Businesses eligible to participate in the Veterans First Contracting Program must meet the VA’s definition of a “service-disabled veteran-owned small business” or a “veteran-owned small business.” This requires the business to show that it is both “owned” and “controlled” by a veteran. Both of these terms have specific meanings.
Ownership: A business must be “not less than 51%…owned by one or more service disabled veterans, or in the case of any publicly owned business, (has) not less than 51% of the stock owned by one or more service disabled veterans, the management and daily business operations of which is controlled by one or more service-disabled veterans, or, in the case of a veteran with a severe and permanent disability, a spouse or permanent caregiver of the veteran.” In other words, the business must be at least 51% directly and unconditionally owned by a veteran. (See 38 CFR 74.3).
Control: “Control” means both the day-to-day management and long-term decisionmaking authority. In determining whether a business is veteran-controlled, one of the most important factors the CVE will examine is the business’ corporate documents, which must clearly demonstrate veteran control. Corporate documents must show that the veteran is the highest-ranked officer, contain language demonstrating how the veteran controls the day-to-day operations and strategic policy, and must make it clear that important company decisions cannot occur without the veteran’s presence and consent. (See 38 CFR 74.4).
Businesses must qualify as “small” under the applicable NAICS code. However, the VA will not make a size determination. When the veteran business owner completes Form 0877 to initiate their application, they must self-certify that their business qualifies as “small.”