[Federal Register Volume 87, Number 46 (Wednesday, March 9, 2022)]
[Proposed Rules]
[Pages 13598-13624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03677]



[[Page 13597]]

Vol. 87

Wednesday,

No. 46

March 9, 2022

Part V





Department of Veterans Affairs





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48 CFR Parts 802, 807, 808, et al.





VA Acquisition Regulation: Acquisition Planning; Required Sources of 
Supplies and Services; Market Research; and Small Business Programs; 
Proposed Rule

  Federal Register / Vol. 87 , No. 46 / Wednesday, March 9, 2022 / 
Proposed Rules  

[[Page 13598]]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Parts 802, 807, 808, 810, 813, 819, 832, 852, and 853

RIN 2900-AR06


VA Acquisition Regulation: Acquisition Planning; Required Sources 
of Supplies and Services; Market Research; and Small Business Programs

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) is proposing to amend 
and update its VA Acquisition Regulation (VAAR) in phased increments to 
revise or remove any policy superseded by changes in the Federal 
Acquisition Regulation (FAR), to remove procedural guidance internal to 
VA into the VA Acquisition Manual (VAAM), and to incorporate any new 
agency specific regulations or policies. This rulemaking revises 
coverage concerning Acquisition Planning, Required Sources of Supplies 
and Services, Market Research, and Small Business Programs, as well as 
affected parts to include Definitions of Words and Terms, Simplified 
Acquisition Procedures, Contract Financing, Solicitation Provisions and 
Contract Clauses, and Forms.

DATES: Comments must be received on or before May 9, 2022 to be 
considered in the formulation of the final rule.

ADDRESSES: Comments may be submitted through www.Regulations.gov. 
Comments received will be available at regulations.gov for public 
viewing, inspection, or copies.

FOR FURTHER INFORMATION CONTACT: Mr. Rafael Taylor, Senior Procurement 
Analyst, Procurement Policy and Warrant Management Services, 003A2A, 
810 Vermont Avenue NW, Washington, DC 20420, (202) 714-8560. (This is 
not a toll-free telephone number.)

SUPPLEMENTARY INFORMATION: 

Background

    This rulemaking is issued under the authority of the Office of 
Federal Procurement Policy (OFPP) Act which provides the authority for 
an agency head to issue agency acquisition regulations that implement 
or supplement the FAR.
    VA is proposing to revise the VAAR to add new policy or regulatory 
requirements and to remove any redundant guidance and guidance that is 
applicable only to VA's internal operating processes or procedures. 
Codified acquisition regulations may be amended and revised only 
through rulemaking. All amendments, revisions, and removals have been 
reviewed and concurred with by VA's Integrated Product Team of agency 
stakeholders.
    The VAAR uses the regulatory structure and arrangement of the FAR 
and headings and subject areas are consistent with FAR content. The 
VAAR is divided into subchapters, parts (each of which covers a 
separate aspect of acquisition), subparts, and sections.
    The Office of Federal Procurement Policy Act, as codified in 41 
U.S.C. 1707, provides the authority for the Federal Acquisition 
Regulation and for the issuance of agency acquisition regulations 
consistent with the FAR.
    When Federal agencies acquire supplies and services using 
appropriated funds, the purchase is governed by the FAR, set forth at 
Title 48 Code of Federal Regulations (CFR), chapter 1, parts 1 through 
53, and the agency regulations that implement and supplement the FAR. 
The VAAR is set forth at Title 48 CFR, chapter 8, parts 801 to 873.

Discussion and Analysis

    VA proposes to make the following changes to the VAAR in this phase 
of its revision and streamlining initiative. For procedural guidance 
cited below that is proposed to be deleted from the VAAR, each section 
cited for removal has been considered for inclusion in VA's internal 
agency operating procedures in accordance with FAR 1.301(a)(2). 
Similarly, delegations of authorities that are removed from the VAAR 
will be included in the VA Acquisition Manual (VAAM) as internal agency 
guidance. These changes seek to streamline and align the VAAR with the 
FAR, remove outdated and duplicative requirements, and reduce burden on 
contractors. The VAAM incorporates portions of the removed VAAR as well 
as other internal agency procedural guidance. VA will rewrite certain 
parts of the VAAR and draft new internal VAAM parts, and as VAAR parts 
are rewritten, will publish them in the Federal Register. VA will 
combine related topics, as appropriate. The VAAM is being created in 
parallel with these revisions to the VAAR and is not subject to the 
rulemaking process as they are internal VA procedures and guidance. 
Therefore, the VAAM will not be finalized until corresponding VAAR 
parts are finalized, and the corresponding VAAM parts or sections 
related to this rule is not yet available online.

VAAR Part 802--Definition of Words and Terms

    We propose to revise the authority citation by removing the dash in 
48 CFR 1.301-1.305 and adding the word, ``through.''
    In 802.101 we propose adding four new definitions and revising 
three existing definitions as discussed below. We propose adding the 
following definitions:
    Public Law (Pub. L. 109-461) means the Veterans Benefits, Health 
Care and Information Technology Act of 2006, as codified in 38 U.S.C. 
8127 and 8128, which authorizes the Veterans First Contracting Program.
    SDVOSB/VOSB when used as an initialism means a service-disabled 
veteran-owned small business (SDVOSB) and/or veteran-owned small 
business (VOSB) that has been found by VA eligible to participate in 
the Veterans First Contracting Program implemented at subpart 819.70 
and listed in the Vendor Information Pages. The term is synonymous with 
VA or VIP verified small business concerns owned and controlled by 
Veterans.
    VA Rule of Two means the determination process mandated in 38 
U.S.C. 8127(d)(1) whereby a contracting officer of the Department shall 
award contracts on the basis of competition restricted to small 
business concerns owned and controlled by Veterans if the contracting 
officer has a reasonable expectation that two or more small business 
concerns owned and controlled by Veterans will submit offers and that 
the award can be made at a fair and reasonable price that offers best 
value to the United States. For purposes of this VA specific rule, a 
service-disabled veteran-owned small business (SDVOSB) or a veteran-
owned small business (VOSB), must meet the eligibility requirements in 
38 U.S.C. 8127(e), (f) and VAAR 819.7003 and be listed as verified in 
the Vendor Information Pages (VIP) database maintained by the VA Office 
of Small and Disadvantaged Business Utilization (OSDBU), Center for 
Verification and Evaluation (CVE). It is distinguished from the FAR 
part 19 ``Rule of Two'' contracting determination requirement for 
general small business set-asides.
    Veterans First Contracting Program (VFCP) means the program 
authorized by Public Law 109-461 (38 U.S.C. 8127 and 8128), as 
implemented in subpart 819.70. This program applies to all VA contracts 
(see FAR 2.101 for the definition of contracts) including orders 
against Blanket Purchase Agreements (BPAs), Basic Ordering Agreements 
(BOAs), and orders against the Federal

[[Page 13599]]

Supply Schedules (FSS), unless otherwise excluded by law.
    In 802.101 we propose revising the following three definitions that 
already exist in the VAAR:
    Service-disabled veteran-owned small business (SDVOSB)--the 
definition remains substantially the same as a service-disabled 
veteran-owned small business concern defined in FAR 2.101, except that 
for acquisitions authorized by 38 U.S.C. 8127 and 8128 for the Veterans 
First Contracting Program, these businesses must be listed as verified 
in the VIP database. In addition, some SDVOSBs listed in the VIP 
database may be owned and controlled by a surviving spouse. See 
definition of surviving spouse in 802.101.
    Vendor Information Pages (VIP) database--this expands the 
definition currently in the VAAR, indicating that the VA Office of 
Small and Disadvantaged Business Utilization (OSDBU) office, through 
its Center for Verification and Evaluation (CVE), is responsible for 
maintaining the SDVOSB/VOSB list, and provides an updated website 
address for the database: https://www.vetbiz.va.gov/vip/ vip/. This site's 
database lists businesses that VA CVE has verified and determined 
eligible for the Veterans First Contracting Program.
    Veteran-owned small business (VOSB)--the definition remains 
substantially the same as a veteran-owned small business concern 
defined in FAR 2.101, except that for acquisitions authorized by 38 
U.S.C. 8127 and 8128 for the Veterans First Contracting Program, these 
businesses must be listed as verified in the VIP database. SDVOSBs, 
including businesses whose SDVOSB status derive from ownership and 
control by a surviving spouse, are also considered VOSB, as long as 
they are listed as eligible in VIP.

VAAR Part 807--Acquisition Planning

    We propose removing the entirety of part 807--Acquisition Planning, 
including subpart 807.1--Acquisition Plans, and 807.103, Agency-head 
responsibilities. This identifies internal procedures of VA that do not 
have a significant effect beyond the internal operating procedures of 
the VA (see FAR 1.301(b)). The information in this section will be 
moved to the VAAM.
    We propose removing subpart 807.3--Contractor Versus Government 
Performance, and 807.300, Scope of subpart, and 807.304-77, Right of 
first refusal. This addresses contracting for commercial services under 
OMB A-76 and VA's cost comparison process. It is proposed for removal 
because the material is outdated. The clause was used in conjunction 
with OMB Circular A-76, Performance of Commercial Activities or with 
VA's cost comparison process. The VA Directive that implemented VA's 
cost comparison process, VA Directive 7100, Competitive Sourcing, has 
been rescinded, which renders the guidance in this subpart and the 
clause obsolete. VA does not currently have policy guidance in place 
that supplements the OMB Circular A-76. Current FAR coverage is 
sufficient pending any changes to the program via the FAR or OMB 
directives.

VAAR Part 808--Required Sources of Supplies and Services

    We propose revising the authority citations pertaining to part 808 
to standardize how it is referenced in other VAAR parts. The authority, 
which now reads ``38 U.S.C. 8127 and 8128'' would be changed to read: 
``38 U.S.C. 8127-8128.''
    We propose removing reference to paragraph (d) in the 40 U.S.C. 121 
citation because it is unnecessary; only paragraph (c) will be 
reflected. This comports with the FAR. 40 U.S.C. 121(c) provides that 
the Administrator of the General Services Administration may prescribe 
regulations to carry out responsibilities under the Federal Property 
and Administrative Services subtitle of Title 40, and, additionally, 
that the head of each executive agency shall issue orders and 
directives that the agency head considers necessary to carry out the 
prescribed regulations issued by the Administrator. The VAAR, which 
supplements and implements the FAR, and its internal operational 
procedures, is a part of the orders and directives as authorized under 
this authority.
    We propose including a reference to Title 41 U.S.C. 1121(c)(3), 
which speaks to the authority of an executive agency under another law 
to prescribe policies, regulations, procedures, and forms for 
procurement that are subject to the authority conferred in the cited 
section, as well as other sections of Title 41 as shown therein.
    And finally, we also propose revising the part 808 authorities to 
add 41 U.S.C. 1702, which addresses overall direction of procurement 
policy, acquisition planning and management responsibilities of VA's 
Chief Acquisition Officer. We are removing the dash in 48 CFR 1.301-
1.304 and adding the word ``through.'' Any other proposed changes to 
authorities are shown under the individual parts as described in the 
preamble.
    We propose adding 808.000, Scope of part, to clarify that the part 
deals with prioritizing sources of supplies and services for use by the 
Government based on unique VA statutory programs, as well as use of the 
General Services Administration (GSA) Federal Supply Schedules program 
including the GSA delegated VA Federal Supply Schedule program.
    We propose adding 808.001, General, with no text as a header, and 
section 808.001-70, Definitions, to provide a definition for the 
Veterans Affairs Federal Supply Schedule (``VA FSS''). The definition 
of VA Federal Supply Schedule was added because ``VA FSS'' is used 
throughout part 808.
    We propose revising 808.002 to implement the requirements of the 
Department of Veterans Affairs Contracting Preference Consistency Act 
of 2020 (the Act), Pubic Law 116-155, amending 38 U.S.C. 8127, which 
became effective on August 8, 2020. In summary, the legislation 
requires a contracting officer of the Department to procure covered 
products and services on the Procurement List maintained by the 
Committee for Purchase from People Who Are Blind or Severely Disabled 
(the Committee), from a qualified nonprofit agency for the blind or by 
a qualified nonprofit agency for other severely disabled, as required 
by 41 U.S.C. chapter 85 and associated regulations prescribed under 
that chapter. This is referred to as the AbilityOne program. This 
requirement shall not apply in the case of a covered product or service 
for which a contract was awarded to an SDVOSB/VOSB under the authority 
of 38 U.S.C. 8127(d)(1) using restricted competition after December 22, 
2006 and in effect on the day before the enactment of the Act, i.e., 
August 7, 2020. In such case, these covered products and services shall 
continue under VA's unique SDVOSB/VOSB set-aside program using 
restricted competition as provided in VAAR 819.7006 and 819.7007. When 
these SDVOSB/VOSB contracts are terminated or expire, the Secretary, as 
delegated to the Head of the Contracting Activity or designee, is 
required to make a determination that the VA Rule of Two cannot be met 
before the requirement can be procured under the AbilityOne program. 
The legislation provides a definition of covered products and services 
and an exception which the VA implemented through Class Deviation from 
VA Acquisition Regulation Part 808, Required Sources of Supplies and 
Services, approved on July 20, 2021.
    We propose revising VAAR 808.002 to comport with changes to FAR 
8.002 based on FAC 2005-72, December 31, 2013, effective January 30, 
2014 and reflects VA's implementation of FAR

[[Page 13600]]

