[Federal Register Volume 78, Number 163 (Thursday, August 22, 2013)]
[Rules and Regulations]
[Pages 52085-52087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20488]



38 CFR Part 74

RIN 2900-AO49

VA Veteran-Owned Small Business Verification Guidelines

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.


SUMMARY: This document adopts as a final rule, without change, the 
interim final rule published in the Federal Register on June 27, 2012. 
This document implements a portion of the Veterans Benefits, Health 
Care, and Information Technology Act of 2006, which requires the 
Department of Veterans Affairs (VA) to verify ownership and control of 

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owned small businesses (VOSBs), including service-disabled veteran-
owned small businesses (SDVOSBs), in order for these firms to 
participate in VA acquisitions set asides for SDVOSB/VOSBs. 
Specifically, this final rule requires re-verification of SDVOSB/VOSB 
status only every 2 years rather than annually. The purpose of this 
change is to reduce the administrative burden on SDVOSB/VOSBs regarding 
participation in VA acquisitions set asides for these types of firms. 
Verified SDVOSB/VOSBs are placed on the Vendor Information Page (VIP) 
at www.vetbiz.gov.

DATES: Effective Date: This rule is effective August 22, 2013.

FOR FURTHER INFORMATION CONTACT: Michelle Gardner-Ince, Director, 
Center for Veterans Enterprise (00VE), Department of Veterans Affairs, 
810 Vermont Ave. NW., Washington, DC 20420, phone (202) 303-3260 x5237. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On June 27, 2012, VA published in the 
Federal Register (77 FR 38181) an interim final rule that revised the 
requirement for re-verification of SDVOSB/VOSB status from 1 year to 2 
years. As noted in the preamble to the interim final rule, VA has 
concluded that an annual examination is not necessary to adequately 
maintain the integrity of the Verification Program.
    We provided a 60-day comment period that ended on August 27, 2012. 
We received six comments. Four commenters discussed that the words 
``open market'' should be removed from the sentence ``In accordance 
with 38 U.S.C. 8127 and VA Acquisition Regulation, 48 CFR part 819, VA 
is required to set aside any open market procurement for SDVOSBs and 
then VOSBs, first and second respectively, if two or more such concerns 
are reasonably anticipated to submit offers at fair and reasonable 
pricing.'' This sentence was part of the background information 
contained in the preamble and not a part of the regulatory language. 
VA's interpretation with respect to the traditional relationship 
between set-asides conducted in open-market acquisitions and the 
Federal Supply Schedule (FSS), namely that agencies are not required to 
implement set-aside programs before or while using the FSS, has been 
upheld in Kingdomware Technologies, Inc. v. United States, 107 Fed. Cl. 
226 (2012). In any event, the regulatory language only addressed the 
expansion of the SDVOSB/VOSB re-verification status requirement from 1 
year to 2 years and, therefore, these comments are outside the scope of 
this rulemaking. We make no changes based on these comments. Two 
additional commenters endorsed the proposed change. VA appreciates the 
commenters' support.
    Based on the rationale set forth in the interim final rule and for 
the reasons discussed above, we adopt the interim final rule as a final 
rule without change.

Administrative Procedure Act

    This document affirms as final the interim final rule that is 
already in effect. In accordance with 5 U.S.C. 553(b)(B) and (d)(3), 
the Secretary of Veterans Affairs concluded that there was good cause 
to dispense with advance public notice and opportunity to comment on 
this rule and good cause to publish this rule with an immediate 
effective date. The rule makes only a minor modification to extend the 
eligibility period for SDVOSB/VOSBs after VA's initial robust 
verification examination and approval from 1 year to 2 years. The rule 
reduces the administrative burden on SDVOSB/VOSB participants by 
eliminating annual re-verification submissions. The integrity of the 
program remains protected by the initial robust and detailed 
verification examination, the regulatory requirement of participants to 
report changes to ownership and control during their eligibility 
period, VA's authority to conduct random site examinations and to re-
examine eligibility upon receipt of any reasonably credible information 
affecting SDVOSB/VOSB verified status, and, for individual 
acquisitions, the status protest process, where VA contracting officers 
or competing vendors can challenge the SDVOSB/VOSB status of offerors 
if a reasonable basis can be asserted to be decided by VA's Office of 
Small and Disadvantaged Business Utilization on SDVOSB/VOSB set-aside 
acquisitions. In view of the detrimental effects of continuing an 
unnecessary administrative burden on program participants and verifying 
officials, and to avoid delays in verification caused by repetitive 
annual reviews, the Secretary concluded that it was impracticable, 
unnecessary, and contrary to public interest to delay the effective 
date of this rulemaking.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, applies to this 
final rule. This final rule is generally neutral in its effect on small 
businesses because it relates only to small businesses applying for 
verified status in VA's SDVOSB/VOSB verified database. The overall 
impact of the rule will benefit small businesses owned by veterans or 
service-disabled veterans because it will reduce their administrative 
burden associated with maintaining verified status by extending the 
need for re-verification by VA from 1 year to 2 years. VA has estimated 
the cost to an individual business to be less than $100.00 for 70-75 
percent of the businesses seeking verification, and the average cost to 
the entire population of businesses seeking to become verified is less 
than $325.00 on average. Increasing the verification period will 
decrease the frequency of any such costs. On this basis, the Secretary 
certifies that the adoption of this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from 
the initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by the Office of 
Management and Budget (OMB), unless OMB waives such review, as ``any 
regulatory action that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities; (2) 
Create a serious inconsistency or otherwise interfere with an action 
taken or planned by another agency; (3) Materially alter the budgetary 
impact of entitlements, grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) Raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in this Executive Order.''
    The economic, interagency, budgetary, legal, and policy

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implications of this regulatory action have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at http://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site at http://www1.va.gov/orpm/, by following the link for ``VA 
Regulations Published.''

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This final rule contains no new provisions constituting a 
collection of information under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3521).

Catalog of Federal Domestic Assistance

    This final rule affects the verification guidelines of veteran-
owned small businesses, for which there is no Catalog of Federal 
Domestic Assistance program number.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Jose D. 
Riojas, Chief of Staff, Department of Veterans Affairs approved this 
document on July 7, 2013, for publication.

List of Subjects in 38 CFR Part 74

    Administrative practice and procedures, Privacy, Reporting and 
recordkeeping requirements, Small business, Veteran, Veteran-owned 
small business, Verification.

    Dated: August 19, 2013.
Robert C. McFetridge,
Director, Regulation Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

    Accordingly, the interim final rule amending 38 CFR part 74, which 
was published on June 27, 2012, at 77 FR 38181, is adopted without 

[FR Doc. 2013-20488 Filed 8-21-13; 8:45 am]