38 USC 8127 - Small business concerns owned and controlled by veterans: contracting goals and preferences

U.S Code last checked for updates: Jan 18, 2025

§ 8127.

Small business concerns owned and controlled by veterans: contracting goals and preferences

(a)

Contracting Goals.—

(1)

In order to increase contracting opportunities for small business concerns owned and controlled by veterans and small business concerns owned and controlled by veterans with service-connected disabilities, the Secretary shall—

(A)

establish a goal for each fiscal year for participation in Department contracts (including subcontracts) by small business concerns owned and controlled by veterans who are not veterans with service-connected disabilities in accordance with paragraph (2); and

(B)

establish a goal for each fiscal year for participation in Department contracts (including subcontracts) by small business concerns owned and controlled by veterans with service-connected disabilities in accordance with paragraph (3).

(2)

The goal for a fiscal year for participation under paragraph (1)(A) shall be determined by the Secretary.

(3)

The goal for a fiscal year for participation under paragraph (1)(B) shall be not less than the Government-wide goal for that fiscal year for participation by small business concerns owned and controlled by veterans with service-connected disabilities under section 15(g)(1) of the Small Business Act (15 U.S.C. 644(g)(1)).

(4)

The Secretary shall establish a review mechanism to ensure that, in the case of a subcontract of a Department contract that is counted for purposes of meeting a goal established pursuant to this section, the subcontract was actually awarded to a business concern that may be counted for purposes of meeting that goal.

(b)

Use of Noncompetitive Procedures for Certain Small Contracts.—

Except as provided in subsection (d)(2), for purposes of meeting the goals under subsection (a), and in accordance with this section, in entering into a contract with a small business concern owned and controlled by veterans or a small business concern owned and controlled by veterans with service-connected disabilities for an amount less than the simplified acquisition threshold (as defined in section 134 of title 41), a contracting officer of the Department may use procedures other than competitive procedures.

(c)

Sole Source Contracts for Contracts Above Simplified Acquisition Threshold.—

Except as provided in subsection (d)(2), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department may award a contract to a small business concern owned and controlled by veterans or a small business concern owned and controlled by veterans with service-connected disabilities using procedures other than competitive procedures if—

(1)

such concern is determined to be a responsible source with respect to performance of such contract opportunity;

(2)

the anticipated award price of the contract (including options) will exceed the simplified acquisition threshold (as defined in section 134 of title 41) but will not exceed $5,000,000; and

(3)

in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price that offers best value to the United States.

(d)

Use of Restricted Competition.—

(1)

Except as provided in paragraph (2) and in subsections (b) and (c), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans or small business concerns owned and controlled by veterans with service-connected disabilities if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans or small business concerns owned and controlled by veterans with service-connected disabilities will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.

(2)

(A)

Notwithstanding paragraph (1) and except as provided by subparagraph (B) of this paragraph, with respect to the procurement of a covered product or service, a contracting officer of the Department shall procure such product or service from a source designated under chapter 85 of title 41, and in accordance with the regulations prescribed under such chapter.

(B)

(i)

Subject to clause (ii), subparagraph (A) shall not apply in the case of a covered product or service for which a contract was—

(I)

awarded under paragraph (1) after December 22, 2006; and

(II)

in effect on the day before the date of the enactment of the Department of Veterans Affairs Contracting Preference Consistency Act of 2020.

(ii)

Clause (i) shall cease to apply to a covered product or service described in such clause upon a determination of the Secretary that when the current contract for the covered product or service is terminated or expires there is no reasonable expectation that—

(I)

two or more small business concerns owned and controlled by veterans will submit offers as described in paragraph (1); and

(II)

the award can be made at a fair and reasonable price that offers best value to the United States.

(C)

In this paragraph, the term “covered product or service” means—

(i)

a product or service that—

(I)

is included on the procurement list under section 8503(a) of title 41; and

(II)

was included on such procurement list on or before December 22, 2006; or

(ii)

a product or service that—

(I)

is a replacement for a product or service described under clause (i);

(II)

is essentially the same and meeting the same requirement as the product or service being replaced; and

(III)

a contracting officer determines meets the quality standards and delivery schedule of the Department.