8.002. The FAR final rule amended FAR part 8 to clarify that use of 
General Services Administration (GSA) Federal Supply Schedules (FSS) is 
not mandatory.
    With this proposed rule, the VA is amending VAAR section 808.002 to 
set forth conforming amendments to its acquisition regulation as the 
result of legislation which requires contracting officers to give 
priority in the award of covered products and services under the 
AbilityOne program along with considering the requirements of the 
Veterans First Contracting Program set forth in subpart 819.70 as 
further described below. VA is also implementing related technical 
amendments as set forth below including adding citation references back 
to 808.002 in VAAR part 819.
    In general, we propose amending section 808.002, by adding 
paragraph (a) and (b) and removing paragraph (c). Paragraph (a) would 
state that contracting activities shall satisfy requirements for 
supplies and services from or through the mandatory sources listed in 
descending order of priority and aligns with FAR 8.002. Under (a)(1) 
and the underlying subparagraphs, the priorities for Supplies are 
established as--
     VA inventories including the VA supply stock program and 
VA excess.
     Excess from other agencies.
     Federal Prison Industries, Inc.
     Supplies that are on the Procurement List maintained by 
the Committee for Purchase From People Who Are Blind or Severely 
Disabled, through the AbilityOne Program (FAR subpart 8.7).
     Wholesale supply sources, such as stock programs of the 
General Services Administration (GSA) (see 41 CFR 101-26.3), the 
Defense Logistics Agency (see 41 CFR 101-26.6), the Department of 
Veterans Affairs (see 41 CFR 101-26.704), and military inventory 
control points.
    Under paragraph (a)(2), the priority is established for Services 
that are on the Procurement List maintained by the Committee for 
Purchase From People Who Are Blind or Severely Disabled, through the 
AbilityOne Program (FAR subpart 8.7).
    In 808.002, Priorities for use of mandatory Government sources, in 
order to implement the new Act, we added paragraphs (a)(1)(iv) and 
(a)(2) to reflect the new legislative mandate concerning products and 
services that are on the Procurement List maintained by the Committee 
for Purchase From People Who Are Blind or Severely Disabled, required 
to be procured through the AbilityOne Program, to:
     Add definitions for a ``covered product'' or ``covered 
service'' which means a product or service that is included on the 
Procurement List prescribed under FAR 8.002 and was included on such 
procurement list on or before December 22, 2006, or is a product or 
service that is a replacement for a product or service and that 
essentially meets the same requirement as the product or service being 
replaced; and the contracting officer determines such product or 
service meets the quality standards and delivery schedule requirements 
of VA.
     Establish AbilityOne as a priority mandatory Government 
source within certain limitations applicable to the Veterans First 
Contracting Program and to require that contracting officers shall 
procure a covered product or service that is on the Procurement List 
through the AbilityOne Program as set forth in VAAR 808.002(a)(1)(iv) 
and (a)(2), respectively, with one exception.
     Identify the exception for covered products or services 
previously awarded to SDVOSBs/VOSBs. Specifically, if a product or 
service contract action was previously awarded under 38 U.S.C. 8127 to 
a VIP-listed SDVOSB or VOSB after December 22, 2006 and in effect on 
the day before the enactment of the Act, i.e., August 7, 2020, the 
requirement shall continue to be procured as a SDVOSB/VOSB set-aside 
provided the contracting officer made a VA Rule of Two determination in 
accordance with 38 U.S.C. 8127(d)(1) and subpart 819.70.
     Restore AbilityOne as a priority mandatory source for 
covered products and services on the Procurement List on certain 
previously awarded SDVOSB/VOSB contracts if the VA Rule of Two is not 
met. Specifically, section 808.002 would require that, in the event the 
conditions of the exception are satisfied at the termination or 
expiration of a contract for covered products or services previously 
awarded under 38 U.S.C. 8127(d)(1) to SDVOSBs or VOSBs, AbilityOne 
remains a priority mandatory Government source. This requires a 
determination, which the Secretary delegates to the Head of the 
Contracting Activity or designee, that there is not a reasonable 
expectation that two or more SDVOSBs/VOSBs will submit offers and that 
award can be made at a fair and reasonable price that offers best value 
to the United States.
    We also propose removing 808.002, paragraph (c), Eligible 
beneficiaries, because internal procedures are more appropriately 
located in the VAAM. We propose adding paragraph (b), Unusual and 
compelling urgency, to comport with the FAR. The contracting officer 
may use a source other than those listed in 808.002, paragraph (a) when 
the need for supplies or services is of an unusual and compelling 
urgency. We added in a reference to FAR 6.302-2, 8.405-6, 13.106-1 and 
VAAR part 806 for justification requirements.
    We propose adding 808.004, Use of other sources, and 808.004-70, 
Use of other priority sources. This provides that contracting officers 
shall award contracts, Blanket Purchase Agreements (BPAs), and orders 
against VA and GSA Federal Supply Schedules (FSS), providing priority 
in the awarding of such contracts, agreements, and orders to VIP-listed 
SDVOSBs first, then VOSBs. This section also sets policy for VA 
strategic sourcing priorities and application of the VA Rule of Two. To 
provide medical supplies in Federal Supply Classification (FSC) groups 
65 and 66 efficiently and effectively the VA, through previous reform 
initiatives, has implemented key strategic sourcing contract vehicles 
(e.g., prime-vendor, national contracts, VA FSS). If these strategic 
sourcing contracts were subject to the VA Rule of Two, they may be 
determined mandatory by the head of the contracting activity. 
Contracting officers shall consider these priority contract vehicles 
before using other existing contract vehicles. This comports with FAR 
8.002 which encourages agencies to consider satisfying requirements 
from or through non-mandatory sources. VA balances this requirement 
carefully with the consideration of VA-specific strategic sourcing 
vehicles that permit VA to more effectively and efficiently meet its 
mission for those FSC groups delegated by GSA to VA--FSC Group 65 and 
66 for supplies, and FSC Group 621, for medical services, in addition 
to those other strategic sourcing vehicles supporting this core VA 
mission.
    In subpart 808.4, Federal Supply Schedules:
    We propose revising 808.402, General, to identify the GSA 
delegation to VA implementing FAR 8.402(a), whereby GSA has delegated 
authority to the VA to procure medical equipment, supplies, services, 
and pharmaceuticals under the VA Federal Supply Schedule (FSS) program. 
The VA FSS program includes medical supplies in Federal Supply 
Classification (FSC) Groups 65 and 66 and services in FSC 621 for 
Professional and Allied Healthcare Staffing Services and Medical 
Laboratory Testing and Analysis Services. We propose to remove outdated 
FSC groups that are no longer delegated.
    We propose adding 808.404, Use of Federal Supply Schedules, and 
808.404-70, Use of Federal Supply Schedules--the Veterans First

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Contracting Program. Contracting officers, when establishing a BPA or 
placing an order against the FSS, shall ensure that priorities for 
Veteran-owned small businesses are implemented within the VA hierarchy 
of small business program preferences in subpart 819.70. Specifically, 
the contracting officer must consider preferences for verified SDVOSBs 
first, then preferences for verified VOSBs. These priorities are 
followed by preferences for other small businesses in accordance with 
819.7005. This also supplements FAR 8.404 and provides that if 
contracting officers are unable to satisfy requirements for supplies 
and services from the mandatory sources in 808.002 and 808.004-70, they 
may consider commercial sources in the open market (see FAR 8.004(b)) 
if an open market acquisition is most appropriate (see FAR 8.004) and a 
VA Rule of Two determination is made (see subpart 819.70). This section 
also requires that when the servicing agency will award contracts under 
an interagency agreement on behalf of the VA, the contracting officer 
shall ensure the interagency acquisition complies with FAR subpart 17.5 
and VAAR subpart 817.5, and includes terms requiring compliance with 
the VA Rule of Two, to the maximum extent feasible--see VAAR subpart 
817.5.
    We propose removing 808.405-2, Ordering procedure for services 
requiring a statement of work as the language is outdated.
    We propose adding 808.405, Ordering procedures for Federal Supply 
Schedules, as a section heading with no text, and 808.405-70, Set-aside 
procedures for VA and GSA Federal Supply Schedules. This requires 
contracting officers to use the supplemental ordering procedures of 
this section when establishing a BPA or placing an order for supplies 
or services under this subpart. This includes posting requirements and 
the required use of evaluation preferences for SDVOSBs/VOSBs when a 
set-aside is not pursued in accordance with the market research and 
documentation requirements set forth.
    We propose adding 808.405-570, Small business set-asides and 
preferences--Veterans First Contracting Program clauses. This includes 
the prescription that requires the contracting officer, when setting 
aside an order pursuant to 808.405-70 (a), the applicable clause 
prescribed in 819.7011 for SDVOSB/VOSB set-asides shall be used. It 
also prescribes in paragraph (b) that when an SDVOSB/VOSB set-aside is 
not feasible, the ordering activity shall use the clause at 852.208-70, 
Service-Disabled Veteran-Owned and Veteran-Owned Small Business 
Evaluation Factors--Orders or BPAs, for task orders, delivery orders or 
BPAs using evaluation preferences other than price. And in paragraph 
(c), it requires the ordering activity to insert the clause at 852.208-
71, Service-Disabled Veteran-Owned and Veteran-Owned Small Business 
Evaluation Factor Commitments--Orders or BPAs, in request for quotes 
and resulting orders that include clause 852.208-70, Service-Disabled 
Veteran-Owned and Veteran-Owned Small Business Evaluation Factors--
Orders or BPAs.
    In subpart 808.6, Acquisition from Federal Prison Industries, Inc., 
we propose revising the title to remove ``(FPI)'' to comport with the 
title in the FAR.
    In 808.603, Purchase priorities, we add language that contracting 
officers may purchase supplies and services produced or provided by 
Federal Prison Industries (FPI) from eligible SDVOSBs and VOSBs, in 
accordance with procedures set forth in subpart 819.70, without seeking 
a waiver from FPI. We are correcting the previous title that had been 
codified at 808.603 from ``Purchasing priorities'' to ``Purchase 
priorities'' to align with the FAR.
    We propose to remove and reserve 808.8, Acquisition of Printing and 
Related Supplies and the underlying section 808.802, Policy. This is 
internal policy that will be removed to the VAAM.

VAAR Part 810--Market Research

    We propose revising the authority citations pertaining to part 810 
to standardize how it is referenced in other VAAR parts. The authority, 
which now reads ``38 U.S.C. 8127 and 8128,'' would be changed to read: 
``38 U.S.C. 8127-8128.''
    We propose removing reference to paragraph (d) in the 40 U.S.C. 121 
citation because it is unnecessary; only paragraph (c) will be 
reflected. This comports with the FAR. 40 U.S.C. 121(c) provides that 
the Administrator of the General Services Administration may prescribe 
regulations to carry out responsibilities under the Federal Property 
and Administrative Services subtitle of Title 40, and, additionally, 
that the head of each executive agency shall issue orders and 
directives that the agency head considers necessary to carry out the 
prescribed regulations issued by the Administrator. The VAAR, which 
supplements and implements the FAR, and its internal operational 
procedures, is a part of the orders and directives as authorized under 
this authority.
    We propose including a reference to Title 41 U.S.C. 1121(c)(3), 
which speaks to the authority of an executive agency under another law 
to prescribe policies, regulations, procedures, and forms for 
procurement that are subject to the authority conferred in the cited 
section, as well as other sections of Title 41 as shown therein.
    And finally, we also propose revising part 810 authorities to add 
41 U.S.C. 1702, which addresses overall direction of procurement 
policy, acquisition planning and management responsibilities of VA's 
Chief Acquisition Officer. We are removing the dash in 48 CFR 1.301-
1.304 and adding the word ``through.'' Any other proposed changes to 
authorities are shown under the individual parts as described in the 
preamble.
    We propose revising part 810, Market Research, to add 810.000, 
Scope of part, which provides that the Veterans First Contracting 
Program in subpart 819.70 applies to contract actions under this part 
and takes precedence over other small business programs referenced in 
FAR part 10 and FAR part 19.
    We propose revising, redesignating, and renumbering the current 
810.001, Market research policy, and retitling it so it now reads: 
810.001-70, Market research policy--use of VA Vendor Information Pages. 
This corrects the error during original codification in the VAAR when 
published originally as a proposed and final rule and which currently 
is reflected in the eCFR as ``810.001, Market research policy,'' and 
which then should have reflected: 810.001, Policy. This provides an 
updated Vendor Information Pages (VIP) website address and require 
contracting officers to review the VIP database as mandated by VAAR 
subpart 819.70, the Veterans First Contracting Program. It also 
requires more specifically that contracting officers search the VIP 
database by applicable North American Industry Classification System 
(NAICS) codes to determine whether two or more verified service-
disabled veteran-owned small businesses (SDVOSBs) and veteran-owned 
small businesses (VOSBs), in the appropriate NAICS code, are listed as 
verified in the VIP database. The contracting officer is required to 
determine, among other things as the requirement dictates, whether VIP-
listed SDVOSBs or VOSBs identified as a result of market research are 
capable of performing the work, are likely to submit an offer/quote, 
and whether award can be made at a fair and reasonable price that 
offers best value to the Government. The contracting officer must use 
the market research for acquisition planning purposes, and as

[[Page 13602]]

set forth in VAAR subpart 819.70, conduct a VA Rule of Two 
determination in accordance with the contracting order of priority (see 
819.7006 and 819.7007)
    We also propose removing 810.002, Market research procedures. This 
identifies internal procedures of VA that do not have a significant 
effect beyond the internal operating procedures of the VA (see FAR 
1.301(b)). The information in this section will be moved to the VAAM.

VAAR Part 813--Simplified Acquisition Procedures

    We propose revising the title of 813.003-70, Policy, to ``General 
policy'' to reflect it is supplementing the FAR at 813.003 and to 
comport with standard FAR conventions. We also propose adding a 
sentence in paragraph (a) that provides a pointer back to 808.002 for 
VA policy regarding mandatory Government sources. In the following 
paragraphs we propose updating references to 819 sections as a result 
of the renumbering of VAAR part 819 sections as follows:
    In paragraph (c)(1) references to 819.7005 and 819.7006 are revised 
to 819.7006 and 819.7007, respectively, and a reference to 819.7009 is 
revised to 819.7011.
    In paragraph (c)(2) a reference to 815.304 is revised to 815.304-70 
to reflect a change at that section in VAAR part 815.
    And in paragraph (d), a reference pointer to 819.7004 and 819.7011 
are added to the end of the sentence.
    In subpart 813.1, Procedures, we add references to new relevant 
VAAR part 806 sections to section 813.106-70, Soliciting competition, 
evaluation of quotations or offers, award and documentation--the 
Veterans First Contracting Program. In paragraph (b), we add a 
reference to 806.302-570(a) and (b) pertaining to justification for 
procurements under the simplified acquisition threshold, and in 
paragraph (c), we add a reference to 806.302-570(a) and (c), above the 
simplified acquisition threshold.

