# Subpart 19.14 - Service-Disabled Veteran-Owned Small Business Procurement Program

## 19.1401 General.

1. (a) The Veterans Benefit Act of2003 (15 U.S.C.657f) created the procurement program for small business concerns owned and controlled by service-disabled veterans (commonly referred to as the “Service-Disabled Veteran-owned Small Business (SDVOSB) Procurement Program”).

2. (b) The purpose of the Service-Disabled Veteran-Owned Small Business Program is to provide Federal contracting assistance to service-disabled veteran-owned small business concerns.

## 19.1402 Applicability.

The procedures in this subpart apply to all Federal agencies that employ one or more contracting officers.

## 19.1403 Status as a service-disabled veteran-owned small business concern.

1. (a) Status as a service-disabled veteran-owned small business concern is determined in accordance with 13 CFR Parts 125.8 through 125.13; also see 19.307.

2. (b) At the time that a service-disabled veteran-owned small business concern submits its offer, it must represent to the contracting officer that it is a—

   1. (1) Service-disabled veteran-owned small business concern; and

   2. (2) Small business concern under the North American Industry Classification System (NAICS) code assigned to the procurement.

3. (c) A joint venture may be considered a service-disabled veteran owned small business concern if—

   1. (1) At least one member of the joint venture is a service-disabled veteran-owned small business concern, and makes the representations in paragraph (b) of this section;

   2. (2) Each other concern is small under the size standard corresponding to the NAICS code assigned to the procurement;

   3. (3) The joint venture meets the requirements in 13 CFR 121.103(h); and

   4. (4) The joint venture meets the requirements of 13 CFR125.15(b).

4. (d) Any service-disabled veteran-owned small business concern (nonmanufacturer) is required to meet the requirements in 19.1407(c) to receive a benefit under this program.

## 19.1404 Exclusions.

This subpart does not apply to-

1. (a) Requirements that can be satisfied through award to-

   1. (1) Federal Prison Industries, Inc. (see subpart 8.6);

   2. (2) AbilityOne participating non-profit agencies for the blind or severely disabled (see subpart 8.7);

2. (b) Orders under indefinite-delivery contracts (see subpart 16.5). (But see 16.505(b)(2)(i)(F) for discretionary set-asides of orders);

3. (c) Orders against Federal Supply Schedules (see subpart 8.4). (But see 8.405-5 for discretionary set-asides of orders); or

4. (d) Requirements currently being performed by an 8(a) participant or requirements SBA has accepted for performance under the authority of the 8(a) program, unless SBA has consented to release the requirements from the 8(a) program.

## 19.1405 Service-disabled veteran-owned small business set-aside procedures.

1. (a) The contracting officer-

   1. (1) Shall comply with 19.203 before deciding to set aside an acquisition under the SDVOSB Program;

   2. (2) May set-aside acquisitions exceeding the micro-purchase threshold for competition restricted to SDVOSB concerns when the requirements of paragraph (b) of this section can be satisfied; and

   3. (3) Shall consider SDVOSB set-asides before considering SDVOSB sole source awards (see 19.1406) or small business set-asides (see subpart 19.5).

2. (b) To set aside an acquisition for competition restricted to service-disabled veteran-owned small business concerns, the contracting officer must have a reasonable expectation that-

   1. (1) Offers will be received from two or more service-disabled veteran-owned small business concerns; and

   2. (2) Award will be made at a fair market price.

3. (c) If the contracting officer receives only one acceptable offer from a service-disabled veteran-owned small business concern in response to a set-aside, the contracting officer should make an award to that concern. If the contracting officer receives no acceptable offers from service-disabled veteran-owned small business concerns, the service-disabled veteran-owned set-aside shall be withdrawn and the requirement, if still valid, set aside for small business concerns, as appropriate (see 19.203).

