[Federal Register Volume 83, Number 7 (Wednesday, January 10, 2018)]
[Proposed Rules]
[Pages 1203-1212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27715]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 74
RIN 2900-AP97
VA Veteran-Owned Small Business (VOSB) Verification Guidelines
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend
its regulations governing VA's Veteran-Owned Small Business (VOSB)
Verification Program. The National Defense Authorization Act for Fiscal
Year 2017 (``the NDAA''), Public Law 114-840, placed the responsibility
for issuing regulations relating to ownership and control for the
verification of VOSBs with the United States Small Business
Administration (SBA). This proposed regulation seeks to remove all
references to ownership and control and to add and clarify certain
terms and references that are currently part of the verification
process. The NDAA also provides that in certain circumstances a firm
can qualify as VOSB or Service-Disabled Veteran Owned Small Business
(SDVOSB) when there is a surviving spouse or an employee stock
ownership plan (ESOP).
DATES: Comments must be received by VA on or before March 12, 2018.
ADDRESSES: Written comments may be submitted through
www.Regulations.gov; by mail or hand-delivery to Director, Regulation
Policy and Management (00REG), Department of Veterans Affairs, 810
Vermont Ave. NW, Room 1063b, Washington, DC 20420; or by fax to (202)
273-9026. Comments should indicate that they are submitted in response
to ``RIN 2900-AP97--VA Veteran-Owned Small Business (VOSB) Verification
Guidelines.'' Copies of comments received will be available for public
inspection in the Office of Regulation Policy and Management, Room
1064, between the hours of 8:00 a.m. and 4:30 p.m., Monday through
Friday (except holidays). Please call (202) 461-4902 for an
appointment. (This is not a toll-free number.) In addition, during the
comment period, comments may be viewed online through the Federal
Docket Management System (FDMS) at www.Regulations.gov.
FOR FURTHER INFORMATION CONTACT: Tom McGrath, Director, Center for
Verification and Evaluation (00VE), Department of Veterans Affairs, 810
Vermont Ave. NW, Washington, DC 20420, [email protected], (202)
461-4300. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: An Advanced Notice of Proposed Rulemaking
was provided with a 60-day comment period which ended on July 12, 2013.
VA received comments from numerous commenters; on November 6, 2015, a
proposed rule was published in the Federal Register (80 FR 68795) which
sought to amend 38 CFR part 74 to find an appropriate balance between
preventing fraud in the Veterans First Contracting Program and
providing a process that would make it easier for eligible VOSBs to
become verified. VA received comments from numerous commenters. In
drafting this proposed rule, VA has considered the issues raised by the
comments submitted in response to both the July 12, 2013 and the
November 6, 2015 publications. We thank all commenters for their
participation in this process. The bases for the proposed amendments
are as follows.
In Public Law 114-840, the NDAA designates the SBA as the Federal
Agency responsible for creating regulations governing ownership and
control. As regulations relating to and clarifying ownership and
control are no longer the responsibility of VA, VA is proposing to
remove the six (6) definitions from Sec. 74.1 that relate to and
clarify ownership and control. Specifically VA is proposing to remove
the following definitions: Day-to-day management, day-to-day
operations, immediate family member, negative control, same or similar
line of business, and unconditional ownership. In addition, VA proposes
to remove one additional definition, VetBiz.gov, to account for
anticipated changes to the location of the Vendor Information Pages
database.
Within Sec. 74.1, VA also proposes to create three new definitions
and amend sixteen (16) others. The new definition ``applicant''
clarifies the use of the term throughout the regulation. The new
definition ``application days'' is added to clarify the manner by which
the time period in Sec. 74.11(a) is computed. The definition http://www.va.gov/osdbu is added to identify the hosting website as VA is
considering replacing VetBiz.gov as the host of the Vendor Information
Pages database. The new definition will allow VA to transition to a new
host site without requiring further amendments to 38 CFR part 74.
VA is proposing to amend the definitions Center for Veterans
Enterprise, joint venture, Office of Small and Disadvantaged Business
Utilization, non-veteran, participant, primary industry classification,
principal place of business, service-disabled veteran, service-disabled
veteran owned small business, small business concern, surviving spouse,
vendor information pages, verification eligibility, veteran, veterans
affairs acquisition regulation, and veteran-owned small business. For
consistency, VA also proposes to remove all references to VetBiz and in
various places replace the words Center for Verification and
Evaluation, service-disabled veteran-owned small business, the
Department of Veterans Affairs,
[[Page 1204]]
Vendor Information Pages, and veteran-owned small business and use in
their place the respective abbreviations--CVE, SDVOSB, VA, VIP, and
VOSB in titles and the body of the regulation.
VA is proposing to amend the definition of Center for Veterans
Enterprise by changing the term to Center for Verification and
Evaluation (CVE) to reflect the name change effectuated at 78 FR 59861,
September 30, 2013. The definition of CVE would be further amended to
reflect the change to the functions of this office to verification
activities. The last sentence of the definition will be removed to
clarify CVE's function.
VA is proposing to amend the definition joint venture to conform to
the amendments to 13 CFR part 125 as it pertains to SDVOSB joint
ventures. VA has also added language to clearly address the current
policy by indicating that at least one venturer must be a VOSB.
VA is proposing to amend the definition of Office of Small and
Disadvantaged Business Utilization to more accurately reflect the role
fulfilled by this office with respect to VOSB matters.
VA is proposing to amend the definition of non-veteran to remove
the reference to VetBiz, as VA is considering moving the site which
hosts the Vendor Information Pages database.
VA is proposing to amend the definition of participant to emphasize
CVE's role in verifying status.
VA is proposing to amend the definition of primary industry
classification to make a technical change to use the acronym NAICS as
it has already been defined in a parenthetical earlier in the
definition.
VA is proposing to amend the definition of principal place of
business to change day to day operations to daily business operations
in order to match the wording in 13 CFR 125.13.
VA is proposing to amend the definition of service-disabled veteran
as the current definition has led to confusion regarding the
documentation necessary to establish a service-connected disability.
This change would also help increase program efficiency by specifically
referencing BIRLS, the system that allows CVE to quickly and accurately
determine veteran status.
VA is proposing to amend the definition of service-disabled
veteran-owned small business concern to align the definition with the
definition for `small business concern owned and controlled by service-
disabled veterans' proposed by SBA in the amendment to 13 CFR 125.11.
VA is proposing to amend the definition of small business concern
to align the definition with the definition for `small business
concern' proposed by SBA in the amendment to 13 CFR 125.11.
VA is proposing to amend the definition of surviving spouse to
reorder existing language and incorporate additional requirements
outlined in the NDAA. The amended definition would provide that
immediately prior to death of the deceased veteran the concern must
have been owned and controlled in accordance with 13 CFR part 125 and
the concern was listed in VIP.