VAAR Part 819--Small Business Programs

    We propose adding authority citations for 15 U.S.C. 631 et seq. to 
denote the authority for small business programs at Federal agencies, 
as well as moving 15 U.S.C. 637(d)(4)(E) earlier in the list of 
authorities to reflect authority for an agency to develop incentives 
for increasing subcontracting plan opportunities which is under the 
auspices of the Office of Small and Disadvantaged Business Utilization 
(OSDBU).
    We propose revising the authority citations pertaining to part 819 
to standardize how it is referenced in other VAAR parts. The authority, 
which now reads ``38 U.S.C. 8127 and 8128,'' would be changed to read: 
``38 U.S.C. 8127-8128.''
    We propose removing reference to paragraph (d) in the 40 U.S.C. 121 
citation because it is unnecessary; only paragraph (c) will be 
reflected.
    We propose revising the authority citations pertaining to part 819 
to include a reference to 41 U.S.C. 1121(c)(3), which speaks to the 
authority of an executive agency under another law to prescribe 
policies, regulations, procedures, and forms for procurement that are 
subject to the authority conferred in the cited section, as well as 
other sections of Title 41 as shown therein.
    We also propose revising part 819 authorities to add 41 U.S.C 1303, 
which reflects additional authority of the VA as an executive agency to 
issue regulations that are essential to implement Governmentwide 
policies and procedures in the agency, as well as to issue additional 
policies and procedures required to satisfy the specific needs of the 
VA.
    We also propose adding 41 U.S.C. 1702, which addresses overall 
direction of procurement policy, acquisition planning and management 
responsibilities of VA's Chief Acquisition Officer. Any other proposed 
changes to authorities are shown under the individual parts as 
described in the preamble. We are removing the dash in 48 CFR 1.301-
1.304 and adding the word ``through.''
    We propose adding 819.000, Scope of part, indicating that 819 
supplements FAR 19 and implements provisions of title 38 U.S.C. 8127 
and 8128, as well as Executive Order 13360 and the Small Business Act 
(15 U.S.C. 631 et seq.) as applied to VA. This part also covers goals, 
priorities, and preferences for using SDVOSBs, VOSBs, and SBs, as well 
as subcontracting compliance.
    In subpart 819.2, Policies, the text is revised and updated to 
align more appropriately with FAR subpart 19.2 and to expand on VA 
policy regarding the Veterans First Contracting Program. New text in 
section 819.201 describes VA's small business policy consistent with 
the VA's legislation and its legislative history and is now aligned 
with the most recent FAR paragraph lettering/numbering. In the proposed 
revisions to 819.201, General policy, the realigned section contains 
revisions as follows: Paragraph (a) provides a policy statement 
regarding priority for veteran owned small businesses and establishment 
of goals consistent with VA's legislative mandate and key points in the 
Supreme Court Kingdomware decision regarding goals; paragraph (c) 
assigns OSDBU concurrent responsibility for the Veterans First 
Contracting Program, in addition to those legislative mandates in FAR; 
and paragraph (d) covers the appointment of small business specialists 
by the HCA in coordination with OSDBU.
    We propose revising 819.202, Specific policies to align with the 
FAR coverage for OSDBU recommendation on set-asides. It implements the 
FAR section and expands coverage to the Veterans First Contracting 
Program in subpart 819.70. The section also covers, in very broad 
terms, the VA Form 2268, Small Business Program and Contract Bundling 
Review process.
    We propose deleting 819.202-1, Encouraging small business 
participation in acquisitions. Existing contract financing language 
here is removed from the VAAR as redundant to the FAR, and certain 
internal procedural guidance is included in VAAM subpart 832.4. The 
current VAAR text provides that payments of less than 30 days are 
allowed, but the contracting officer and the local fiscal officer must 
agree on the negotiated payment terms before awarding the contract. 
Note: This requirement may have been overtaken by the accelerated 
payments provisions recently added to FAR part 32.
    We propose removing coverage in sections 819.202-1, 819.202-5, 
819.202-70, and 819.202-71. Current VAAR coverage under these sections 
are no longer necessary or were moved to other sections. Internal 
procedures are removed and moved to the VAAM.
    In 819.202-72, Order of precedence, the section is removed, and the 
language moved to a new section 819.203-70, Priority for SDVOSB/VOSB 
contracting preferences, to supplement more appropriately FAR 19.203.
    We propose adding 819.203, Relationship among small business 
programs, as a section header with no text.
    We proposed adding 819.203-70, Priority for SDVOSB/VOSB contracting 
preferences. This proposed supplement to FAR 19.203 cites the 
legislative authority for VA to establish special acquisition methods 
and priorities which shall be considered by VA contracting officers 
before other priorities and preferences in FAR 19.203. It also covers 
legislative requirements in 38 U.S.C. 8128 to provide SDVOSB/VOSB 
preference

[[Page 13603]]

under any other small business program.
    In subpart 819.3, Determination of Small Business Status for Small 
Business Programs, we propose revising the title to comport with the 
updated FAR title so that it reads: Determination of Small Business 
Size and Status for Small Business Programs.
    We propose revising existing section at 819.307, SDVOSB/VOSB Small 
Business Status Protests, to change the title to comport with the FAR 
so that it reads: ``Protesting a firm's status as a service-disabled 
veteran-owned small business concern.'' There is no text under this 
section heading. The text previously under this section is moved to a 
new 819.307-70 as described below.
    We propose adding 819.307-70, SDVOSB/VOSB status protests, to 
reflect that it provides VA policy supplementing FAR 19.307. Paragraph 
(a) from the existing CFR is modified as a single paragraph. The other 
paragraphs in the previous text at 819.307 are removed. The proposed 
modified section reiterates a FAR requirement that protests, 
challenging whether an SDVOSB/VOSB is a ``small business'' for the 
purposes of any Federal program, are subject to FAR subpart 19.3 and 
must be filed in accordance with that part. It also implements 
legislative requirements contained in section 1832 of the National 
Defense Authorization Act for FY 2017, Public Law 114-328, to place 
responsibility for all SDVOSB/VOSB status protests with the SBA Office 
of Hearings and Appeals, including those related to VIP inclusion.
    We propose revising subpart 819.5, to change the title from ``Set-
Asides for Small Businesses'' to ``Small Business Total Set-Asides, 
Partial Set-Asides, and Reserves'' to comport with an updated title in 
the FAR.
    We propose adding 819.501, General, as a section header with no 
text.
    We propose adding 819.501-70, General principles for setting aside 
VA acquisitions. A new section is created as a supplement to FAR 
19.501, General, providing small business set aside principles and 
priorities that apply to VA set asides. The FAR provides a preference 
to the socioeconomic programs in FAR 19.202 before small business set-
asides but does not provide coverage for VOSB set-asides. Nor does it 
require verification of SDVOSBs for set-asides covered under FAR 
subpart 19.14. Moreover, the SDVOSB program in FAR is discretionary and 
not mandatory as it is for VA. The new section covers VA priorities and 
preferences for SDVOSBs/VOSBs, both above and below the simplified 
acquisition threshold in accordance with subpart 819.70. These 
priorities also apply to all VA acquisitions under this subpart 
including orders and BPAs under multiple award contracts, GSA Federal 
Supply Schedule contracts and Multi-Agency Contracts (MACs) awarded by 
another agency. It also provides that when a procurement requirement is 
not set aside for SDVOSBs/VOSBs in accordance with subpart 819.70, the 
contracting officer shall consider using evaluation preferences, as set 
forth in 808.405-70 or 815.304-70. It also adds coverage indicating 
that contracting officers may provide in the solicitation for the use 
of tiered evaluations. Note: Since other Federal agencies, including 
GSA, are not subject to Public Law 109-461, and/or ownership and 
control verification, the section reiterates that the requirements in 
this section apply to all VA competitive acquisitions under this 
subpart, including orders and BPAs under multiple award contracts, GSA 
Federal Supply Schedule contracts and Multi-Agency Contracts (MACs) 
awarded by another agency. It also provides that a set-aside restricted 
to SDVOSBs/VOSBs pursuant to VAAR subpart 819.70 satisfies competition 
requirements in FAR part 6, as well as fair opportunity requirements 
for orders under multiple-award contracts (see FAR 16.505(b)(2)(i)(F)).
    Under section 819.502, Setting aside acquisitions, we propose 
adding an underlying section 819.502-1, Requirements for setting aside 
acquisitions. This new section is created to supplement FAR 19.502-1(b) 
with the VA policy for mandatory Government sources. The FAR section 
provides that small business set-asides do not apply to purchases from 
required sources under part 8 (e.g., Committee for Purchase From People 
Who are Blind or Severely Disabled). As a result of Public Law 116-155, 
the new VAAR section refers contracting officers to VAAR 808.002 for 
the VA policy regarding priorities for use of SDVOSBs/VOSBs and 
mandatory Government sources as VA has different requirements with 
respect to FAR 8.002 based on Public Law 116-155.
    In 819.502-2, Total small business set-asides, we propose adding 
new coverage at 819.502-2(a) to indicate that VA contracting officers, 
rather than withdrawing an SDVOSB/VOSB set-aside and resoliciting, may 
follow tiered evaluation procedures, as provided in the March 22, 2018 
VA Class Deviation from Federal Acquisition Regulation 19.502-2, Total 
small business set-asides.
    We propose removing 819.502-3, Partial set-asides. Coverage is no 
longer required because the FAR adequately covers this topic.
    We propose adding 819.507, Solicitation provisions and contract 
clauses, as a new section header with no text.
    We propose adding 819.507-70, Additional VA solicitation provisions 
and contract clauses. This proposed new section refers contracting 
officers to VAAR subpart 808.4 (Federal Supply Schedules); VAAR subpart 
815.3 (Source Selection); and VAAR subpart 819.70 (Veterans First 
Contracting Program) for VA specific requirements and clauses 
applicable to VA veteran-owned and small business contracting programs.
    We propose removing subpart 819.6, Certificates of Competency and 
Determinations of Responsibility. The FAR-redundant language is removed 
and information that is internal and procedural in nature is moved to 
the VAAM.
    In subpart 819.7--The Small Business Subcontracting Program, we 
propose removing 819.704, Subcontracting plan requirements; the 
language will be moved to a new section, retitled and revised as 
discussed below.
    We propose adding 819.704-70, VA subcontracting plan requirements, 
as a supplement to the FAR. This language contains some previous 
coverage at 819.704. This proposed new language directs contracting 
officers to ensure any subcontracting plans submitted by offerors 
include goals for SDVOSBs and VOSBs that are commensurate with the 
annual VA SDVOSB and VOSB subcontracting goals, rather than the prime 
contracting goals as previously included in this section. The proposed 
new language cautions contractors that only firms registered and 
verified through the VIP data base will count towards their SDVOSB/VOSB 
subcontracting goals; and that subcontracting plan achievement reports 
will be reviewed to ensure the subcontract was awarded to a business 
concern that is eligible to be counted toward meeting the goal, as 
provided in subpart 819.70.
    Section 819.704-70, paragraph (b) requires goals to be expressed as 
a percentage of total dollars to be subcontracted unless otherwise 
stated in the solicitation. Paragraph (c) provides that if an offeror 
proposes to use an SDVOSB/VOSB subcontractor for the purpose of 
receiving SDVOSB/VOSB evaluation factors credit pursuant to 808.405-70 
or 815.304-70, the contracting officer shall ensure that the offeror, 
if awarded the contract, uses the

[[Page 13604]]