(e)

Eligibility of Small Business Concerns.—

A small business concern may be awarded a contract under this section only if the small business concern and the veteran owner of the small business concern are listed in the database of veteran-owned businesses maintained by the Administrator under section 36 of the Small Business Act.

[(f)

Transferred. Pub. L. 116–283, div. A, title VIII, § 862(b)(2), Jan. 1, 2021, 134 Stat. 3778.]

(g)

Enforcement Penalties for Misrepresentation.—

(1)

Any business concern that is determined by the Secretary to have willfully and intentionally misrepresented the status of that concern as a small business concern owned and controlled by veterans or as a small business concern owned and controlled by service-disabled veterans for purposes of this subsection shall be debarred from contracting with the Department for a period of not less than five years.

(2)

In the case of a debarment under paragraph (1), the Secretary shall commence debarment action against the business concern by not later than 30 days after determining that the concern willfully and intentionally misrepresented the status of the concern as described in paragraph (1) and shall complete debarment actions against such concern by not later than 90 days after such determination.

(3)

The debarment of a business concern under paragraph (1) includes the debarment of all principals in the business concern for a period of not less than five years.

(h)

Priority for Contracting Preferences.—

Preferences for awarding contracts to small business concerns shall be applied in the following order of priority:

(1)

Contracts awarded pursuant to subsection (b), (c), or (d) to small business concerns owned and controlled by veterans with service-connected disabilities.

(2)

Contracts awarded pursuant to subsection (b), (c), or (d) to small business concerns owned and controlled by veterans that are not covered by paragraph (1).

(3)

Contracts awarded pursuant to—

(A)

section 8(a) of the Small Business Act (15 U.S.C. 637(a)); or

(B)

section 31 of such Act (15 U.S.C. 657a).

(4)

Contracts awarded pursuant to any other small business contracting preference.

(i)

Applicability of Requirements to Contracts.—

(1)

If after December 31, 2008, the Secretary enters into a contract, memorandum of understanding, agreement, or other arrangement with any governmental entity to acquire goods or services, the Secretary shall include in such contract, memorandum, agreement, or other arrangement a requirement that the entity will comply, to the maximum extent feasible, with the provisions of this section in acquiring such goods or services.

(2)

Nothing in this subsection shall be construed to supersede or otherwise affect the authorities provided under the Small Business Act (15 U.S.C. 631 et seq.).

(j)

Annual Reports.—

Not later than December 31 each year, the Secretary shall submit to Congress a report on small business contracting during the fiscal year ending in such year. Each report shall include, for the fiscal year covered by such report, the following:

(1)

The percentage of the total amount of all contracts awarded by the Department during that fiscal year that were awarded to small business concerns owned and controlled by veterans.

(2)

The percentage of the total amount of all such contracts awarded to small business concerns owned and controlled by veterans with service-connected disabilities.

(3)

The percentage of the total amount of all contracts awarded by each Administration of the Department during that fiscal year that were awarded to small business concerns owned and controlled by veterans.

(4)

The percentage of the total amount of all contracts awarded by each such Administration during that fiscal year that were awarded to small business concerns owned and controlled by veterans with service-connected disabilities.

(k)

Annual Transfer for Certification Costs.—

For each fiscal year, the Secretary of Veterans Affairs shall reimburse the Administrator in an amount necessary to cover any cost incurred by the Administrator for certifying small business concerns owned and controlled by veterans that do not qualify as small business concerns owned and controlled by service-disabled veterans for the Secretary for purposes of this section and section 8128 of this title. The Administrator is authorized to accept such reimbursement. The amount of any such reimbursement shall be determined jointly by the Secretary and the Administrator and shall be provided from fees collected by the Secretary under multiple-award schedule contracts. Any disagreement about the amount shall be resolved by the Director of the Office of Management and Budget.

(l)

Limitations on Subcontracting.—

(1)

(A)

The requirements applicable to a covered small business concern under section 46 of the Small Business Act (15 U.S.C. 657s) shall apply with respect to a small business concern owned and controlled by veterans that is awarded a contract under this section.