VA is proposing to amend the definition of Vendor Information Pages
to replace the reference to the website http://www.VetBiz.gov with the
website that is the successor to VetBiz.gov and allow for CVE to make
reasonable and necessary adjustments without the need for an amendment
of the regulation.
VA is proposing to remove the definition of Vetbiz.gov to account
for anticipated changes to the location of the Vendor Information Pages
database.
VA is proposing to amend the definition of verification eligibility
period to reflect the current eligibility period of 3 years, which was
effectuated via publication in the Federal Register on February 21,
2017 at 82 FR 11154. Additionally, a technical change would amend the
reference to Center for Veterans Enterprise by replacing it with the
abbreviation CVE. A final technical change would replace the word
``year'' with ``eligibility period'' to agree with the change in the
first sentence.
VA is proposing to amend the definition of Veteran to add a
reference to the Veterans Benefits Administration (VBA). This revised
definition is meant to be inclusive of all persons who served on active
duty and were discharged or released under conditions other than
dishonorable. Historically, the program has had an issue wherein
applicants who did in fact qualify as veterans under the statutory
definition, did not meet the standards outlined in Sec. 74.1. This
change is not intended to create a new class of veteran, but rather to
clarify that those who are eligible under the applicable statutes will
be found eligible for participation in this program.
VA is proposing to amend the definition of Veterans Affairs
Acquisition Regulation to remove the term U.S. Department of Veterans
Affairs and replace it with the abbreviation for VA as previously
defined in Sec. 74.1.
VA is proposing to amend the definition of Veteran-owned small
business, in accordance with the NDAA, to reflect that stock owned by
ESOPs which in turn are owned by one or more veterans are not included
in determining requisite ownership percentage, and to use the
abbreviations that have been previously defined in Sec. 74.1.
VA is proposing to amend Sec. 74.2 by revising paragraphs (a)-(e)
and adding new paragraph (g). In both 2010 and 2012, GAO published
reports tasking VA with reducing potential instances of fraud, waste,
and abuse. VA has found in its administration of the verification
program that the use of the procedures identified in Sec. 74.2
protects VA acquisition integrity and diminishes ongoing exposure to
fraud, waste, and abuse. Therefore, for such limited situations as
identified in Sec. 74.2, and only in these limited instances, VA finds
that immediate removal from public listing is warranted in order to
protect the integrity of VA procurement. Accordingly, the proposed
amendments to Sec. 74.2 would serve to more comprehensively outline
the circumstances under which a participant would be found ineligible
for the VOSB Verification program.
VA is proposing to amend Sec. 74.2(a) to add the clause
``submitted required supplemental documentation at http://www.va.gov/osdbu'' to clearly explain the key steps necessary to submit an
application and obtain verification. Additionally, a technical change
would be made to use the abbreviated form ``CVE'' for consistency.
VA is proposing to amend Sec. 74.2(b) to address the impact of
criminal activity on eligibility and thus better protect the government
from fraud, waste, and abuse. The title would be amended to reference
the System for Award Management (SAM), which has replaced the Excluded
Parties List System. Additionally, the language of the first sentence
would be amended to address the impact of 38 U.S.C. 8127(g)(3), which
now VA authority to exclude all principals in the business concern.
Accordingly, the language of Sec. 74.2 would be amended to specify
that the debarment of any individual holding an ownership and control
interest in the concern will impact the concern's eligibility.
VA is proposing to amend Sec. 74.2(c) by adding the phrase ``false
statements or information'' to reference the title and provide further
clarification on the eligibility requirements. The removal provision
would be additionally reworded to clarify that removal is immediate.
Finally, a technical change would remove the word ``the'' before CVE in
the last sentence.
[[Page 1205]]
VA is proposing to amend Sec. 74.2(d) by including tax liens and
unresolved debts owed to various governmental entities outside of the
Federal Government as financial obligations that would disqualify an
applicant for inclusion in the VIP database. The title would be
additionally amended to reflect this change. If after verifying the
participant's eligibility, CVE discovers that the participant no longer
satisfies this requirement, CVE will remove the participant from the
VIP database in accordance with Sec. 74.22. Finally, a technical
change would remove the word ``VetBiz'' before verification in the last
sentence.
VA is proposing to amend Sec. 74.2(e) to clarify the consequences
of SBA protest decisions and other negative findings. ``Other negative
findings'' will additionally be clarified by specifically referencing
status protest decisions. A technical change would remove the word
``VetBiz'' before verification throughout. The title of this section
would additionally be amended to clarify this section is not limited to
SBA decisions. In order to properly capture the impact of negative
findings, Sec. 74.2(e) would continue to clarify removal is immediate.
The second sentence would be amended to take into account ``other
negative findings''.
VA is proposing to amend Sec. 74.2(f) to specifically reference
the System for Award Management (SAM) registration. SAM is a
consolidated listing of previous databases and was not in existence at
the time the original regulation was created and therefore was not
referenced. Registration through SAM is required by 48 CFR 4.1200 as
supplemented by 48 CFR 804.1102.
VA is proposing to amend Sec. 74.3(a) to reflect that ownership is
determined in accordance with 13 CFR part 125 as the result of the
amendments to Title 38 of the United States Code as set forth in the
NDAA.
VA is proposing to amend Sec. 74.3(e) to redesignate this
paragraph as Sec. 74.3(b) to account for the removal of paragraphs
(a)-(d). VA is proposing to amend Sec. 74.3(b)(1) by a technical
change to replace ``application'' with ``VA Form 0877'' in order to
clarify the requirement and conform language to the rest of the
regulation. VA is proposing to amend Sec. 74.3(b)(1) to add a 30-day
time period for submission of a new application after a change in
ownership. This change would provide CVE the ability to definitively
and accurately track changes of ownership. Further, by adding a time
period for a new application, the program would be better able to
comply with its statutory mandate to verify that all concerns listed in
the VIP Database meet the prescribed ownership and control requirements
of the verification program.
VA is proposing to amend Sec. 74.3(b)(3) by a technical change to
replace ``application'' with ``VA Form 0877'' in order to clarify the
requirement and conform language to the rest of the regulation.
VA is proposing to amend Sec. 74.4(a) to state that control is
determined in accordance with 13 CFR part 125 pursuant to the NDAA.
Paragraphs (b)-(i) would be removed.
VA is proposing to amend Sec. 74.5 to include joint ventures. The
paragraph would additionally be reworded to clearly establish that 38
CFR part 74 does not supersede 13 CFR part 121 with respect to size
determinations. VA is proposing to add paragraph (b) to specifically
address eligibility of joint ventures. Subparagraphs (b)(1) and (b)(2)
would be added to provide notice of applicable requirements outlined
elsewhere in VA regulation.