proposed subcontractor or another SDVOSB/VOSB for that subcontract or 
for work of similar value, in accordance with clause 852.208-70 or 
852.215-71, Evaluation Factor Commitments.
    Paragraph (d) provides that pursuant to 38 U.S.C. 8127(g), any 
business concern that is determined by VA to have willfully and 
intentionally misrepresented a company's SDVOSB or VOSB status is 
subject to debarment from contracting with the Department for a period 
of not less than five years. This includes the debarment of all 
principals in the business.
    We propose removing 819.705, Appeal of contracting officer 
decisions. Relevant subcontracting-related language is incorporated 
into 819.704-70. Unrelated language regarding set-aside decisions is 
removed because it is not applicable to subcontracting.
    We propose renumbering 819.709, Contract clause, as 819.708, 
Contract clauses, to align with FAR clause coverage on small business 
subcontracting plans. It requires the contracting officer to insert 
VAAR clause 852.219-9, Small Business Subcontracting Plan Minimum 
Requirements, in solicitations and contracts that include FAR clause 
52.219-9, Small Business Subcontracting Plan. In addition, the section 
refers readers to new subpart 819.72 for other required provisions and 
clauses.
    In subpart 819.8, Contracting With the Small Business 
Administration (The 8(a) Program), we propose revising the title to 
correct a minor capitalization error to comport with the FAR so that it 
reads: ``Contracting With the Small Business Administration (the 8(a) 
Program).
    We propose revising 819.800, General. Paragraphs (a), (b), and (c) 
are deleted as obsolete. New paragraph (e) is created to refer to the 
SBA/VA Partnership Agreement (PA), which delegates contracting 
execution authority to VA contracting officers. The PA sets forth the 
delegation of authority and establishes the basic procedures for 
expediting the award of 8(a) contract requirements. The actual PA and 
related basic procedures will be addressed in VAAM subpart M819.8. The 
PA is now permanent (as opposed to a yearly agreement) but is subject 
to cancellation by SBA. The new language provides that contracting 
officers must follow the alternate procedures in the Partnership 
Agreement and this subpart, as applicable, to award an 8(a) contract 
and that in the event no Partnership Agreement is in effect, the 
procedures in FAR subpart 19.8 will be followed.
    We propose adding 819.811, Preparing the contracts, as a section 
header with no text.
    We propose adding 819.811-370, VA/SBA Partnership Agreement and 
contract clauses, for direct 8(a) awards. The new language prescribes 
clauses 852.219-18, Notification of Competition Limited to Eligible 
8(a) Participants, and 852.219-71, Notification of Section 8(a) Direct 
Award.
    In subpart 819.70, Service-Disabled Veteran-Owned and Veteran-Owned 
Small Business Acquisition Program, we propose revising the title of 
the subpart to reflect the well-known and public name of the program: 
The VA Veterans First Contracting Program, typically referred to as the 
Veterans First Contracting Program.
    We propose revising 819.7001, General, to provide background and 
legislative authority for the Veterans First Contracting Program 
consistent with legislative requirements in 38 U.S.C. 8127 and 8128 and 
the June 16, 2016 decision of the U.S. Supreme Court in Kingdomware 
Technologies, Inc. v. United States (No. 14-916) (136 S.Ct. 1969 
(2016)). In the Kingdomware decision dated June 16, 2016, the Supreme 
Court held that 38 U.S.C. 8127(d) applies to all competitively awarded 
contracts, including orders placed against Federal Supply Schedule 
(FSS) contracts. The Court also held the Rule of Two contracting 
procedures in section 8127(d) are not limited to those contracts 
necessary to fulfill the Secretary's goals. The ``VA Rule of Two'' as 
VA's implementing policy defined in VAAR 802.101 via Class Deviation 
issued on July 25, 2016 (and subsequent minor amendments), after the 
Kingdomware case, refers to the legislative requirement in Sec.  
8127(d) that ``a contracting officer of the Department shall award 
contracts on the basis of competition restricted to small business 
concerns owned and controlled by veterans if the contracting officer 
has a reasonable expectation that two or more small business concerns 
owned and controlled by veterans will submit offers and that the award 
can be made at a fair and reasonable price that offers best value to 
the United States.'' Paragraph (b) is revised to state that eligible 
SDVOSBs qualify for VOSB preferences under VAAR subpart 819.70. 
Paragraphs (c) and (d) provide the legislative basis for VA contracting 
officers to make awards to VIP-listed SDVOSBs/VOSBs using set-asides, 
other than full and open competition (sole source), as well as to 
provide SDVOSBs/VOSBs priority in the awarding of contracts and 
subcontracts through the use of evaluation preferences. Paragraph (d) 
provides that while contracting officers shall award contracts on the 
basis of competition restricted to small business concerns owned and 
controlled by veterans as provided in 819.7006 and 819.7007, when 
appropriate, the contracting officer may also use other SDVOSB/VOSB 
preferences in this subpart, including sole source awards. Paragraph 
(e) provides that a contract awarded under this subpart is subject to 
the SBA limitations on subcontracting requirements in 13 CFR 125.6, 
provided that a firm must be VIP-listed. Additional information is 
provided as to who is considered similarly situated. Paragraph (f) 
states that the attainment of goals or the use of interagency vehicles 
or Governmentwide contract vehicles (i.e., Federal Supply Schedules 
(FSS)) does not relieve the contracting officer from using SDVOSB/VOSB 
set-asides and other preferences as provided in subpart 819.70. It also 
requires that if the VA enters into a contract, agreement, or other 
arrangement with any Governmental entity to acquire goods or services, 
the entity acting on behalf of the VA through such an interagency 
acquisition or other agreement will comply, to the maximum extent 
feasible, with the provisions of the Veterans First Contracting Program 
as set forth in this subpart. Paragraph (g) requires contracting 
officers to ensure awards are made using the VA hierarchy of SDVOSB/
VOSB preferences in this subpart. Specifically, the contracting officer 
will consider preferences for eligible SDVOSBs first, then preferences 
for other eligible VOSBs. And paragraph (h) would provide that when an 
offer of an SDVOSB/VOSB prime contractor includes a proposed team of 
small business subcontractors and specifically identifies the first-
tier subcontractor(s) in the proposal, the contracting officer must 
consider the capabilities, past performance, and experience of each 
first tier subcontractor that is part of the team as the capabilities, 
past performance, and experience of the small business prime contractor 
if the capabilities, past performance, and experience of the small 
business prime does not independently demonstrate capabilities and past 
performance necessary for award.
    We propose revising 819.7002, Applicability, to reiterate that this 
subpart applies to VA contracting activities and to all contract 
actions. In addition, this subpart applies to VA contractors and to any 
government entity that has a contract, memorandum of understanding, 
agreement, or other arrangement with VA to acquire goods

[[Page 13605]]

and services for VA in accordance with 817.502. It includes a reference 
to VAAR 808.002 to ensure the public and VA contracting officers 
understands to refer to 808.002 for applicability and VA policy 
regarding priorities for use of mandatory Government sources.
    We propose revising 819.7003, Eligibility. Most of the original 
structure and language regarding eligibility of SDVOSBs and VOSBs is 
retained but updated to reflect new legislative requirements regarding 
eligibility under the program and alignment with SBA regulations, 
including the applicability of limitations on subcontracting and the 
transfer of eligibility challenges to the SBA as a result of Public Law 
114-328, enacted December 23, 2016 and subsequent legislative and 
regulatory changes. For example, new language has been added to clarify 
joint venture eligibility as a result of recent SBA regulatory changes, 
and a new paragraph is added to address the limitations on 
subcontracting certification requirements in Public Law 116-183, August 
19, 2020. In addition, a new paragraph is added consistent with a 2012 
amendment to Public Law 109-461, stating that willful and intentional 
misrepresentation of SDVOSB/VOSB status is subject to debarment from 
contracting with the Department for a period of not less than five 
years.
    We propose adding 819.7004, Limitations on subcontracting 
compliance requirements. This new section is created to address the 
limitations on subcontracting certification requirements in Public Law 
116-183, August 19, 2020. Specifically, contracting officers may award 
a contract under this subpart only after obtaining from the offeror a 
certification that the offeror will comply with the limitations on 
subcontracting requirements described in the solicitation and required 
under the resultant contract. The section also deals with legislative 
mandates that require OSDBU and Chief Acquisition Officer (CAO) to 
monitor and refer potential violations to the OIG for potential 
criminal violations. Note: As a result of this new section, the 
numbering in subsequent sections is changed to reflect the 
corresponding numerical sequence.
    We propose renumbering the existing 819.7004, Contracting order of 
priority, to 819.7005. Most of the original language regarding 
eligibility of SDVOSBs and VOSBs is removed, and the text updated to 
reflect the contracting order of priority established in 38 U.S.C. 
8127(h). New simpler language is added to track the order of preference 
set forth in 38 U.S.C. 8127(h). As a result of this new section, the 
numbering in subsequent sections is changed to reflect the 
corresponding numerical sequence.
    We propose revising 819.7005, Service-disabled veteran-owned small 
business set-aside procedures, renumbering it as 819.7006, and 
retitling it as ``VA service-disabled veteran-owned small business set-
aside procedures.'' Most of the existing language is retained with a 
few updates consistent with legislative requirements. The section 
provides that the contracting officer must consider SDVOSB set-asides 
before considering VOSB set-asides and the conditions to be met to make 
this determination. New language is added to reflect that the set-
asides are only applicable above the micro-purchase threshold.
    We propose revising 819.7006, Veteran-owned small business set-
aside procedures, renumbering it as 819.7007 and retitling it as ``VA 
veteran-owned small business set-aside procedures.'' Most of the 
existing language is retained with a few updates consistent with 
legislative requirements. The section provides that the contracting 
officer must consider VOSB set-asides after SDVOSB, and the conditions 
to be met to make the determination. New language is added to reflect 
that the set-asides are only applicable above the micro-purchases.
    We propose revising 819.7007, Sole source awards to service-
disabled veteran-owned small business concerns, renumbering it as 
819.7008 and retitling it as ``Sole source awards to verified service-
disabled veteran-owned small businesses.'' Existing language in 
paragraphs (a) and (d) is retained. Existing paragraph (b) is broken up 
into (b) and (c) and revised as follows: Paragraph (b) retains existing 
language recognizing the discretionary nature of this sole source 
authority; however, it adds that to ensure opportunities are available 
to the broadest number of SDVOSBs this authority is to be used only to 
the extent necessary to meet procurement goals and/or when in the best 
interest of the agency. Paragraph (c) is added providing that in 
accordance with FAR 6.302-5, contracts awarded using this authority 
shall be supported by the written justifications and approvals 
described in FAR 6.303 and 6.304. And lastly, paragraph (e) is added 
indicating that a procurement estimated to exceed $5 million shall not 
be split or subdivided to permit the use of this sole source authority.
    We propose revising 819.7008, Sole source awards to a verified 
veteran-owned small business concerns, renumbering it as 819.7009 and 
retitling it as ``Sole source awards to verified veteran-owned small 
businesses.'' We propose making similar changes as noted for the 
proposed language in 819.7008, but as it applies to Veterans other than 
SDVOSBs (i.e., verified veteran-owned small businesses). Note: The 
existing section at 819.7009, Contract clauses, is moved to 819.7011 as 
discussed below.
    We propose adding 819.7010, Tiered set-aside evaluation. This new 
section is proposed to implement FAR Class Deviation (VAIQ 7867323) and 
PPM 2018-04 Guidance and Procedures regarding use of Tiered Evaluations 
for use in solicitations set-aside in accordance with the VA Rule of 
Two. The section introduces the concept of tiered set-aside 
evaluations. It also defines and establishes the basis for the program, 
as implemented by VA. This is necessary because currently there is no 
guidance in the FAR for such a process.
    We propose revising 819.7009, Contract clauses, by renumbering it 
to 819.7011. The section prescribes set-aside clauses for solicitations 
and contracts. The names of the clauses are changed slightly to further 
differentiate from those in FAR and the numbering scheme is changed to 
comply with FAR drafting guidelines. In addition, the actual content of 
the clauses is updated. Two new clauses have been created to address 
the limitations on subcontracting certification requirements in Public 
Law 116-183, August 19, 2020. The legislation requires that before an 
award is made under the Veterans First Contracting Program, offerors 
must submit a certification of compliance with the Limitation on 
Subcontracting requirements and the Nonmanufacturer rule. This is 
discussed further under Part 852.
    We propose removing and reserving subpart 819.71, VA Mentor-
Prot[eacute]g[eacute] Program. The underlying sections 819.7101 through 
819.7115 are accordingly also removed. The VA Mentor-
Prot[eacute]g[eacute] Program is inactive. It was replaced with the 
Small Business Administration's Small Business Mentor 
Prot[eacute]g[eacute] Programs established pursuant to the Small 
Business Jobs Act of 2010 and the National Defense Authorization Act of 
2013. If VA does create a program specific to VA, the proposed language 
will be in a separate VAAR case for public comment.

VAAR Part 832--Contract Financing

    We propose removing subpart 832.9, Prompt Payment, and the 
underlying section 832.904-70 Determining payment due dates for small 
businesses.

[[Page 13606]]

As a result of a FAR class deviation issued ahead of FAR rulemaking, 
the VAAR must remove language that VA had enacted timely but is now 
redundant to the FAR class deviation.

VAAR Part 852--Solicitation Provisions and Contract Clauses

    We propose removing 852.207-70, Report of Employment Under 
Commercial Activities, which is no longer required.
    We propose adding 852.208-70, Service-Disabled Veteran-Owned and 
Veteran-Owned Small Business Evaluation Factors--Orders or BPAs, to 
reflect the clause prescribed by 808.405-570. Rather than relying on a 
clause under FAR part 15, this clause is specific to its use under FAR 
subpart 8.4 and the GSA FSS program. The clause provides that in an 
effort to increase contracting opportunities for veterans, depending on 
the evaluation factors included in the solicitation, VA will evaluate 
responses received based on the schedule Contractor's VIP verified 
service-disabled veteran-owned small business/veteran-owned small 
business (SDVOSB/VOSB) status; and/or their proposed use of SDVOSB/VOSB 
as subcontractors or teaming partners. This new language proposes that 
in order to receive credit under this clause a contractor or 
subcontractor must be listed, at time of submission of offer/quotes and 
at time of award, as an eligible SDVOSB/VOSB in the Vendor Information 
Pages (VIP) database at https://www.vetbiz.va.gov/vip/. VIP listed 
service-disabled veteran-owned schedule holders will receive full 
credit, and those listed in VIP as veteran-owned small businesses will 
receive partial credit for the SDVOSB/VOSB status evaluation factor. It 
also requires the offeror proposing to use VIP listed SDVOSBs/VOSBs as 
subcontractors or teaming partner must provide in their proposals 
information regarding the proposed SDVOSBs or VOSBs such as names and 
contact information of the VIP-listed SDVOSBs/VOSBs, a description of 
the proposed teaming arrangement, the approximate dollar value of the 
proposed teaming arrangements or subcontract(s), and evidence of 
teaming partner/subcontractor's VIP database registration and 
verification.
    We propose adding 852.208-71, Service-Disabled Veteran-Owned and 
Veteran-Owned Small Business Evaluation Factor Commitments--Orders and 
BPAs, as prescribed in 808.405-570. The proposed language provides that 
if a contractor is selected on the basis of SDVOSB or VOSB status, the 
contractor agrees to comply with the eligibility requirements in 
subpart 819.70, including the limitation on subcontracting requirements 
at 13 CFR 125.6. The clause also requires that if the contractor is 
selected for award on the basis of teaming/subcontracting in accordance 
with 852.208-70, the contractor agrees to use the evaluated firm(s) as 
proposed or to substitute one or more VIP verified SDVOSB/VOSB for work 
of the same or similar value. Such substitution must be for cause and 
approved by the contracting officer. It also includes language that 
pursuant to 38 U.S.C. 8127(g), any business concern that is determined 
by VA to have willfully and intentionally misrepresented a company's 
SDVOSB/VOSB status is subject to debarment for a period of not less 
than five years. This includes the debarment of all principals in the 
business.
    In 852.219-9, VA Small Business Subcontracting Plan Minimum 
Requirements, we propose renumbering it to 852.219-70 to comport with 
FAR drafting guidelines and numbering conventions. We propose revising 
language to reflect updated policy with the implementation of 38 U.S.C. 
8127-8128 at the VA. We propose emphasizing the requirement to utilize 
VA verified SDVOSBs/VOSBs in subcontracting plans, when previously this 
was not specifically addressed. The use of VA Form 0896A, Report of 
Subcontracts to Small and Veteran-Owned Business, is specified. And we 
provide language that pursuant to 38 U.S.C. 8127(g), any business 
concern that is determined by VA to have willfully and intentionally 
misrepresented a company's SDVOSB/VOSB status is subject to debarment 
for a period of not less than five years. This includes the debarment 
of all principals in the business.
    We propose removing 852.219-10, VA Notice of Total Service-Disabled 
Veteran-Owned Small Business Set-Aside and 852.219-11, VA Notice of 
Total Veteran Owned Small Business Set- Aside, as the names of the 
clauses will be changed and renumbered to 852.219-73 and 852.219-74, in 
order to differentiate from those in the FAR. A discussion is provided 
where the new numbered clauses are mentioned in this preamble.
    We propose removing 852.219-71, VA Mentor-Prot[eacute]g[eacute] 
Program and 852.219-72, Evaluation Factor for Participation in the VA 
Mentor-Prot[eacute]g[eacute] Program because the VA Mentor-
Prot[eacute]g[eacute] Program is inactive. It was replaced with the 
Small Business Administration's Small Business Mentor 
Prot[eacute]g[eacute] Programs established pursuant to the Small 
Business Jobs Act of 2010 and the National Defense Authorization Act of 
2013.
    We propose adding 852.219-71, Notification of Competition Limited 
to Eligible 8(a) Participants, which would be used in conjunction with 
FAR clause 52.219-18, Notification of Competition Limited to Eligible 
8(a) Participants, and state that any award resulting from this 
solicitation will be made directly by the contracting officer to the 
successful 8(a) offeror. Although SBA is not identified as such in the 
award form, SBA is still the prime contractor.
    We propose adding 852.219-72, Notification of Section 8(a) Direct 
Award, which would provide further information about the Partnership 
Agreement between the VA and the Small Business Administration.
    We propose adding 852.219-73, VA Notice of Total Set-Aside for 
Verified Service-Disabled Veteran-Owned Small Businesses, and 852.219-
74, VA Notice of Total Set-Aside for Verified Veteran-Owned Small 
Businesses, which were previously numbered as 852.219-10 and 852.219-
11. The actual content of the clauses is updated to address new 
legislative requirements on limitations on subcontracting requirements.
    We propose adding 852.219-75, VA Notice of Limitations on 
Subcontracting--Certificate of Compliance for Services and 
Construction. This new clause addresses the limitations on 
subcontracting certification requirements in Public Law 116-183, August 
19, as it is applied to services and construction. The legislation 
requires that before an award is made under the Veterans First 
Programs, offeror must submit a certification of compliance with the 
Limitations in Subcontracting requirements, currently required by SBA 
at 13 CFR 125.6.
    We propose adding 852.219-76, VA Notice of Limitations on 
Subcontracting--Certificate of Compliance for Supplies and Products. 
This new clause addresses the limitations on subcontracting 
certification requirements in Public Law 116-183, August 19, 2020 as it 
applies to supplies and products.