4. (d) The procedures at 19.202-1 and, except for acquisitions not exceeding the simplified acquisition threshold, at 19.402 apply to this section. When the SBA intends to appeal a contracting officer’s decision to reject a recommendation of the SBA procurement center representative (or, if a procurement center representative is not assigned, see 19.402(a)) to set aside an acquisition for competition restricted to service-disabled veteran-owned small business concerns, the SBA procurement center representative shall notify the contracting officer, in writing, of its intent within 5 working days of receiving the contracting officer’s notice of rejection. Upon receipt of notice of SBA’s intent to appeal, the contracting officer shall suspend action on the acquisition unless the head of the contracting activity makes a written determination that urgent and compelling circumstances, which significantly affect the interests of the Government, exist. Within 15 working days of SBA’s notification to the contracting officer, SBA shall file its formal appeal with the head of the contracting activity, or that agency may consider the appeal withdrawn. The head of the contracting activity shall reply to SBA within 15 working days of receiving the appeal. The decision of the head of the contracting activity shall be final.

## 19.1406 Sole source awards to service-disabled veteran-owned small business concerns.

1. (a) A contracting officer shall consider a contract award to a SDVOSB concern on a sole source basis (see 6.302-5(b)(6)), before considering small business set-asides (see 19.203 and subpart 19.5) provided none of the exclusions of 19.1404 apply and—

   1. (1) The contracting officer does not have a reasonable expectation that offers would be received from two or more service-disabled veteran-owned small business concerns;

   2. (2) The anticipated award price of the contract, including options, will not exceed-

      1. (i) $6.5 million for a requirement within the NAICS codes for manufacturing; or

      2. (ii) $4 million for a requirement within any other NAICS code;

   3. (3) The requirement is not currently being performed by an 8(a) participant under the provisions of subpart 19.8 or has been accepted as a requirement by SBA under subpart 19.8;

   4. (4) The service-disabled veteran-owned small business concern has been determined to be a responsible contractor with respect to performance; and

   5. (5) Award can be made at a fair and reasonable price.

2. (b) The SBA has the right to appeal the contracting officer’s decision not to make a service-disabled veteran-owned small business sole source award.

## 19.1407 Limitations on subcontracting and nonmanufacturer rule.

1. (a) Limitations on subcontracting. To be awarded a contract or order under this subpart, the SDVOSB concern is required to—

   1. (1)For services (except construction), spend at least 50 percent of the cost incurred for personnel on its own employees or the employees of other SDVOSBs;

   2. (2)For supplies or products (other than a procurement from a nonmanufacturer of such supplies or products), spend at least 50 percent of the cost of manufacturing the supplies or products (not including the cost of materials) on itself or by other SDVOSBs;

   3. (3)For general construction, spend at least 15 percent of the cost (not including the cost of materials) incurred for personnel on its own employees or the employees of other SDVOSBs; or

   4. (4)For construction by special trade contractors, spend at least 25 percent of the cost (not including the cost of materials) incurred for personnel on its own employees or the employees of other SDVOSBs.

2. (b) Compliance period. An SDVOSB contractor is required to comply with the limitations on subcontracting—

   1. (1)For a contract that has been set aside or awarded on a sole source basis to an SDVOSB concern, either by the end of the base term and then by the end of each subsequent option period or by the end of the performance period for each order issued under the contract, at the contracting officer's discretion; and

   2. (2)For an order set aside for SDVOSB contractors as described in 8.405-5 and 16.505(b)(2)(i)(F) or for an order issued directly to an SDVOSB contractor in accordance with 19.504(c)(1)(ii), by the end of the performance period for the order.

3. (c) Nonmanufacturer rule. See 19.505(c) for application of the nonmanufacturer rule, inclusive of waivers and exceptions to the nonmanufacturer rule.

## 19.1408 Contract clauses.

The contracting officer shall insert the clause 52.219-27 , Notice of Service-Disabled Veteran-Owned Small Business Set-Aside, in solicitations and contracts for acquisitions that are set aside or awarded on a sole source basis to, service-disabled veteran-owned small business concerns under 19.1405 and 19.1406 . This includes multiple-award contracts when orders may be set aside for service-disabled veteran-owned small business concerns as described in 8.405-5 and 16.505(b)(2(i)(F) or when orders may be issued directly to one service-disabled veteran-owned small business contractor in accordance with 19.504(c)(1)(ii). For contracts that are set aside, the contracting officer shall indicate in paragraph (e) of the clause whether compliance with the limitations on subcontracting is required at the contract level or order level.