VA is proposing to amend Sec. 74.10 to remove reference to the
physical address for CVE. Addresses or methods for submission may
change over time, and this change allows CVE to make reasonable and
necessary adjustments without the need for an amendment to the
regulation. This section would be further amended to remove the word
``VetBiz'' before verification, and change ``located'' to ``contained''
in the last sentence for better clarity. Finally, a technical change
would remove the word ``the'' before CVE in the last sentence.
VA is proposing to amend Sec. 74.11 to redesignate paragraphs (c)-
(g) to account for addition of new paragraph (c). VA is proposing to
amend Sec. 74.11(a) to accommodate a more veteran-friendly, customer
service centric approach to processing applications. ``Center for
Veterans Enterprise'' would be changed to ``CVE'' and ``[t]he CVE''
would be changed to ``CVE''. Additionally, VA is proposing to amend
Sec. 74.11(a) to incorporate the term `application days' and to
increase the review period to 90 application days, when practicable, to
accommodate time spent between registering for verification and the
time that all required documentation is received and the application is
deemed complete.
VA is proposing to amend Sec. 74.11(c) to address instances where
CVE does not receive all requested documentation. VA must verify
applicants prior to admission in the database. In order to comply with
the statute, VA requests documentation to demonstrate eligibility. This
proposed revision would notify the public that failure to adequately
respond to document requests may render CVE unable to verify the
eligibility of a concern and therefore may result in a denial or
administrative removal.
VA is proposing to amend Sec. 74.11(c) to be redesignated as Sec.
74.11(d) and to make a technical change to insert a reference to the
newly added paragraph (c). Additionally, the reference to paragraph (d)
would be changed to paragraph (e) to account for the redesignation. VA
is proposing to add the term ``totality of circumstances'' to clarify
long standing CVE interpretation and procedure. References to Sec.
74.11(b) and Sec. 74.13(a) would be added to highlight all applicable
exceptions. Finally, a last sentence would be added to clarify the
longstanding policy that the applicant bears the burden of establishing
VOSB status.
VA is proposing to amend Sec. 74.11(d) to be redesignated as Sec.
74.11(e). The first and second sentences would be amended by removing
the word ``adversely.'' The third sentence would be removed as it
refers to withdrawal or removal of verified status. This scenario will
be addressed in Sec. 74.21, which specifically deals with how
participants can exit the VIP database. Therefore, the removal would
help to eliminate redundancy and reduce the likelihood of confusion.
Additionally, VA is proposing to add Sec. 74.11(e)(1) to specifically
address bankruptcy as a changed circumstance. Subparagraphs (a)-(c)
would be added to outline requirements applicable to firms undergoing
the bankruptcy process.
VA is proposing to amend Sec. 74.11(e) to be redesignated as Sec.
74.11(f).
VA is proposing to amend Sec. 74.11(f) to be redesignated as Sec.
74.11(g).
VA is proposing to amend Sec. 74.11(g) to be redesignated as Sec.
74.11(h). A second sentence would be added to increase program
efficiency by requiring firms to provide updated contact information.
This would allow the program to use the most efficient methods to
dispatch determinations and ensure that applicants will receive
determinations in a timely manner.
VA is proposing to amend Sec. 74.12 to expand the list of required
documentation in order to provide the public notice of documentation
that is routinely requested by CVE. This amended list would include
documents previously referenced by Sec. 74.20(b). While the documents
would still be required for examination as described in Sec. 74.20(b),
they also are initially required for the application. As the
application is a concern's first exposure with the process, VA finds
this list
[[Page 1206]]
would be more appropriately placed in this Sec. 74.12 to notify the
public of the documentary requirements. Additionally, ``electronic
form'' would be changed to ``VA Form 0877'' throughout for clarity.
Similarly, ``attachments'' would be changed to ``supplemental
documentation'' throughout. Finally, the last two sentences would be
removed for clarity.
VA is proposing to amend Sec. 74.13 to modify the title and to
remove references to the previous reconsideration process, to include
removing paragraphs (b)-(d). In accordance with the NDAA, appeals of
initial denials on the grounds of ownership and control will be
adjudicated by SBA's Office of Hearings and Appeals (OHA) in accordance
with 13 CFR part 134. Accordingly, Section 74.13 (a) would be amended
to refer to the appeal process set forth in 13 CFR part 134.
VA is proposing to amend Sec. 74.13(e) to be redesignated as Sec.
74.13(b). VA is further proposing to modify this section to reflect the
removal of the reconsideration process and to remove the phrase
`service-disabled veteran' as the term veteran is now used to refer to
both veterans and service-disabled veterans throughout. VA is proposing
to delete paragraphs (f) and (g) as they are no longer relevant to the
process.
VA is proposing to amend Sec. 74.14 to remove references to
requests for reconsideration and to include notices of verified status
cancellation and denials of appeals in the list of determinations that
trigger a waiting period before a concern may submit a new verification
application. Including denial of appeals takes into consideration any
appeal filed with OHA that sustains the initial denial letter issued by
CVE. The program has instituted several procedures through policy to
assist applicants to identify and address easily correctable issues
that render the applicant ineligible. Therefore, the class of notices
listed in Sec. 74.14 are issued to applicants with substantial issues
in their business structure or underlying documentation that result in
ineligibility.
VA is proposing to further amend Sec. 74.14 to be redesignated as
Sec. 74.14(a). A new paragraph Sec. 74.14(b) would be added to
clarify that a finding of ineligibility during a reapplication will
result in the immediate removal of the participant. VA only intends, to
the extent practicable, to list as verified in the VIP database
concerns which currently meet verification requirements. This proposed
change would clarify current policy and serve the important purpose of
assisting contracting officers in the procurement process by ensuring
the database only includes concerns that are eligible for award of set
aside procurements. A final technical change removes the word
``VetBiz'' before verification throughout.
VA is proposing to amend Sec. 74.15(a) by splitting the paragraph
into paragraphs (a), (b), and (c). A technical change would be made to
what would be redesignated as Sec. 74.15(a) to improve specificity. A
change would be made to what would be redesignated as Sec. 74.15(b) to
require participants to inform CVE within 30 days of changes affecting
eligibility, consistent with Sec. 74.3(f)(1). A substantive change
would be made to the list that would be redesignated as Sec. 74.15(c),
which would be expanded to include all situations in which the
eligibility period may be shortened. VA is proposing to remove Sec.
74.15(b) because it deals with affiliation and would therefore be
addressed in Sec. 74.5. Therefore, any shortening of the eligibility
period due to an affiliation determination would result from an SBA
determination. This scenario would be addressed by Sec. 74.2(e) and is
referenced appropriately at what would be designated Sec. 74.15(c). A
technical change would remove the word ``VetBiz'' before verification
throughout. Finally, paragraphs (c), (d), and (e) would be redesignated
as (d), (e), and (f) respectively. The redesignated Sec. 74.15(e) will
be amended to reference immediate removals pursuant to Sec. 74.2.
VA is proposing to amend the first three sentences of Sec.