VAAR Part 853--Forms

    In subpart 853.2--Prescription of Forms, we propose adding 853.219, 
Small business forms, and to add the following forms referenced in the 
VAAR dealing with Small Business Programs under VAAR part 819 under the 
auspices of the Office of Small and Disadvantaged Business Utilization: 
VA Form 2268, Small Business Program and Contract Bundling Review, 
which is prescribed in 819.202. Contracting

[[Page 13607]]

officers shall use VA Form 2268, Small Business Program and Contract 
Bundling Review, to document actions related to small business, market 
research and consideration of the VA Rule of Two. VA Form 0896A, Report 
of Subcontracts to Small and Veteran-Owned Business, which is utilized 
by contractors when proposing subcontracting to SDVOSB/VOSBs.

Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 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). E.O. 13563 (Improving Regulation and Regulatory Review) 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. The 
Office of Information and Regulatory Affairs has determined that this 
rule is not a significant regulatory action under Executive Order 
12866.
    The Regulatory Impact Analysis associated with this rulemaking can 
be found as a supporting document at www.regulations.gov.

Paperwork Reduction Act

    This proposed rule includes provisions constituting a revised 
collection of information under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3521) that require approval by the Office of Management and 
Budget (OMB). This proposed rule also contains collection of 
information under the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3521) that are already approved by OMB. The collection 
of information for 48 CFR 819.704-70, 852.219-9, and 853.219(b) is 
currently approved by the Office of Management and Budget (OMB and has 
been assigned OMB control number 2900-0741. Accordingly, under 44 
U.S.C. 3507(d), VA has submitted a copy of this rulemaking containing 
the revised collection of information to OMB for review and approval.
    OMB assigns control numbers to collections of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. If OMB does not approve the 
collection(s) of information as requested, VA will immediately remove 
the provisions containing the collection(s) of information or take such 
other action as is directed by OMB.
    Comments on the revised collection(s) of information contained in 
this rulemaking should be submitted through www.regulations.gov. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AR06; VA Acquisition Regulation: Acquisition Planning; Required 
Sources of Supplies and Services; Market Research; and Small Business 
Programs'' and should be sent within 60 days of publication of this 
rulemaking. The information collection(s) associated with this 
rulemaking can be reviewed at: www.reginfo.gov/public/do/PRAMain.
    OMB is required to make a decision concerning the collection(s) of 
information contained in this rulemaking between 30 and 60 days after 
publication of this rulemaking in the Federal Register. Therefore, a 
comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the provisions of this 
rulemaking.
    The Department considers comments by the public on new 
collection(s) of information in--
     Evaluating whether the new collection(s) of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the new collection(s) of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection(s) of information 
on those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The removed collection of information associated with this 
rulemaking is contained in 48 CFR 852.207-70, Report of Employment 
Under Commercial Activities, under OMB control # 2900-0590. This 
proposed rule would remove one of the existing information collection 
requirements associated with this action at 48 CFR 852.207-70 to 
reflect the discontinuation of 852.207-70, as well as the related 
prescriptions for the clause at 807.304-77 and 873.110, paragraph (f). 
The removal of VAAR clause 852.207-70 from this OMB control number will 
remove 15 estimated annual burden hours and an annual cost savings to 
respondents of $428.85 that are currently reflected in the OIRA/OMB 
information collection inventory. However, due to the fact this OMB 
control number contains two additional VAAR clauses, as well as the 
increase of the Bureau of Labor Statistics (BLS) hourly rate in May 
2020, the net decrease of public burden cost for this OMB control 
number is $268.85.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule is not 
expected to 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).
    The overall impact of the proposed rule would be of benefit to 
small businesses owned by Veterans or service-disabled Veterans as the 
VAAR is being updated to remove extraneous procedural information that 
applies only to VA's internal operating processes or procedures. VA 
estimates no increased or decreased costs to small business entities. 
This rulemaking clarifies VA's policy regarding the contracting order 
of priority for Service-Disabled Veteran-Owned Small Businesses 
(SDVOSBs) and Veteran-Owned Small Businesses (VOSBs) as a result of the 
U.S. Supreme Court's decision in Kingdomware Technologies, Inc. vs. the 
United States, July 25, 2018, (Kingdomware) only as it pertains to the 
application of the VA Rule of Two in accordance with Public Law 109-461 
as codified at 38 U.S.C. 8127-8128, and via the original Final Rule--VA 
Acquisition Regulation: Supporting Veteran-Owned and Service-Disabled 
Veteran-Owned Small Businesses, published in the Federal Register at 74 
FR 64619, on December 9, 2009, and effective January 7, 2010.
    This regulation seeks to simplify and streamline VA guidance 
regarding its small business program. The impact on small business 
overall is positive, as VA continues to implement its small business 
policies in accordance with legislative mandates pertaining to the 
Department of Veterans Affairs in 38 U.S.C. 8127-8128 to ensure that 
that small business owned and controlled by Veterans receive a fair 
share of contracting opportunities at the Department. VA's hierarchy of 
contracting preferences, established by law, mandates VA Vendor 
Information Pages (VIP)-listed SDVOSBs first, then VOSBs, prior to 
other small business preferences. While consistent with VA's

[[Page 13608]]

legislation and mission to serve Veterans, this mandate necessarily 
makes achievement of other small business goals more challenging that 
fall in a statutorily based lower contracting order of priority, e.g., 
awards in the general small business category. Through renewed emphasis 
on the program in 2016 post the U.S. Supreme Court decision in 
Kingdomware Technologies, Inc., and through increased training and 
revised implementing policy and procedures issued to VA contracting 
officers, VA has successfully achieved specific SDVOSB, VOSB, and small 
business goals for FY 2020 as discussed below.
    This rulemaking does not change VA's overall policy regarding small 
businesses, does not have an economic impact to individual businesses, 
and there are no increased or decreased costs to small business 
entities. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final 
regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do 
not apply.
    a. A description of the reasons why action by VA is being 
considered.
    Response: This proposed rule is part of VA's initiative to revise 
and streamline the VAAR in phased increments. It is necessary 
specifically with this case, to implement updated requirements the 
Department of Veterans Affairs' (VA) policy and procedures pertaining 
to 38 U.S.C. 8127-8128 (Pub. L. 109-461), known as the Veterans First 
Contracting Program, as well as additional legislative amendments and 
statutory changes to 38 U.S.C. 8127 as a result of Public Law 116-155, 
the Department of Veterans Affairs Contracting Preference Consistency 
Act of 2020, which had an effective date of August 8, 2020, and Public 
Law 116-183, Protecting Business Opportunities for Veterans Act of 
2019, enacted October 30, 2020, which have been implemented in advance 
of this proposed rulemaking through separate class deviations. This 
rulemaking provides the proposed changes to the CFR for public comments 
on the updates to key related parts.
    b. A succinct statement of the objectives of, and legal basis for, 
the rule.
    Response: The objectives of this proposed rule are to implement 
statutory requirements and make other necessary updates to the VAAR to 
bring current with the Federal Acquisition Regulation (FAR) and with 
specific statutory amendments to 38 U.S.C. 8127. In addition to other 
programmatic updates, VA is addressing in this rule Public Law 116-155, 
the Department of Veterans Affairs Contracting Preference Consistency 
Act of 2020, enacted August 8, 2020, and Public Law 116-183, Protecting 
Business Opportunities for Veterans Act of 2019, enacted October 30, 
2020.
    c. A description of and, where feasible, an estimate of the number 
of small entities to which the rule would apply.
    Response: This rulemaking is not expected to 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.
    To determine the number of potential affected small businesses and 
other entities, VA examined the data in the Federal Procurement Data 
System (FPDS) to estimate the number of small business entities that 
will be affected by this rule. Based on preliminary data from Fiscal 
Year 2021, there were 80,148 SDVOSB coded contract actions, and 143,452 
coded contract actions to VOSBs. In addition to specific SDVOSB/VOSB 
contract actions, in FY 2021 there were a total of 219,301 small 
business contract actions in FPDS. Note: SDVOSBs may also be coded in 
addition to the SDVOSB category as both a small business and VOSB 
award. VA analysis indicates that in FY 2021 VA exceeded its goals for 
SDVOSB, VOSB and small businesses. In FY 2020, VA exceeded--(1) its 
SDVOSB goal of 15% with a 23.9% achievement; (2) its VOSB goal of 17% 
with a 24.4% achievement; and (3) its overall small business goal of 
28.45% with a 30.3% achievement, even during the midst of the declared 
national emergency on COVID-19. Considering VA had to make critical and 
urgent emergency procurements under other authorities, including sole 
source, of Personal Protective Equipment (PPE) and other related 
medical supplies and services in support of continuity of its core 
mission to provide Veterans' healthcare and as part of its overarching 
pandemic response in support of the declared national emergency, the VA 
acquisition workforce worked diligently hand-in-hand with its program/
project offices to continue to comply with the requirements of 38 
U.S.C. 8127-8127 in priority awards to SDVOSBs, then VOSBs. These table 
below provides the referenced data and successful small business 
program goal achievements in these categories.

                            Preliminary Fiscal Year 2021 Small Business Goaling Data
----------------------------------------------------------------------------------------------------------------
                                        Total contract
          Fiscal year 2021               dollars and       Small business         SDVOSB              VOSB
                                           actions
----------------------------------------------------------------------------------------------------------------
Goal................................  .................             28.45%              15.0%              17.0%
Actual Performance..................  .................              30.3%              23.9%              24.4%
Dollars awarded by VA...............    $34,351,110,891    $10,307,742,213     $8,144,793,570     $8,365,441,281
Total Contract Awards...............          1,833,460            219,301             80,148            143,452
----------------------------------------------------------------------------------------------------------------
Source: Federal Procurement Data System. Dataset downloaded on December 9, 2021.

    This proposed rule should help small businesses continue to receive 
a fair share of the VA contracting dollars.
    d. A description of the projected reporting, recordkeeping, and 
other compliance requirements of the rule, including an estimate of the 
classes of small entities which would be subject to the requirement and 
the type of professional skills necessary for preparation of the report 
or record.
    Response: This rule does not impose any new reporting, 
recordkeeping or other compliance requirements for small entities.
    e. An identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap or conflict with the rule.
    Response: This rule does not duplicate, overlap, or conflict with 
any other Federal rules.
    f. A description of any significant alternatives to the rule which 
accomplish the stated objectives of applicable statutes and which 
minimize any significant economic impact of the rule on small entities.
    Response: VA is unable to identify any significant alternatives 
that would accomplish the requirements of this proposed rule and update 
of the VAAR. In accordance with 41 U.S.C. 1707, VA must provide for 
public comment any

[[Page 13609]]

proposed revisions to the VAAR, some of which were implemented as class 
deviations to ensure compliance with legislation or in accordance with 
mandates of the Federal courts, to include the U.S. Supreme Court. 
Through this rule, the public will have an opportunity to provide 
public comment prior to publication of a final rule. VA considered 
initially issuing a complete revision to the VAAR in one case, but 
given ongoing litigation and legislative initiatives, as well as the 
complexity of the various VAAR parts, the phased incremental approach 
permitted the public to be able to focus on specific topics and parts 
of interest and allow them to timely submit public comments which may 
have been more onerous if the complete VAAR were revised at one time. 
By updating the VAAR, it will increase transparency and furthers the 
consistent implementation of any new or revised policy and ensures wide 
dissemination to both the VA acquisition workforce, the public, 
interested parties, and affected small entities such as SDVOSBs, VOSBs, 
and small businesses, including AbilityOne participating entities. 
Small entities cannot be exempted from coverage under this rule as the 
VAAR applies to all potential offerors, large or small.
    The rule is not expected to have a significant economic impact to 
SDVOSBs or VOSBs since the VA Rule of Two will continue to apply to 
VA's unique Veterans First Contracting Program that was first 
implemented in the VAAR in 2009, and which was subsequently revised 
consistent with revised policy and procedures issued by class 
deviations as a result of court cases and new legislative amendments.
    VA invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.

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.

List of Subjects

48 CFR Part 802, 807, 808, 810, 813, 832, and 853

    Government procurement.

48 CFR Part 819

    Administrative practice and procedure, Government procurement, 
Reporting and recordkeeping requirements, Small business, Veterans.

48 CFR Part 852

    Government procurement, Reporting and recordkeeping requirements.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, approved this 
document on February 15, 2022, 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.

