unlikely that two or more businesses will submit bids, the business is able to perform the contract at a fair and reasonable price, and the anticipated contract price does not exceed $3 million, or $5 million for manufacturing contracts.

The interim final rule allows small businesses to self-certify to the SBA that they are owned by service-disabled veterans. It also allows protests to the SBA of small business status or standing as a service-disabled veteran-owned small business. The SBA will rely upon status determinations by the departments of Veterans Affairs and Defense, and will help enforce penalties for false representation, according to the interim rule.

Comments on the rule are due by July 6 at or via e-mail to Comments should be identified with the code RIN 3245-AF16. SBA officials said they especially seek comments on the potential number of businesses that could become eligible for set-asides under the rule, as well as the impact of the rule on current small-business program participants.

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