74.20(b) for simplicity and clarification. In the first sentence, the
phrase, ``or parts of the program examination'' would be removed. In
the second sentence, ``location'' would be changed to ``location(s)''.
In the third sentence, the word ``[e]xaminers'' is changed to ``CVE''.
As the proposed revisions to Sec. 74.12 would fully address the
required documentation necessary for verification the complete list
would be removed from Sec. 74.20 in order to avoid redundancy and
confusion. A final technical change removes the word ``VetBiz'' before
verification throughout.
VA is proposing to amend Sec. 74.21 to reorder for clarity and to
conform with changes made to other sections of this Part. VA is
proposing to amend Sec. 74.21(a) by a technical change to remove
reference to the `` `verified' status button'' in order to reflect the
current graphical user interface of the VIP database. Additionally,
``Vendor Information Pages'' would be changed to ``VIP.'' VA is
proposing to amend Sec. 74.21(b) by changing ``Vendor Information
Pages'' to ``VIP.'' VA is proposing to amend Sec. 74.21(c) by
referencing the immediate removal provisions established by and
clarified in Sec. 74.2. VA is proposing to amend Sec. 74.21(c) and
associated subparagraphs to be redesignated as Sec. 74.21(d) and
associated subparagraphs. Additionally, reference to the `` `verified'
status button'' would be removed to reflect the current graphical user
interface of the database. VA is proposing to remove Sec. 74.21(c)(5)
as involuntary exclusions would now be addressed in Sec. 74.2. VA is
proposing to amend Sec. 74.21(c)(6) to be redesignated as Section
74.21(d)(5) to account for deletion of Sec. 74.21(c)(5). Additionally,
the phrase ``or its agents'' would be added to clarify who may request
documents, and the words ``a pattern of '' will be deleted to clarify
the requirements necessary to remove a company for failure to provide
requested information. In the past, establishing a pattern of failure
has led to ineligible firms maintaining verified status for an extended
period of time by failing to provide requested documentation. This
change would help CVE protect the integrity of the procurement process
while still providing firms notice and opportunity to be heard prior to
cancellation. VA is proposing to amend Sec. 74.21(c)(7) to be
redesignated as Sec. 74.21(d)(6) to account for deletion of Sec.
74.21(c)(5). VA is proposing to remove Sec. 74.21(c)(8) as the action
addressed by that provision would now be addressed in Sec. 74.2. VA is
proposing to amend Sec. 74.21(c)(10) to be redesignated as Sec.
74.21(d)(7). The term ``application'' would be removed as VA Form 0877
reflects current program requirements. The phrase `60 days' would be
changed to `30 days' to conform with revised Sec. 74.3(f)(1) of this
part. VA is proposing to add Sec. 74.21(d)(8) to notify the public
that failure to report changed circumstances within 30 days is in and
of itself good cause to initiate cancellation proceedings. VA is
proposing to amend Sec. 74.21(d) to be redesignated as Sec. 74.21(e).
VA is proposing to amend Sec. 74.22(a) to begin the relevant 30-
day time period on the date on which CVE sends notice of proposed
cancellation of verified status. This change would provide the agency
the ability to definitively and accurately track the cancellation
proceedings. Additionally, this change would provide the agency the
ability to control the regulatory time period and consistently apply
the subsequent provisions of the paragraph. VA is proposing to amend
Sec. 74.22(e) to implement the new appeals procedure to OHA prescribed
in the NDAA.
VA is proposing to amend Sec. 74.25 to replace ``the Department''
with ``VA''.
[[Page 1207]]
VA is proposing to amend Sec. 74.26 to reflect the amended title
of Sec. 74.12.
VA is proposing to amend Sec. 74.27 to reword the first sentence
to specify that all documents submitted to the program, not only those
used to complete applications, will be stored electronically.
Additionally, the ``Vendor Information Pages'' would be changed to
``CVE'' in order to clearly denote who will be in possession of the
documents and responsible for their retention. The location reference
would be removed due to the electronic nature of the records to be
maintained by the program. The second sentence would be revised to
indicate that any owner information provided will be compared to any
available records. Finally, references to records management procedures
to be followed and procedures governing data breaches would be added.
VA is proposing to amend Sec. 74.28 to replace `Department of
Veterans Affairs' and `Center for Veterans Enterprises' VA and CVE
respectively.
VA is proposing to amend Sec. 74.29 to refer to VA's records
management procedures, which would govern, absent a timely written
request from the Government Accountability Office.
Effect of Rulemaking
The Code of Federal Regulations, as proposed to be revised by this
rulemaking, would represent the exclusive legal authority on this
subject. No contrary rules or procedures would be authorized. All VA
guidance would be read to conform with the rule finally adopted if
possible or, if not possible, such guidance would be superseded.
Paperwork Reduction Act
This proposed rule contains no provision constituting a collection
of information under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3521).
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. Small entities include
small businesses, small not-for-profit organizations, and small
governmental jurisdictions. Section 605 of the RFA allows an agency to
certify a rule, in lieu of preparing an analysis, if the rulemaking is
not expected to have a significant economic impact on a substantial
number of small entities.
This rule making has an average cost to the small business of $803,
and it would apply only to applying for verified status in the Vendor
Information Pages (VIP) database. The proposed regulation would merely
seek to clarify and streamline the existing rule and would add no
additional burdens or restrictions on applicants or participants with
regard to VA's VOSB Verification Program. The overall impact of the
proposed rule would be of benefit to small businesses owned by veterans
or service-disabled veterans.
The overall impact of the proposed rule will not affect small
businesses owned and controlled by veterans and service-disabled
veterans. The proposed rule removes ownership and control from 38 CFR
part 74 which will be assumed under a separate set of regulations
promulgated by SBA. The proposed rule also refines and clarifies
process steps and removes post examination review. Post examination
review will also be assumed under a separate set of regulations.
Examination of businesses seeking verification as veteran-owned
small businesses or service-disabled veteran owned small businesses
seeking VA set aside contract opportunities is through the MyVA
examination model. The MyVA examination model revises the verification
process by assigning dedicated case analysts and providing applicants
with additional access to VA staffers during verification.
From December 2016 through February 2017, 352 small businesses that
completed the MyVA process and received determination letters
participated in a follow-up survey detailing their costs and the
attribution of the costs. Seventy-three (73) percent of participating
businesses had either $0 costs or responded not applicable; 14 percent
estimated costs between $1 and $1,000; 3 percent responded with a cost
estimate between $1,001 and $2,000; 3 percent responded with a cost
estimate between $2,001 and $3,000; 2 percent responded with a cost
estimate between $3,001 and $4,000; 2 percent responded with a cost
estimate between $4,001 and $5,000; and 4 percent responded with a cost
estimate over $5,000. The average cost of all businesses providing
survey responses was $803 per business. The largest cost categories
were employee costs, attorney costs, travel/printing, consultants, and
accountants. As of the end of April 2017, there were 10,088 verified
companies in VA's database and 3,254 companies with applications in
process. On this basis, the Secretary certifies that the adoption of
this proposed rule would not have a significant economic impact on a
substantial number of small entities as they are defined in the
Regulatory Flexibility Act. Therefore, under 5 U.S.C. 605(b), this
rulemaking is exempt from the initial and final regulatory flexibility
analysis requirements of Sec. Sec. 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,'' which requires review by the Office
of Management and Budget (OMB), 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
implications of this regulatory action have been examined, and it has
been determined not to be a significant regulatory action under
Executive Order 12866.