Consuela Benjamin,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of General Counsel, Department of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 48 
CFR, chapter 8 as follows:

PART 802--DEFINITIONS OF WORDS AND TERMS

0
1. Revise the authority citation for part 802 to read as follows:

    Authority: 40 U.S.C. 121(c); 41 U.S.C. 1121(c)(3); 41 U.S.C. 
1702; and 48 CFR 1.301 through 1.304.

0
2. Amend section 802.101 by adding definitions for ``Public Law (Public 
Law) 109-461'', ``SDVOSB/VOSB'', ``VA Rule of Two'', and ``Veterans 
First Contracting Program'', and by revising the definitions for 
``Service-disabled veteran-owned small business (SDVOSB)'', ``Vendor 
Information Pages (VIP) or VIP database'', and ``Veteran-owned small 
business (VOSB)'' in alphabetical order to read as follows:


802.101  Definitions.

* * * * *
    Public Law (Pub. L.) 109-461 means the Veterans Benefits, Health 
Care and Information Technology Act of 2006, as codified in 38 U.S.C. 
8127 and 8128.
* * * * *
    SDVOSB/VOSB when used as an initialism means a service-disabled 
veteran-owned small business (SDVOSB) and/or veteran-owned small 
business (VOSB) that has been found by VA eligible to participate in 
the Veterans First Contracting Program implemented at subpart 819.70 
and listed in the Vendor Information Pages. The term is synonymous with 
VA or VIP-verified small business concerns owned and controlled by 
Veterans.
* * * * *
    Service-disabled veteran-owned small business (SDVOSB) or small 
business concern owned and controlled by Veterans with service-
connected disabilities has the same meaning as service-disabled 
veteran-owned small business concern defined in FAR 2.101, except that 
for acquisitions authorized by 38 U.S.C. 8127 and 8128 for the Veterans 
First Contracting Program, these businesses must be listed as verified 
in the VIP database. In addition, some SDVOSB listed in the VIP 
database may be owned and controlled by a surviving spouse. See 
definition of surviving spouse in 802.101.
* * * * *
    VA Rule of Two means the determination process mandated in 38 
U.S.C. 8127(d)(1) whereby a contracting officer of the Department shall 
award contracts on the basis of competition restricted to small 
business concerns owned and controlled by veterans if the contracting 
officer has a reasonable expectation that two or more small business 
concerns owned and controlled by Veterans will submit offers and that 
the award can be made at a fair and reasonable price that offers best 
value to the United States. For purposes of this VA specific rule, a 
service-disabled veteran-owned small business (SDVOSB) or a veteran-
owned small business (VOSB), must meet the eligibility requirements in 
38 U.S.C. 8127(e), (f) and VAAR 819.7003 and be listed as verified in 
the Vendor Information Pages (VIP) database.
* * * * *
    Vendor Information Pages (VIP) or VIP database means the Department 
of Veterans Affairs Office of Small and Disadvantaged Business 
Utilization (OSDBU) Center for Verification and Evaluation (CVE) Vendor 
Information Pages (VIP) database at https://www.vetbiz.va.gov/vip/. 
This site's database lists businesses that VA CVE has determined 
eligible for the Veterans First Contracting Program.
    Veteran-owned small business (VOSB) has the same meaning as 
veteran-owned small business concern defined in FAR 2.101, except that 
for acquisitions authorized by 38 U.S.C. 8127 and 8128 for the Veterans 
First Contracting Program, these businesses must be listed as verified 
in the VIP database. SDVOSBs, including businesses whose SDVOSB status 
derive from ownership and control by a surviving spouse, are also 
considered VOSBs, as long as they are listed as eligible in VIP.
    Veterans First Contracting Program means the program authorized by 
Public Law 109-461 (38 U.S.C. 8127 and 8128), as implemented in subpart 
819.70. This

[[Page 13610]]

program applies to all VA contracts (see FAR 2.101 for the definition 
of contracts) as well as Blanket Purchase Agreements (BPAs), Basic 
Ordering Agreements (BOAs), and orders against the Federal Supply 
Schedules (FSS), unless otherwise excluded by law.
* * * * *

PART 807 [Removed and Reserved]

0
3. Remove and reserve part 807.
0
4. Revise part 808 to read as follows:

PART 808--REQUIRED SOURCES OF SUPPLIES AND SERVICES

Sec.
808.000 Scope of part.
808.001 General.
808.001-70 Definitions.
808.002 Priorities for use of mandatory Government sources.
808.004 Use of other sources.
808.004-70 Use of other priority sources.
Subpart 808.4--Federal Supply Schedules
808.402 General.
808.404 Use of Federal Supply Schedules.
808.404-70 Use of Federal Supply Schedules--the Veterans First 
Contracting Program.
808.405 Ordering procedures for Federal Supply Schedules.
808.405-70 Set-aside procedures for VA and GSA Federal Supply 
Schedules.
808.405-570 Small business set-asides and preferences--Veterans 
First Contracting Program clauses.
Subpart 808.6--Acquisition from Federal Prison Industries, Inc.
808.603 Purchase priorities.
Subpart 808.8--[Reserved]

    Authority: 38 U.S.C. 8127-8128; 40 U.S.C. 121(c); 41 U.S.C. 
1121(c)(3); 41 U.S.C. 1702; and 48 CFR 1.301 through 1.304.


808.000  Scope of part.

    This part deals with prioritizing sources of supplies and services 
for use by the Government based on unique VA statutory programs, as 
well as requirements when using the General Services Administration 
(GSA) Federal Supply Schedules program including the GSA delegated VA 
Federal Supply Schedule program.


808.001  General.


808.001-70  Definitions.

    As used in this part--
    Veterans Affairs (VA) Federal Supply Schedule (FSS) or ``VA FSS'' 
means FSS contracts awarded by the VA National Acquisition Center, 
under authority delegated by the General Services Administration (GSA) 
per FAR 8.402(a). VA FSS contracts include medical, dental, pharmacy 
and veterinary equipment and supplies in Federal Supply Classification 
(FSC) Group 65, instruments and laboratory equipment in FSC Group 66 
and health care services in FSC Group 621.


808.002  Priorities for use of mandatory Government sources.

    (a) Priorities. Contracting activities shall satisfy requirements 
for supplies and services from or through the mandatory sources listed 
below in descending order of priority:
    (1) Supplies. (i) VA inventories including the VA supply stock 
program (41 CFR 101-26.704) and VA excess.
    (ii) Excess from other agencies (see FAR subpart 8.1).
    (iii) Federal Prison Industries, Inc. (see 808.603). Prior to 
considering award of a contract to Federal Prison Industries, Inc, 
contracting officers shall apply the VA Rule of Two to determine 
whether a requirement should be awarded to veteran-owned small 
businesses under the authority of 38 U.S.C. 8127-28, by using the 
preferences and priorities in subpart 819.70. If an award is not made 
to a VIP-listed and verified service-disabled veteran-owned small 
business (SDVOSB)/veteran-owned small business (VOSB) as provided in 
subpart 819.70, FPI remains a mandatory source in accordance with FAR 
8.002.
    (iv) Supplies that are on the Procurement List maintained by the 
Committee for Purchase From People Who Are Blind or Severely Disabled, 
through the AbilityOne Program (FAR subpart 8.7). Supplies that are on 
the Procurement List but which do not meet the definition of a covered 
product are only required to be procured from a mandatory source in 
accordance with FAR 8.002 if an award is not made to a VIP-listed and 
verified SDVOSB/VOSB after following the procedures set forth in 
subpart 819.70.
    (A) Definition. As used in this paragraph--
    Covered product means a product that--
    (1) Is included on the Procurement List as authorized under 41 
U.S.C. 8503(a) (see FAR 8.703) and was included on the Procurement List 
on or before December 22, 2006; or
    (2) Meets the following criteria--
    (i) Is a replacement for a product under this paragraph;
    (ii) Is essentially the same and meeting the same requirement as 
the product being replaced; and
    (iii) The contracting officer determines the product meets the 
quality standards and delivery schedule requirements of VA.
    (B) Policy. Except as provided in paragraph (a)(1)(iv)(C) and (D), 
contracting officers shall procure covered products that are on the 
Procurement List through the AbilityOne Program as set forth in FAR 
subpart 8.7. Contracting officers shall not procure products that are 
on the Procurement List, but which do not meet the definition of a 
covered product using the procedures set forth in FAR subpart 8.7, 
unless award cannot be made to a VIP-listed and verified SDVOSB/VOSB 
pursuant to the procedures set forth in subpart 819.70.
    (C) Exception for certain contracts awarded in accordance with the 
Veterans First Contracting Program in subpart 819.70. If a contract for 
a covered product awarded under the authority of 38 U.S.C. 8127(d)(1) 
to a VIP-listed SDVOSB or VOSB was in effect as of August 7, 2020, the 
requirement shall continue as an SDVOSB/VOSB set-aside in accordance 
with 819.7006 and 819.7007.
    (D) Termination or expiration of excepted contracts. When a 
contract previously awarded as set forth in paragraph (a)(1)(iv)(C) of 
this section is terminated or expires, contracting officers shall 
procure such covered product through the AbilityOne Program as a 
priority mandatory Government source (see (a)(1)(iv)(B) of this 
section), provided the head of the contracting activity or designee 
determines there is no reasonable expectation that--
    (1) Two or more SDVOSBs/VOSBs will submit offers; and
    (2) Award can be made at a fair and reasonable price that offers 
best value to the United States.
    (v) Wholesale supply sources, such as stock programs of the General 
Services Administration (GSA) (see 41 CFR 101-26.3), the Defense 
Logistics Agency (see 41 CFR 101-26.6), the Department of Veterans 
Affairs (see 41 CFR 101-26.704), and military inventory control points.
    (2) Services that are on the Procurement List maintained by the 
Committee for Purchase From People Who Are Blind or Severely Disabled, 
through the AbilityOne Program (FAR subpart 8.7). Services that are on 
the Procurement List, but which do not meet the definition of a covered 
service are only required to be procured from a mandatory source in 
accordance with FAR 8.002 if an award is not made to a VIP-listed and 
verified SDVOSB/VOSB after following the procedures set forth in 
subpart 819.70.
    (i) Definition. As used in this paragraph--
    Covered service means a service that--

[[Page 13611]]

    (A) Is included on the Procurement List as authorized under 41 
U.S.C. 8503(a) (see FAR 8.703) and was included on the Procurement List 
on or before December 22, 2006; or
    (B) Meets the following criteria--
    (1) Is a replacement for a service under this paragraph;
    (2) Is essentially the same and meeting the same requirement as the 
service being replaced; and
    (3) The contracting officer determines the service meets the 
quality standards and delivery schedule requirements of VA.
    (ii) Policy. Except as provided in paragraph (a)(2)(iii) and (iv) 
of this section, contracting officers shall procure covered services 
that are on the Procurement List through the AbilityOne Program as set 
forth in FAR subpart 8.7. Contracting officers shall not procure 
services that are on the Procurement List, but which do not meet the 
definition of a covered service using the procedures set forth in FAR 
subpart 8.7, unless award cannot be made to a VIP-listed and verified 
SDVOSB/VOSB pursuant to the procedures set forth in subpart 819.70.
    (iii) Exception for certain contracts awarded in accordance with 
the Veterans First Contracting Program in subpart 819.70. If a contract 
for a covered service awarded under the authority of 38 U.S.C. 
8127(d)(1) to a VIP-listed SDVOSB or VOSB was in effect as of August 7, 
2020, the requirement shall continue as an SDVOSB/VOSB set-aside in 
accordance with 819.7006 and 819.7007.
    (iv) Termination or expiration of certain excepted contracts. When 
a contract previously awarded as set forth in paragraph (a)(2)(iii) of 
this section is terminated or expires, contracting officers shall 
procure such covered service through the AbilityOne Program as a 
priority mandatory Government source (see (a)(2)(ii) of this section), 
provided the head of the contracting activity or designee determines 
there is no reasonable expectation that--
    (A) Two or more SDVOSBs/VOSBs will submit offers; and
    (B) Award can be made at a fair and reasonable price that offers 
best value to the United States.
    (b) Unusual and compelling urgency. The contracting officer may use 
a source other than those listed in paragraph (a) of this section when 
the need for supplies or services is of an unusual and compelling 
urgency (see FAR 6.302-2, 8.405-6, 13.106-1 and part 806 for 
justification requirements).


808.004  Use of other sources.


808.004-70  Use of other priority sources.

    (a) Veterans contracting priority. In order to fulfill the 
requirements of 38 U.S.C. 8127-8128 (see subpart 819.70), contracting 
officers shall award contracts (see FAR 2.101 for the definition of 
contracts), as well as Blanket Purchase Agreements (BPAs), and orders 
against VA and GSA Federal Supply Schedules (FSS), providing priority 
in the awarding of such contracts to VIP-listed SDVOSBs first, then 
VOSBs.
    (b) Strategic sourcing priorities and application of the VA Rule of 
Two. To provide medical supplies in Federal Supply Classification (FSC) 
groups 65 and 66 efficiently and effectively the VA, through previous 
reform initiatives, has implemented key strategic sourcing contract 
vehicles (e.g., prime-vendor, national contracts, VA FSS). If these 
strategic sourcing contracts were subject to the VA Rule of Two, they 
may be determined mandatory by the head of the contracting activity. 
Contracting officers shall consider these priority contract vehicles 
before using other existing contract vehicles.

Subpart 808.4--Federal Supply Schedules


808.402  General.

    (a) GSA has delegated authority to the VA to procure medical 
equipment, supplies, services and pharmaceuticals under the VA Federal 
Supply Schedule (FSS) program. The VA FSS program includes medical 
supplies in Federal Supply Classification (FSC) Groups 65 and 66 and 
services in FSC 621 for Professional and Allied Healthcare Staffing 
Services and Medical Laboratory Testing and Analysis Services.


808.404  Use of Federal Supply Schedules.


808.404-70  Use of Federal Supply Schedules--the Veterans First 
Contracting Program.