(B)

For purposes of applying the requirements of section 46 of the Small Business Act (15 U.S.C. 657s) pursuant to subparagraph (A), the term “similarly situated entity” used in such section 46 includes a subcontractor for a small business concern owned and controlled by veterans described in such subparagraph (A).

(2)

The Secretary may award a contract under this section only after the Secretary obtains from the offeror a certification that the offeror will comply with the requirements described in paragraph (1)(A) if awarded the contract. Such certification shall—

(A)

specify the exact performance requirements applicable under such paragraph; and

(B)

explicitly acknowledge that the certification is subject to section 1001 of title 18.

(3)

(A)

The Director of Small and Disadvantaged Business Utilization for the Department, established pursuant to section 15(k) of the Small Business Act (15 U.S.C. 644(k)), and the Chief Acquisition Officer of the Department, established pursuant to section 1702 of title 41, shall jointly implement a process using the systems described in section 16(g)(2) of the Small Business Act (15 U.S.C. 645(g)(2)), or any other relevant systems available, to monitor compliance with this subsection.

(B)

The Director of Small and Disadvantaged Business Utilization and the Chief Acquisition Officer shall jointly refer any violations or suspected violations of this subsection to the Inspector General of the Department.

(C)

If the Secretary determines, in consultation with the Inspector General of the Department, that a small business concern that is awarded a contract under this section did not act in good faith with respect to the requirements described in paragraph (1)(A), the small business concern shall be subject to any or all of the following consequences—

(i)

referral to the Debarment and Suspension Committee of the Department;

(ii)

a fine under section 16(g)(1) of the Small Business Act (15 U.S.C. 645(g)(1)); and

(iii)

prosecution for violating section 1001 of title 18.

(D)

Not later than November 30 for each of fiscal years 2021 through 2025, the Inspector General shall submit to the Committees on Veterans’ Affairs of the Senate and House of Representatives a report for the fiscal year preceding the fiscal year during which the report is submitted that includes, for the fiscal year covered by the report—

(i)

the number of referred violations and suspected violations received under subparagraph (B); and

(ii)

the disposition of such referred violations, including the number of small business concerns suspended or debarred from Federal contracting or referred to the Attorney General for prosecution.

(m)

Definitions.—

In this section:

(1)

The term “Administrator” means the Administrator of the Small Business Administration.

(2)

The term “small business concern” has the meaning given that term under section 3 of the Small Business Act (15 U.S.C. 632).

(3)

The term “small business concern owned and controlled by veterans” has the meaning given that term under section 3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)).

(4)

The term “small business concern owned and controlled by veterans with service-connected disabilities” has the meaning given the term “small business concern owned and controlled by service-disabled veterans” under section 3(q)(2) of the Small Business Act (15 U.S.C. 632(q)(2)).

(Added Pub. L. 109–461, title V, § 502(a)(1), Dec. 22, 2006, 120 Stat. 3431; amended Pub. L. 110–389, title VIII, § 806, Oct. 10, 2008, 122 Stat. 4189; Pub. L. 111–275, title I, § 104(b)(1), Oct. 13, 2010, 124 Stat. 2867; Pub. L. 111–350, § 5(j)(7), Jan. 4, 2011, 124 Stat. 3850; Pub. L. 112—154, title VII, § 706, Aug. 6, 2012, 126 Stat. 1206; Pub. L. 114–315, title V, § 501(a), Dec. 16, 2016, 130 Stat. 1566; Pub. L. 114–328, div. A, title XVIII, § 1832(b), (d), (f)(1), Dec. 23, 2016, 130 Stat. 2659, 2660; Pub. L. 116–155, § 2(a), (b), Aug. 8, 2020, 134 Stat. 698, 699; Pub. L. 116–183, § 2(a), Oct. 30, 2020, 134 Stat. 895; Pub. L. 116–283, div. A, title VIII, § 862(b)(1), (2), Jan. 1, 2021, 134 Stat. 3776, 3778; Pub. L. 116–315, title VII, § 7009, Jan. 5, 2021, 134 Stat. 5061.)

cite as: 38 USC 8127