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 proposed rule would have no such
effect on State, local, and tribal governments, or on the private
sector.
[[Page 1208]]
Catalog of Federal Domestic Assistance
This proposed rule would affect the verification guidelines of
veteran-owned small businesses, for which there is no Catalog of
Federal Domestic Assistance program number.
List of Subjects in 38 CFR Part 74
Administrative practice and procedure; Definitions; Appeals;
Eligibility requirements; Ownership requirements; Control requirements;
Affiliation; Application guidelines; Request for reconsideration;
Reapplication; Eligibility term; Verification examination; Procedures
for cancellation; Records management.
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. Gina S.
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs,
approved this document on October 13, 2017, for publication.
Dated: October 13, 2017.
Jeffrey Martin,
Office Program Manager, Office of Regulation Policy & Management,
Office of the Secretary, Department of Veterans Affairs.
For the reasons set forth in the preamble, we propose to amend 38
CFR part 74 as follows:
PART 74--VETERANS SMALL BUSINESS REGULATIONS
0
1. The authority citation for Part 74 continues to read as follows:
Authority: 38 U.S.C. 501 and 513, unless otherwise noted.
0
2. Revise Sec. 74.1 to read as follows:
Sec. 74.1 What definitions are important for Vendor Information Pages
(VIP) Verification Program?
For the purpose of part 74, the following definitions apply.
Applicant means a firm applying for inclusion in the VIP database.
Application days means the time period from when a veteran
registers for verification to the time of a determination, excluding
any days in which CVE is waiting for the firm to submit information or
documentation necessary for the office to continue processing the
application.
Center for Verification and Evaluation (CVE) is an office within
the U.S. Department of Veterans Affairs (VA) and is a subdivision of
VA's Office of Small and Disadvantaged Business Utilization. CVE
receives and reviews all applications for eligibility under this part
and maintains the VIP database. CVE assists VA contracting offices to
identify veteran-owned small businesses and communicates with the Small
Business Administration (SBA) with regard to small business status.
Days are calendar days unless otherwise specified. In computing any
period of time described in part 74, the day from which the period
begins to run is not counted, and when the last day of the period is a
Saturday, Sunday, or Federal holiday, the period extends to the next
day that is not a Saturday, Sunday, or Federal holiday. Similarly, in
circumstances where CVE is closed for all or part of the last day, the
period extends to the next day on which the agency is open.
Eligible individual means a veteran, service-disabled veteran, or
surviving spouse, as defined in this section.
Joint venture is an association of two or more business concerns
for which purpose they combine their efforts, property, money, skill,
or knowledge in accordance with 13 CFR part 125. A joint venture must
be comprised of at least one veteran-owned small business. For VA
contracts, a joint venture must be in the form of a separate legal
entity.
Non-veteran means any individual who does not claim veteran status,
or upon whose status an applicant or participant does not rely in
qualifying for the VIP Verification Program participation.
Office of Small and Disadvantaged Business Utilization (OSDBU) is
the office within VA that establishes and monitors small business
program goals at the prime and subcontract levels. OSDBU works with VA
Acquisitions to ensure the creation and expansion of small businesses
opportunities by promoting the use of set-aside contracting vehicles
within VA procurement. OSDBU connects and enables veterans to gain
access to these Federal procurement opportunities. The Executive
Director, OSDBU, is the VA liaison with the SBA. Information copies of
correspondence sent to the SBA seeking a certificate of competency
determination must be concurrently provided to the Director, OSDBU.
Before appealing a certificate of competency, the Head of Contracting
Activity must seek concurrence from the Director, OSDBU.
Participant means a veteran-owned small business concern which CVE
has verified and deemed eligible to participate in VA's veteran-owned
small business program.
Primary industry classification means the six-digit North American
Industry Classification System (NAICS) code designation which best
describes the primary business activity of the participant. The NAICS
code designations are described in the NAICS Manual published by the
U.S. Office of Management and Budget.
Principal place of business means the business location where the
individuals who manage the concern's daily business operations spend
most working hours and where top management's current business records
are kept. If the office from which management is directed and where the
current business records are kept are in different locations, CVE will
determine the principal place of business for program purposes.
Service-disabled veteran is a veteran who possesses a service-
connected disability rating between 0 and 100 percent. For the purposes
of VA's veteran-owned small business program, the service-connected
disability can be established by either registration in the Beneficiary
Identification and Records Locator Subsystem (BIRLS) maintained by the
Veterans Benefits Administration (VBA), a disability rating letter
issued by VA, or a disability determination from the Department of
Defense.
Service-disabled veteran-owned small business concern (SDVOSB)
means any of the following:
(1) A small business concern--
(i) Not less than 51 percent of which is owned by one or more
service-disabled veterans or, in the case of any publicly owned
business, not less than 51 percent of the stock (not including any
stock owned by an ESOP) of which is owned by one or more service-
disabled veterans; and
(ii) The management and daily business operations of which are
controlled by one or more service-disabled veterans or, in the case of
a veteran with permanent and severe disability, the spouse or permanent
caregiver of such veteran;
(2) A small business concern--
(i) Not less than 51 percent of which is owned by one or more
service-disabled veterans with a disability that is rated by the
Secretary of Veterans Affairs as a permanent and total disability who
are unable to manage the daily business operations of such concern; or
(ii) In the case of a publicly owned business, not less than 51
percent of the stock (not including any stock owned by an ESOP) of
which is owned by one or more such veterans.
Small business concern (SBC) means a concern that satisfies the
definition of concern in FAR 19.001 and, with its affiliates, meets the
size standard for its
[[Page 1209]]
primary industry, pursuant to part 121 of chapter 13.
Surviving spouse is any individual identified as such by VBA and
listed in its database of veterans and family members in accordance
with 101(3) of title 38, United States Code. For a concern whose
eligibility for the VIP database is based on the ownership of a
surviving spouse, the concern must have been owned and controlled in
accordance with 13 CFR part 125 immediately prior to the death of the
deceased veteran; and
(1) The service-disabled veteran's death causes the concern to be
owned by less than 51 percent by one or more service-disabled
veteran(s);
(2) The surviving spouse of such deceased veteran acquires such
veteran's ownership in the concern;
(3) The deceased veteran had a service-connected disability rated
as 100 percent disabling under the laws administered by the Secretary
of Veterans Affairs or such died as a result of a service-connected
disability; and
(4) Immediately prior to the death of such, and, to the extent
applicable, during the earlier of the periods described in paragraphs
(i) through (iii) of this definition, the concern was included in VIP:
(i) The date on which the surviving spouse remarries;
(ii) The date on which the surviving spouse relinquishes an
ownership interest in the small business concern; or
(iii) The date that is 10 years after the date of the death of the
veteran.