    (a) The Veterans First Contracting Program, implemented in subpart 
819.70 pursuant to 38 U.S.C 8127-8128, applies to BPAs, and orders 
under FAR subpart 8.4 and has precedence over other small business 
programs.
    (b) Contracting officers, when establishing a BPA or placing an 
order against the FSS, shall ensure that priorities for veteran-owned 
small businesses are implemented within the VA hierarchy of small 
business program preferences in subpart 819.70. Specifically, the 
contracting officer will consider preferences for verified SDVOSBs 
first, then preferences for verified VOSBs. These priorities will be 
followed by preferences for other small businesses in accordance with 
819.7005.
    (c) If unable to satisfy requirements for supplies and services 
from the mandatory sources in 808.002 and 808.004-70, contracting 
officers may consider commercial sources in the open market (see FAR 
8.004(b)) if an open market acquisition is most appropriate (see FAR 
8.004) and a VA Rule of Two determination is made (see subpart 819.70).
    (d) When the servicing agency will award contracts under an 
interagency agreement on behalf of the VA, the contracting officer 
shall ensure the interagency acquisition complies with FAR subpart 17.5 
and subpart 817.5 and includes terms requiring compliance with the VA 
Rule of Two (see 817.501).


808.405  Ordering procedures for Federal Supply Schedules.


808.405-70  Set-aside procedures for VA and GSA Federal Supply 
Schedules.

    To satisfy VA legislative requirements, contracting officers shall 
use the supplemental ordering procedures of this section when 
establishing a BPA or placing an order for supplies or services under 
this subpart as follows:
    (a) When market research supports set-asides. Pursuant to 38 U.S.C. 
8127, contracting activities shall set-aside BPAs and orders for VIP-
listed SDVOSBs or VOSBs when, based on research, the contracting 
officer has a reasonable expectation that two or more small business 
concerns owned and controlled by Veterans or owned and controlled by 
Veterans with service-connected disabilities will submit offers and 
that award can be made at a fair and reasonable price that offers best 
value to the United States. When the VA Rule of Two is met:
    (1) The set-aside requirements as provided in 819.7006 and 819.7007 
are mandatory.
    (2) The requirements in FAR 8.405-1, 8.405-2, and 8.405-3, apply, 
except only quotes received from verified (i.e., VIP-listed) and 
eligible SDVOSBs or VOSBs will be considered.
    (3) The eligibility requirements of 819.7003, 819.7006, and 
819.7007 apply, including the requirement for offerors to be VIP-listed 
at the time they submit offers/quotes as well as at the time awards are 
made.
    (4) The contracting officer shall notify potential offerors of the 
unique VA verification requirements by including in the solicitation 
the applicable set-aside clause prescribed at 819.7011.
    (b) When market research does not support set-asides. Pursuant to 
38

[[Page 13612]]

U.S.C. 8128 and to the extent that market research does not support an 
SDVOSB or VOSB set-aside in either FSS or the open market, the 
contracting activity shall give priority in the award of orders placed 
under this part to VIP-listed SDVOSBs/VOSBs through the use of 
evaluation preferences giving priority to SDVOSBs first, then to a 
lesser extent VOSBs, and finally to any firm that proposes to use 
SDVOSBs/VOSBs as subcontractors. Contracting officers must use the 
clause prescribed in 808.405-570(b).
    (c) SDVOSB/VOSB eligibility requirements. The SDVOSB and VOSB 
eligibility requirements in 819.7003 apply, including current SDVOSB 
and VOSB VIP-listed status at the time of submission of offer/quote and 
at time of award. The offeror must also represent that it meets the 
small business size standard for the assigned NAICS as well as other 
small business requirements (including completing the certification 
found in 852.219-75 or 852.219-76.


808.405-570  Small business set-asides and preferences--Veterans First 
Contracting Program clauses.

    (a) When setting aside an order pursuant to 808.405-70(a), the 
applicable clause prescribed in 819.7011 for SDVOSB/VOSB set-asides 
shall be used.
    (b) When an SDVOSB/VOSB set-aside is not feasible, the ordering 
activity shall use the clause at 852.208-70, Service-Disabled Veteran-
Owned and Veteran-Owned Small Business Evaluation Factors--Orders or 
BPAs, for task orders, delivery orders or BPAs using evaluation factors 
other than price alone.
    (c) The ordering activity shall insert the clause at 852.208-71, 
Service-Disabled Veteran-Owned and Veteran-Owned Small Business 
Evaluation Factor Commitments--Orders or BPAs, in request for quotes 
and resulting orders that include clause 852.208-70, Service-Disabled 
Veteran-Owned and Veteran-Owned Small Business Evaluation Factors--
Orders or BPAs.

Subpart 808.6--Acquisition from Federal Prison Industries, Inc.


808.603  Purchase priorities.

    A waiver from Federal Prison Industries is not needed when 
comparable supplies and services are procured in accordance with 
subpart 819.70.

Subpart 808.8 [Reserved]

0
5. Part 810 is revised to read as follows:

PART 810--MARKET RESEARCH

Sec.
810.000 Scope of part.
810.001 Policy.
810.001-70 Market research policy--use of VA Vendor Information 
Pages.

    Authority: 38 U.S.C. 8127-8128; 40 U.S.C. 121(c); 41 U.S.C. 
1121(c)(3); 41 U.S.C. 1702; and 48 CFR 1.301 through 1.304.


810.000  Scope of part.

    The Veterans First Contracting Program in subpart 819.70 applies to 
contract actions under this part and takes precedence over other small 
business programs referenced in FAR part 10 and FAR part 19.


810.001  Policy.


810.001-70  Market research policy--use of VA Vendor Information Pages.

    When performing market research, contracting officers shall review 
the Vendor Information Pages (VIP) database at https://www.vetbiz.va.gov/vip/ as required by subpart 819.70. The contracting 
officer will search the VIP database by applicable North American 
Industry Classification System (NAICS) codes to determine whether two 
or more verified service-disabled veteran-owned small businesses 
(SDVOSBs) and/or veteran-owned small businesses (VOSBs), with the 
appropriate NAICS code, are listed as verified in the VIP database. The 
contracting officer will determine, among other things as the 
requirement dictates, whether VIP-listed SDVOSBs or VOSBs identified as 
a result of market research are capable of performing the work, are 
likely to submit an offer/quote, and whether an award can be made at a 
fair and reasonable price that offers best value to the Government. The 
contracting officer shall use the market research for acquisition 
planning purposes, and as set forth in VAAR subpart 819.70, conduct a 
VA Rule of Two determination in accordance with the contracting order 
of priority (see 819.7005 and 819.7006).

PART 813--SIMPLIFIED ACQUISITION PROCEDURES

0
6.The authority citation for part 813 continues to read as follows:

    Authority: 38 U.S.C. 8127-8128; 40 U.S.C. 121(c); 41 U.S.C. 1702 
and 48 CFR 1.301 through 1.304.

0
7. Revise section 813.003-70 to read as follows:


813.003-70  General policy.

    (a) The Veterans First Contracting Program in subpart 819.70 
applies to VA contracts, orders and BPAs under this part and has 
precedence over other small business programs referenced in FAR parts 
13 and 19. For VA policy regarding mandatory Government sources, refer 
to 808.002.
    (b) Notwithstanding FAR 13.003(b)(2), the contracting officer shall 
make an award utilizing the priorities for veteran-owned small 
businesses as implemented within the VA hierarchy of small business 
program preferences, the Veterans First Contracting Program in subpart 
819.70. Specifically, the contracting officer shall consider 
preferences for verified service-disabled veteran-owned small 
businesses (SDVOSBs) first, then preferences for verified veteran-owned 
small businesses (VOSBs). These priorities will be followed by 
preferences for other small businesses in accordance with 819.7005.
    (c) When using competitive procedures, the preference for 
restricting competition to verified SDVOSBs/VOSBs in accordance with 
paragraph (b) of this section is mandatory whenever market research 
provides a reasonable expectation of receiving two or more offers/
quotes from eligible, capable and verified firms, and that an award can 
be made at a fair and reasonable price that offers best value to the 
Government.
    (1) Pursuant to 38 U.S.C. 8127, contracts under this part shall be 
set-aside for SDVOSBs/VOSBs, in accordance with 819.7006 or 819.7007 
when supported by market research. Contracting officers shall use the 
applicable set-aside clause prescribed at 819.7011.
    (2) Pursuant to 38 U.S.C. 8128 and to the extent that market 
research does not support an SDVOSB or VOSB set-aside, the contracting 
officer shall include evaluation factors as prescribed at 815.304-70 
and the evaluation criteria clause prescribed at 815.304-71(a).
    (d) The SDVOSB and VOSB eligibility requirements in 819.7003 apply, 
including verification of the SDVOSB and VOSB status of an offeror, and 
other small business requirements in 13 CFR part 121 and 13 CFR 125.6 
(e.g., small business representation, nonmanufacturer rule, and 
subcontracting limitations (see 819.7004 and 819.7011)).

Subpart 813.1--Procedures.

0
8. Revise section 813.106 to read as follows:

[[Page 13613]]

813.106  Soliciting competition, evaluation of quotations or offers, 
award and documentation.


813.106-70  Soliciting competition, evaluation of quotations or offers, 
award and documentation--the Veterans First Contracting Program.

    (a) When using competitive procedures under this part, the 
contracting officer shall use the Veterans First Contracting Program in 
subpart 819.70 and the guidance set forth in 813.003-70.
    (b) Pursuant to 38 U.S.C 8127(b), contracting officers may use 
other than competitive procedures to enter into a contract with a 
verified SDVOSB or VOSB for procurements below the simplified 
acquisition threshold, as authorized by FAR 6.302-5 and 806.302-570(a) 
and (b).
    (c) For procurements above the simplified acquisition threshold, 
pursuant to 38 U.S.C. 8127(c), contracting officers may also award a 
contract under this part to a firm verified under the Veterans First 
Contracting Program at subpart 819.70, using procedures other than 
competitive procedures, as authorized by FAR 6.302-5 and 806.302-570(a) 
and (c), and in accordance with 819.7008 and 819.7009.
0
9. Part 819 is revised to read as follows:

PART 819--SMALL BUSINESS PROGRAMS

Sec.
819.000 Scope of part.
Subpart 819.2--Policies.
819.201 General policy.
819.202 Specific policies.
819.203 Relationship among small business programs.
819.203-70 Priority for SDVOSB/VOSB contracting preferences.
Subpart 819.3--Determination of Small Business Size and Status for 
Small Business Programs
819.307 Protesting a firm's status as a service-disabled veteran-
owned small business concern.
819.307-70 SDVOSB/VOSB status protests.
Subpart 819.5--Small Business Total Set-Asides, Partial Set-Asides, and 
Reserves
819.501 General.
819.501-70 General principles for setting aside VA acquisitions.
819.502 Setting aside acquisitions.
819.502-1 Requirements for setting aside acquisitions.
819.502-2 Total small business set-asides.
819.507 Solicitation provisions and contract clauses.
819.507-70 Additional VA solicitation provisions and contract 
clauses.
Subpart 819.6--[Reserved]
Subpart 819.7--The Small Business Subcontracting Program
819.704-70 VA subcontracting plan requirements.
819.708 Contract clauses.
Subpart 819.8--Contracting With the Small Business Administration (the 
8(a) Program)
819.800 General.
819.811 Preparing the contracts.
819.811-370 VA/SBA Partnership Agreement and contract clauses.
Subpart 819.70--The VA Veterans First Contracting Program
819.7001 General.
819.7002 Applicability.
819.7003 Eligibility.
819.7004 Limitations on subcontracting compliance requirements.
819.7005 Contracting order of priority.
819.7006 VA service-disabled veteran-owned small business set-aside 
procedures.
819.7007 VA veteran-owned small business set-aside procedures.
819.7008 Sole source awards to verified service-disabled veteran-
owned small businesses.
819.7009 Sole source awards to verified veteran-owned small 
businesses.
819.7010 Tiered set-aside evaluation.
819.7011 Contract clauses.
Subpart 819.71--[Reserved]

    Authority: 15 U.S.C. 631, et seq.; 15 U.S.C. 637(d)(4)(E); 38 
U.S.C. 8127-8128; 40 U.S.C. 121(c); 41 U.S.C. 1121(c)(3), 41 U.S.C. 
1303, 41 U.S.C. 1702; and 48 CFR 1.301 through 1.304.


819.000  Scope of part.

    (a) This part supplements FAR part 19 and implements the service-
disabled veteran-owned small business (SDVOSB), veteran-owned small 
business (VOSB) and small business provisions of title 38 U.S.C. 8127 
and 8128, Executive Order 13360 and the Small Business Act (15 U.S.C. 
631 et. seq.) as applied to the Department of Veterans Affairs (VA). 
This part also covers--
    (1) Goals for using SDVOSBs, and VOSBs;
    (2) Priorities and preferences for using SDVOSBs/VOSBs;
    (3) SDVOSB/VOSB eligibility and contract compliance;
    (4) Setting aside acquisitions for SDVOSBs/VOSBs;
    (5) Sole-source awards to SDVOSBs and VOSBs; and
    (6) Evaluation preferences and contract clauses.

Subpart 819.2--Policies


819.201  General policy.

    (a) It is VA policy that small business concerns owned and 
controlled by veterans shall have maximum practicable opportunity to 
participate in VA acquisitions, consistent the priorities and 
preferences prescribed under the Veterans First Contracting Program in 
subpart 819.70.
    (1) To carry out this policy the Secretary shall establish annual 
SDVOSB and VOSB contracting goals.
    (2) In support of these goals, each administration and staff office 
shall in turn establish annual goals for each subordinate contracting 
activity that present, for that activity, the maximum practicable 
opportunity for small business concerns, and particularly SDVOSBs/
VOSBs, to participate in the performance of the activity's contracts 
and subcontracts.
    (3) The attainment of these goals or the use of interagency 
acquisition vehicles does not limit the applicability of the Veterans 
First Contracting Program and priorities in subpart 819.70.
    (c) In addition to the duties and responsibilities in FAR 
19.201(c), the Executive Director, Office of Small and Disadvantaged 
Business Utilization (OSDBU), is responsible for overseeing 
implementation of the Veterans First Contracting Program under subpart 
819.70.
    (d) Each organization with contracting authority shall designate 
small business specialists/technical advisors in coordination with the 
OSDBU Director.


819.202  Specific policies.

    OSDBU is responsible for reviewing procurement strategies, 
establishing thresholds for such reviews and making recommendations to 
assist contracting officers in the implementation of this part. These 
responsibilities shall be conducted within the VA hierarchy of small 
business program preferences established by 38 U.S.C. 8127(h) (see 
subpart 819.70), which requires VA to consider preferences for VIP-
listed SDVOSBs first, then preferences for VIP-listed VOSBs. 
Contracting officers shall use VA Form 2268, Small Business Program and 
Contract Bundling Review, to document actions and recommendations.