(iv) The date on which the business concern is no longer small
under Federal small business size standards.
Note to Definition of Surviving Spouse: For program eligibility
purposes, the surviving spouse has the same rights and entitlements
of the service-disabled veteran who transferred ownership upon his
or her death.
VA is the U.S. Department of Veterans Affairs.
Vendor Information Pages (VIP) is a database of businesses eligible
to participate in VA's Veteran-owned Small Business Program. The online
database may be accessed at no charge via the internet at https://www.va.gov/osdbu.
Verification eligibility period is a 3-year period that begins on
the date CVE issues its approval letter establishing verified status.
The participant must submit a new application for each eligibility
period to continue eligibility.
Veteran has the meaning given the term in section 101(2) of title
38, United States Code, as interpreted through Title 38 of the CFR. In
addition, any person having a determination of veteran status from VBA,
and who was discharged or released under conditions other than
dishonorable will be deemed to be a veteran for the purposes of this
program.
Veteran-owned small business concern (VOSB) is a small business
concern that is not less than 51 percent owned by one or more veterans,
or in the case of any publicly owned business, not less than 51 percent
of the stock of which is owned by one or more veterans (not including
any stock owned by an ESOP of which is owned by one or more veterans);
the management and daily business operations of which are controlled by
one or more veterans and qualifies as ``small'' for Federal business
size standard purposes. All service-disabled veteran-owned small
business concerns (SDVOSB) are also, by definition, veteran-owned small
business concerns. When used in these guidelines, the term ``VOSB''
includes SDVOSB.
Veterans Affairs Acquisition Regulation (VAAR) is the set of rules
that specifically govern requirements exclusive to VA prime and
subcontracting actions. The VAAR is chapter 8 of title 48, Code of
Federal Regulations, and supplements the Federal Acquisition Regulation
(FAR), which contains guidance applicable to most Federal agencies.
0
3. Revise Sec. 74.2 to read as follows:
Sec. 74.2 What are the eligibility requirements a concern must meet
for the VIP Verification Program?
(a) Ownership and control. A small business concern must be
unconditionally owned and controlled by one or more eligible veterans,
service-disabled veterans or surviving spouses, have completed the
online VIP database forms, submitted required supplemental
documentation at http://www.va.gov/osdbu, and have been examined by
VA's CVE. Such businesses appear in the VIP database as ``verified''.
(b) Good character and exclusions in System for Award Management
(SAM). Individuals having an ownership or control interest in verified
businesses must have good character. Debarred or suspended concerns or
concerns owned or controlled by debarred or suspended persons are
ineligible for VIP Verification. Concerns owned or controlled by a
person(s) who is currently incarcerated, or on parole or probation
(pursuant to a pre-trial diversion or following conviction for a felony
or any crime involving business integrity) are ineligible for VIP
Verification. Concerns owned or controlled by a person(s) who is
formally convicted of a crime set forth in 48 CFR 9.406-2(b)(3) are
ineligible for VIP Verification during the pendency of any subsequent
legal proceedings. If, after verifying a participant's eligibility, the
person(s) controlling the participant is found to lack good character,
CVE will immediately remove the participant from the VIP database,
notwithstanding the provisions of Sec. 74.22 of this part.
(c) False statements. If, during the processing of an application,
CVE determines, by a preponderance of the evidence standard, that an
applicant has knowingly submitted false information, regardless of
whether correct information would cause CVE to deny the application,
and regardless of whether correct information was given to CVE in
accompanying documents, CVE will deny the application. If, after
verifying the participant's eligibility, CVE discovers that false
statements or information have been submitted by a firm, CVE will
remove the participant from the VIP database immediately,
notwithstanding the provisions of Sec. 74.22 of this part. Whenever
CVE determines that the applicant submitted false information, the
matter will be referred to the VA Office of Inspector General for
review. In addition, CVE will request that debarment proceedings be
initiated by the Department.
(d) Financial obligations. Neither an applicant firm nor any of its
eligible individuals that fails to pay significant financial
obligations, including unresolved tax liens and defaults on Federal
loans or State or other government assisted financing, owed to the
federal government, the District of Columbia or any state, district, or
territorial government of the United States, is eligible for VIP
Verification. If after verifying the participant's eligibility CVE
discovers that the participant no longer satisfies this requirement,
CVE will remove the participant from the VIP database in accordance
with Sec. 74.22 of this part.
(e) Protest decisions or other negative findings. Any firm verified
in the VIP database that is found to be ineligible by a SDVOSB/VOSB
status protest decision will be immediately removed from the VIP
database, notwithstanding the provisions of Sec. 74.22 of this part.
Any firm verified in the VIP database that is found to be ineligible
due to a U.S. Small Business Administration (SBA) protest decision or
other negative finding may be immediately removed from the VIP
database, notwithstanding the provisions of Sec. 74.22 of this part.
Until such time as CVE receives official notification that the firm has
proven that it has successfully overcome the
[[Page 1210]]
grounds for the determination, that the decision is overturned on
appeal, or the firm applies for and receives verified status from CVE,
the firm will not be eligible to participate in the 38 U.S.C. 8127
program.
(f) System for Award Management (SAM) registration. All applicants
for VIP Verification must be registered in SAM at http://www.sam.gov,
or its successor prior to application submission.
0
4. Revise Sec. 74.3 to read as follows:
Sec. 74.3 Who does CVE consider to own a veteran-owned small
business?
(a) Ownership is determined in accordance with 13 CFR part 125.
However, where 13 CFR part 125 is limited to SDVOSBs, CVE applies the
same ownership criteria to firms seeking verified VOSB status.
(b) Change of ownership. (1) A participant may remain eligible
after a change in its ownership or business structure, so long as one
or more veterans own and control it after the change. The participant
must file an updated VA Form 0877 and supporting documentation
identifying the new veteran owners or the new business interest within
30 days of the change.
(2) Any participant that is performing contracts and desires to
substitute one veteran owner for another shall submit a proposed
novation agreement and supporting documentation in accordance with FAR
subpart 42.12 to the contracting officer prior to the substitution or
change of ownership for approval.
(3) Where the transfer results from the death or incapacity due to
a serious, long-term illness or injury of an eligible principal, prior
approval is not required, but the concern must file an updated VA Form
0877 with CVE within 60 days of the change. Existing contracts may be
performed to the end of the instant term. However, no options may be
exercised.
(4) Continued eligibility of the participant with new ownership
requires that CVE verify that all eligibility requirements are met by
the concern and the new owners.
0
5. Revise Sec. 74.4 to read as follows:
Sec. 74.4 Who does CVE consider to control a veteran-owned small
business?
Control is determined in accordance with 13 CFR part 125. However,
where 13 CFR part 125 is limited to SDVOSBs, CVE applies the same
control criteria to firms seeking verified VOSB status.
(Authority: 38 U.S.C. 501, 513 and 8127)
0
6. Revise Sec. 74.5 to read as follows:
Sec. 74.5 How does CVE determine affiliation?
(a) CVE does not determine affiliation. Affiliation is determined
by the SBA in accordance with 13 CFR part 121.
(b) Joint ventures may apply for inclusion in the VIP Verification
Program. To be eligible for inclusion in the VIP Verification Program,
a joint venture must demonstrate that:
(1) The underlying VOSB upon which eligibility is based is verified
in accordance with this part;
(2) The joint venture agreement complies with the requirements set
forth in 13 CFR part 125 for SDVOSBs. However, while 13 CFR part 125 is
limited to SDVOSBs, CVE will apply the same requirements to joint
venture firms seeking verified VOSB status.
0
7. Revise Sec. 74.10 to read as follows:
Sec. 74.10 Where must an application be filed?
An application for VIP Verification status must be electronically
filed in the Vendor Information Pages database located on the CVE's web
portal, http://www.va.gov/osdbu. Guidelines and forms are located on
the Web portal. Upon receipt of the applicant's electronic submission,
an acknowledgment message will be dispatched to the concern containing
estimated processing time and other information. Address information
for CVE is also located on the web portal.
(The Office of Management and Budget has approved the information
collection requirements in this section under control number 2900-
0675.)
0
8. Revise Sec. 74.11 to read as follows:
Sec. 74.11 How does CVE process applications for VIP Verification
Program?
(a) The Director, CVE, is authorized to approve or deny
applications for VIP Verification. CVE will receive, review, and
examine all VIP Verification applications. Once an applicant registers,
CVE will contact the applicant within 30 days to initiate the process.
If CVE is unsuccessful in its attempts to contact the applicant, the
application will be administratively removed. If CVE is successful in
initiating contact with the applicant, CVE will advise the applicant of
required documents and the timeline for submission. If the applicant
would be unable to provide conforming documentation, the applicant will
be given the option to withdraw its application. CVE will process an
application for VIP Verification status within 90 application days,
when practicable, of receipt of a registration. Incomplete application
packages will not be processed.
(b) CVE, in its sole discretion, may request clarification of
information relating to eligibility at any time in the eligibility
determination process. CVE will take into account any clarifications
made by an applicant in response to a request for such by CVE.
(c) CVE, in its sole discretion, may request additional
documentation at any time in the eligibility determination process.
Failure to adequately respond to the documentation request shall
constitute grounds for a denial or administrative removal.
(d) An applicant's eligibility will be based on the totality of
circumstances existing on the date of application, except where
clarification is made pursuant to paragraph (b) of this section,
additional documentation is submitted pursuant to paragraph (c) of this
section, as provided in paragraph (e) of this section or in the case of
amended documentation submitted pursuant to section 74.13(a) of this
part. The applicant bears the burden to establish its status as a VOSB.
(e) Changed circumstances for an applicant occurring subsequent to
its application and which affect eligibility will be considered and may
constitute grounds for denial of the application. The applicant must
inform CVE of any changed circumstances that could affect its
eligibility for the program (i.e., ownership or control changes) during
its application review.
(1) Bankruptcy. Bankruptcy is a change in circumstance requiring
additional protection for the agency. Should a VOSB enter into
bankruptcy the participant must:
(i) Inform CVE of the filing event within 30 days;
(ii) Specify to CVE whether the concern has filed Chapter 7, 11, or
13 under U.S. Bankruptcy code; and
(iii) Any participant that is performing contracts must assure
performance to the contracting officer(s) prior to any reorganization
or change if necessary including such contracts in the debtor's estate
and reorganization plan in the bankruptcy.
(f) The decision of the Director, CVE, to approve or deny an
application will be in writing. A decision to deny verification status
will state the specific reasons for denial and will inform the
applicant of any appeal rights.
(g) If the Director, CVE, approves the application, the date of the
approval letter is the date of participant verification for purposes of
determining the participant's verification eligibility term.
(h) The decision may be sent by mail, commercial carrier, facsimile
transmission, or other electronic means.
[[Page 1211]]
It is the responsibility of the applicant to ensure all contact
information is current in the applicant's profile.
(The Office of Management and Budget has approved the information
collection requirements in this section under control number 2900-
0675.)
0
9. Revise Sec. 74.12 to read as follows:
Sec. 74.12 What must a concern submit to apply for VIP Verification
Program?
Each VIP Verification applicant must submit VA Form 0877 and
supplemental documentation as CVE requires. All electronic forms are
available on the VIP database web pages. From the time the applicant
dispatches the VA Form 0877, the applicant must also retain on file, at
the principal place of business, a complete copy of all supplemental
documentation required by, and provided to, CVE for use in verification
examinations. The documentation to be submitted to CVE includes, but is
not limited to: Articles of Incorporation/Organization; corporate by-
laws or operating agreements; shareholder agreements; voting records
and voting agreements; trust agreements; franchise agreements,
organizational, annual, and board/member meeting records; stock ledgers
and certificates; State-issued Certificates of Good Standing; contract,
lease and loan agreements; payroll records; bank account signature
cards; financial statements; Federal personal and business tax returns
for up to 3 years; and licenses.
(The Office of Management and Budget has approved the information
collection requirements in this section under control number 2900-
0675.)
0
10. Amend Sec. 74.13 by revising paragraphs (a) and (b) to read as
follows:
Sec. 74.13 Can an applicant appeal CVE's initial decision to deny an
application?
(a) An applicant may appeal CVE's decision to deny an application
by filing an appeal with the United States Small Business
Administration (SBA) Office of Hearings and Appeals (OHA) after the
applicant receives the denial in accordance with 13 CFR part 134. The
filing party bears the risk that the delivery method chosen will not
result in timely receipt by OHA.
(b) A denial decision that is based on the failure to meet any
veteran eligibility criteria is not subject to appeal and is the final
decision of CVE.
* * * * *
0
11. Revise Sec. 74.14 to read as follows:
Sec. 74.14 Can an applicant or participant reapply for admission to
the VIP Verification Program?
(a) Once an application, an appeal of a denial of an application,
or an appeal of a verified status cancellation has been denied, or a
verified status cancellation which was not appealed has been issued,
the applicant or participant shall be required to wait for a period of
6 months before a new application will be processed by CVE.
(b) Participants may reapply prior to the termination of their
eligibility period. If a participant is found to be ineligible, the
participant will forfeit any time remaining on their eligibility period
and will be immediately removed from the VIP Verification database. An
applicant removed pursuant to this section may appeal the decision to
OHA in accordance with section 74.13 of this part. The date of a new
determination letter verifying an applicant will be the beginning of
the next 3-year eligibility period.
0
12. Revise Sec. 74.15 to read as follows:
Sec. 74.15 What length of time may a business participate in VIP
Verification Program?
(a) A participant receives an eligibility term of 3 years from the
date of CVE's approval letter establishing verified status.
(b) The participant must maintain its eligibility during its tenure
and must inform CVE of any changes that would affect its eligibility
within 30 days.
(c) The eligibility term may be shortened by removal pursuant to
Sec. 74.2 of this part, application pursuant to Sec. 74.14(b) of this
part, voluntary withdrawal by the participant pursuant to Sec. 74.21
of this part, or cancellation pursuant to Sec. 74.22 of this part.
(d) CVE may initiate a verification examination whenever it
receives credible information concerning a participant's eligibility as
a VOSB. Upon its completion of the examination, CVE will issue a
written decision regarding the continued eligibility status of the
questioned participant.
(e) If CVE finds that the participant does not qualify as a VOSB,
the procedures at Sec. 74.22 of this part will apply, except as
provided in Sec. 74.2 of this part.
(f) If CVE finds that the participant continues to qualify as a
VOSB, the original eligibility period remains in effect.
0
13. Revise Sec. 74.20 to read as follows:
Sec. 74.20 What is a verification examination and what will CVE
examine?
(a) General. A verification examination is an investigation by CVE
officials, which verifies the accuracy of any statement or information
provided as part of the VIP Verification application process. Thus,
examiners may verify that the concern currently meets the eligibility
requirements, and that it met such requirements at the time of its
application or its most recent size recertification. An examination may
be conducted on a random, unannounced basis, or upon receipt of
specific and credible information alleging that a participant no longer
meets eligibility requirements.
(b) Scope of examination. CVE may conduct the examination at one or
all of the participant's offices or work sites. CVE will determine the
location(s) of the examination. CVE may review any information related
to the concern's eligibility requirements including, but not limited
to, documentation related to the legal structure, ownership, and
control. Examiners may review any or all of the organizing documents,
financial documents, and publicly available information as well as any
information identified in Sec. 74.12 of this part.
0
14. Revise Sec. 74.21 to read as follows:
Sec. 74.21 What are the ways a business may exit VIP Verification
Program status?
A participant may:
(a) Voluntarily cancel its status by submitting a written request
to CVE requesting that the concern be removed from public listing in
the VIP database; or
(b) Delete its record entirely from the VIP database; or
(c) CVE may remove a participant immediately pursuant to Sec.
74.2; or
(d) CVE may remove a participant from public listing in the VIP
database for good cause upon formal notice to the participant in
accordance with Sec. 74.22. Examples of good cause include, but are
not limited to, the following:
(1) Submission of false information in the participant's VIP
Verification application.
(2) Failure by the participant to maintain its eligibility for
program participation.
(3) Failure by the participant for any reason, including the death
of an individual upon whom eligibility was based, to maintain
ownership, management, and control by veterans, service-disabled
veterans, or surviving spouses.
(4) Failure by the concern to disclose to CVE the extent to which
non-veteran persons or firms participate in the management of the
participant.
(5) Failure to make required submissions or responses to CVE or its
agents, including a failure to make
[[Page 1212]]
available financial statements, requested tax returns, reports,
information requested by CVE or VA's Office of Inspector General, or
other requested information or data within 30 days of the date of
request.
(6) Cessation of the participant's business operations.
(7) Failure by the concern to provide an updated VA Form 0877
within 30 days of any change in ownership, except as provided in
paragraph 74.3(f)(3) of this part.
(8) Failure to inform CVE of any such changed circumstances, as
outlined in paragraphs (c) and (d) of this section.
(9) Failure by the concern to obtain and keep current any and all
required permits, licenses, and charters, including suspension or
revocation of any professional license required to operate the
business.
(e) The examples of good cause listed in paragraph (c) of this
section are intended to be illustrative only. Other grounds for
canceling a participant's verified status include any other cause of so
serious or compelling a nature that it affects the present
responsibility of the participant.
0
15. Amend Sec. 74.22 by revising paragraphs (a) and (e) to read as
follows:
Sec. 74.22 What are the procedures for cancellation?
(a) General. When CVE believes that a participant's verified status
should be cancelled prior to the expiration of its eligibility term,
CVE will notify the participant in writing. The Notice of Proposed
Cancellation Letter will set forth the specific facts and reasons for
CVE's findings and will notify the participant that it has 30 days from
the date CVE sent the notice to submit a written response to CVE
explaining why the proposed ground(s) should not justify cancellation.
* * * * *
(e) Appeals. A participant may file an appeal with OHA concerning
the Notice of Verified Status Cancellation decision in accordance with
13 CFR part 134. The decision on the appeal shall be final.
0
16. Revise Sec. 74.25 to read as follows:
Sec. 74.25 What types of personally identifiable information will VA
collect?
In order to establish owner eligibility, VA will collect individual
names and social security numbers for veterans, service-disabled
veterans, and surviving spouses who represent themselves as having
ownership interests in a specific business seeking to obtain verified
status.
0
17. Revise Sec. 74.26 to read as follows:
Sec. 74.26 What types of business information will VA collect?
VA will examine a variety of business records. See Sec. 74.12,
``What must a concern submit to apply for VIP Verification Program?''
0
18. Revise Sec. 74.27 to read as follows:
Sec. 74.27 How will VA store information?
VA stores records provided to CVE fully electronically on the VA's
secure servers. CVE personnel will compare information provided
concerning owners against any available records. Any records collected
in association with the VIP verification program will be stored and
fully secured in accordance with all VA records management procedures.
Any data breaches will be addressed in accordance with the VA
information security program.
(Authority: 38 U.S.C. 501 and 8127)
0
19. Revise Sec. 74.28 to read as follows:
Sec. 74.28 Who may examine records?
Personnel from VA, CVE, and its agents, including personnel from
the SBA, may examine records to ascertain the ownership and control of
the applicant or participant.
(Authority: 38 U.S.C. 5, 13, and 8127)
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20. Revise section 74.29 to read as follows:
Sec. 74.29 When will VA dispose of records?
The records, including those pertaining to businesses not
determined to be eligible for the program, will be kept intact and in
good condition and retained in accordance with VA records management
procedures following a program examination or the date of the last
Notice of Verified Status Approval letter. Longer retention will not be
required unless a written request is received from the Government
Accountability Office not later than 30 days prior to the end of the
retention period.
[FR Doc. 2017-27715 Filed 1-9-18; 8:45 am]
BILLING CODE 8320-01-P