819.203  Relationship among small business programs.


819.203-70  Priority for SDVOSB/VOSB contracting preferences.

    (a) 38 U.S.C. 8127 and 8128 require the VA to provide priority and 
establish special acquisition methods to increase contracting 
opportunities for SDVOSBs/VOSBs. These priorities and special 
acquisition methods are set forth in subpart 819.70 and shall be 
applied by contracting officers before other

[[Page 13614]]

priorities and preferences in FAR 19.203.
    (b) Pursuant to 38 U.S.C. 8128, contracting officers shall give 
priority to SDVOSBs/VOSBs if such business concern(s) also meet the 
requirements of that contracting preference. This requirement applies 
even when using a contracting preference under FAR part 19 (for 
example, a women-owned small business set-aside).

Subpart 819.3--Determination of Small Business Size and Status for 
Small Business Programs


819.307  Protesting a firm's status as a service-disabled veteran-owned 
small business concern.


819.307-70  SDVOSB/VOSB status protests.

    All protests relating to size, status and/or whether an SDVOSB or a 
VOSB is a ``small business'' are subject to the Small Business 
Administration (SBA) regulations at 13 CFR part 121 and must be filed 
in accordance with SBA guidelines at 13 CFR part 134 (see FAR subpart 
19.3). Pursuant to Public Law 114-328, SBA will hear cases related to 
size and status, including ownership and control challenges under the 
VA Veterans First Contracting Program (see 38 U.S.C. 8127(f)(8)).

Subpart 819.5--Small Business Total Set-Asides, Partial Set-Asides, 
and Reserves


819.501  General.


819.501-70  General principles for setting aside VA acquisitions.

    (a) The following principles apply to VA acquisitions under this 
subpart:
    (1) Before setting aside or reserving an acquisition for small 
businesses under FAR subpart 19.5, contracting officers shall refer to 
808.002, 819.203-70 and subpart 819.70 for VA SDVOSB/VOSB priorities 
and preferences.
    (2) Set-asides under the Veterans First Contracting Program in 
subpart 819.70 (see 819.7006 and 819.7007) have precedence over other 
small business set-asides authorized in FAR part 19, both above and 
below the simplified acquisition threshold (SAT). An SDVOSB/VOSB set-
aside satisfies the legislative requirement to reserve actions below 
the SAT for small business.
    (3) Pursuant to 38 U.S.C. 8127(d), set-asides for SDVOSBs/VOSBs are 
mandatory whenever a contracting officer has a reasonable expectation 
of receiving two or more offers/quotes from eligible, capable and 
verified firms, and that an award can be made at a fair and reasonable 
price that offers best value to the Government. (VA Rule of Two).
    (b) The set-aside principles in this section apply to VA 
acquisitions even when a procuring activity is meeting its goals or is 
planning the use of an interagency agreement, Federal Supply Schedule, 
or a multiple award contract, including a Governmentwide contract 
vehicle.
    (c) The requirements in this subsection apply to all VA 
acquisitions under this subpart, including reserves, orders and BPAs 
under multiple award contracts, GSA Federal Supply Schedule contracts 
and Multi-Agency Contracts (MACs) awarded by another agency. A set-
aside restricted to SDVOSBs/VOSBs pursuant to subpart 819.70 satisfies 
competition requirements in FAR part 6, as well as fair opportunity 
requirements for orders under multiple-award contracts (see FAR 
16.505(b)(2)(i)(F)).


819.502  Setting aside acquisitions.


819.502-1  Requirements for setting aside acquisitions.

    (b) Contracting officers shall refer to 808.002 for the VA policy 
regarding priorities for use of SDVOSBs/VOSBs and mandatory Government 
sources.


819.502-2  Total small business set-asides.

    (a) If the contracting officer receives no acceptable offers from 
responsible small business concerns, the set-aside shall be withdrawn 
and the requirement, if still valid, shall be resolicited on an 
unrestricted basis or, if permitted in the solicitation, the 
contracting officer will follow the tiered set-aside evaluation 
procedures in 819.7010, Tiered evaluation, and proceed to the next 
eligible tier in the evaluation process.


819.507  Solicitation provisions and contract clauses.


819.507-70  Additional VA solicitation provisions and contract clauses.

    For contracts, orders or BPAs to be issued as SDVOSB/VOSB reserve, 
tiered evaluation, set-aside or sole source, see 819.7011. Also see 
subparts 808.4, 815.3, and 819.203-70 for requirements and clauses 
applicable to VA small business set-asides.

Subpart 819.6--[Reserved]

Subpart 819.7--The Small Business Subcontracting Program


819.704-70  VA subcontracting plan requirements.

    (a) VA's current subcontracting goals, at a minimum, shall be 
inserted into all solicitations which contain FAR clause 52.219-9. To 
the maximum extent possible, the contracting officer shall ensure that 
individual subcontracting plans submitted by offerors subject to clause 
852.219-70, VA Small Business Subcontracting Plan Minimum Requirements, 
include SDVOSB/VOSB goals that are commensurate with the annual VA 
SDVOSB/VOSB subcontracting goals (see 819.708).
    (1) Only firms listed as verified on the Vendor Information Pages 
(VIP) database (see subpart 819.70) will count towards SDVOSB and VOSB 
goals.
    (2) A contractor may reasonably rely on a subcontractor's status as 
shown in the VIP database as of the date of subcontract award, provided 
the contractor retains records of the results of the VIP database 
query.
    (3) In furtherance of 38 U.S.C. 8127(a)(4), contractors shall 
submit subcontracting plan reports to OSDBU as set forth in clause 
852.219-70, VA Small Business Subcontracting Plan Minimum Requirements. 
Unless otherwise directed by OSDBU, VA Form 0896A, Report of 
Subcontracts to Small and Veteran Owned Business, shall be used to 
submit the required information.
    (b) Subcontracting goals should be expressed as a percentage of 
total dollars to be subcontracted unless otherwise stated in the 
solicitation.
    (c) If an offeror proposes to use an SDVOSB/VOSB subcontractor for 
the purpose of receiving SDVOSB/VOSB evaluation factors credit pursuant 
to 808.405-70 or 815.304-70, the contracting officer shall ensure that 
the offeror, if awarded the contract, actually uses the proposed 
subcontractor or another SDVOSB/VOSB for that subcontract or for work 
of similar value, in accordance with clause 852.208-70, Service-
Disabled Veteran-Owned and Veteran-Owned Small Business Evaluation 
Factors--Orders or BPAs or 852.215-71, Evaluation Factor Commitments.
    (d) Pursuant to 38 U.S.C. 8127(g), any business concern that is 
determined by VA to have willfully and intentionally misrepresented a 
company's SDVOSB or VOSB status is subject to debarment from 
contracting with the Department for a period of not less than five 
years. This includes the debarment of all principals in the business 
(see 809.406-270, Additional causes for debarment).


819.708  Contract clauses.

    (b) The contracting officer shall insert clause 852.219-70, Small 
Business Subcontracting Plan Minimum Requirements, in solicitations and 
contracts that include FAR clause 52.219-9, Small Business 
Subcontracting Plan.

[[Page 13615]]

Subpart 819.8--Contracting With the Small Business Administration 
(the 8(a) Program)


819.800   General.

    (e) The Small Business Administration (SBA) and the Department of 
Veterans Affairs (VA) have entered into a Partnership Agreement 
delegating SBA's contract execution and administrative functions to VA. 
Contracting officers shall follow the alternate procedures in the 
Partnership Agreement and this subpart, as applicable, to award an 8(a) 
contract. In the event the Partnership Agreement ceases to be in 
effect, contracting officers shall follow the procedures in FAR subpart 
19.8.


819.811   Preparing the contracts.


819.811-370   VA/SBA Partnership Agreement and contract clauses.

    (a) Before placing new requirements under the 8(a) program, the 
contracting officer must determine whether an SDVOSB/VOSB set-aside is 
mandated under the VA Rule of Two (see 802.101, Definitions). If the 
determination does not result in an SDVOSB/VOSB set-aside, the 
contracting officer may consider the 8(a) program.
    (b) The Partnership Agreement provides that SBA can release 
procurements already in the program whenever an SDVOSB or VOSB set-
aside is feasible.
    (c) When an 8(a) acquisition is processed pursuant to the 
Partnership Agreement, the contracting officer shall:
    (1) For competitive solicitations and awards, use the clause at 
852.219-71, VA Notification of Competition Limited to Eligible 8(a) 
Participants, substituting paragraph (c) of FAR 52.219-18 Notification 
of Competition Limited to Eligible 8(a) Participants. with the 
paragraph (c) contained in 852.219-71.
    (2) For noncompetitive solicitations and awards insert the clause 
at 852.219-72, Notification of Section 8(a) Direct Awards, instead of 
the prescribed FAR clauses at 52.219-11, Special 8(a) Contract 
Conditions; 52.219-12, Special 8(a) Subcontract Conditions; and 52.219-
17, Section 8(a) Award.
    (3) In all instances, contracting include the clause at FAR 52.219-
14, Limitations on Subcontracting, or if applicable 52.219-33 
Nonmanufacturer Rule.

Subpart 819.70--The VA Veterans First Contracting Program


819.7001   General.

    (a) Sections 502 and 503 of Public Law 109-461, the Veterans 
Benefits, Health Care, and Information Technology Act of 2006, as 
amended (38 U.S.C. 8127-8128), authorizes a VA specific program to 
increase contracting opportunities for eligible small business concerns 
owned and controlled by Veterans with service-connected disabilities 
and small business concerns owned and controlled by Veterans. Once 
ownership and control by these veterans is verified, these businesses 
are referred to as service-disabled veteran-owned small businesses 
(SDVOSBs) and veteran-owned small businesses (VOSBs) or collectively 
SDVOSB/VOSB for ease of reference.
    (b) The program as implemented in this subpart shall be known as 
the Veterans First Contracting Program. The purpose of the program is 
to increase contracting opportunities and provide for priority in the 
award of contracts and subcontracts to SDVOSBs/VOSBs so they can fully 
participate in the VA contracting process. Eligible SDVOSBs qualify for 
any VOSB preferences under this subpart.
    (c) 38 U.S.C. 8127 (b), (c), and (d) provide the authority for VA 
contracting officers to make awards to SDVOSBs/VOSBs using restricted 
competition, as well as other than full and open competition (sole 
source), as set-forth in this subpart. 38 U.S.C. 8128 provides the 
authority for VA to give SDVOSBs/VOSBs priority in the awarding of 
contracts and subcontracts using evaluation preferences.
    (d) Contracting officers shall award contracts by restricting 
competition to eligible SDVOSBs/VOSBs as provided in 819.7006 and 
819.7007. The contracting officer may use other preferences in this 
subpart as appropriate and in accordance with procuring activity 
guidelines.
    (e) Pursuant to 38 U.S.C. 8128, contracting officers shall give 
priority to SDVOSBs/VOSBs if such business concern(s) also meet the 
requirements of that contracting preference. In carrying out this 
responsibility, contracting officers shall include the clauses 
prescribed at 808.405-570 and 815.304-71 in competitive solicitations 
and contracts that are not set-aside for SDVOSB/VOSB, including those 
under FAR part 12. This requirement applies even when using a 
contracting preference under FAR part 19 (for example, a women-owned 
small business set-aside).
    (f) The attainment of goals or the use of interagency vehicles or 
Governmentwide contract vehicles (i.e., Federal Supply Schedules (FSS)) 
does not relieve the contracting officer from using SDVOSB/VOSB set-
asides and other preferences as provided in subpart 819.70. Moreover, 
if the VA enters into a contract, agreement, or other arrangement with 
any Governmental entity to acquire goods or services, the entity acting 
on behalf of the VA through such an interagency acquisition or other 
agreement will comply, to the maximum extent feasible, with the 
provisions of the Veterans First Contracting Program as set forth in 
this subpart.
    (g) Contracting officers shall ensure awards are made using the VA 
hierarchy of SDVOSB/VOSB preferences in this subpart. Specifically, the 
contracting officer will consider preferences for eligible SDVOSBs 
first, then preferences for other eligible VOSBs.
    (h) When an offer of an SDVOSB/VOSB prime contractor includes a 
proposed team of small business subcontractors and specifically 
identifies the first-tier subcontractor(s) in the proposal, the 
contracting officer must consider the capabilities, past performance, 
and experience of each first tier subcontractor that is part of the 
team as the capabilities, past performance, and experience of the small 
business prime contractor if the capabilities, past performance, and 
experience of the small business prime does not independently 
demonstrate capabilities and past performance necessary for award.


819.7002   Applicability.

    Unless otherwise exempted by law, this subpart applies to VA 
contracting activities and contracts (see FAR 2.101, Definitions) 
including BPAs and orders under FAR subpart 8.4 and commercial 
acquisitions under FAR part 12. In addition, this subpart applies to VA 
contractors, their subcontractors and to any Government entity that has 
a contract, agreement, or other arrangement with the VA to acquire 
goods and services on behalf of the VA (see 817.502). For applicability 
and VA policy regarding priorities for use of mandatory Government 
sources, see 808.002.


819.7003   Eligibility.

    (a) SDVOSB/VOSB size eligibility, challenges and appeals are 
governed by the Small Business Administration (SBA) regulations at 13 
CFR parts 121,125, and 134, except where directed otherwise by this 
part or 38 CFR part 74, Veterans Small Business Regulations.
    (b) At the time of submission of offers/quotes, and at the time of 
award of any contract, the offeror must represent to the contracting 
officer that it is a--
    (1) SDVOSB or VOSB eligible under this subpart;

[[Page 13616]]

    (2) Small business concern under the North American Industry 
Classification System (NAICS) code assigned to the acquisition; and
    (3) Listed as a verified SDVOSB/VOSB on the VA's Vendor Information 
Pages (VIP) at https://www.vetbiz.va.gov/vip/.
    (c) A joint venture may be considered eligible if it meets the 
requirements in 13 CFR part 125; and the joint venture is listed in the 
VIP database.
    (d) To receive a benefit under the Veterans First Contacting 
Program, an otherwise eligible SDVOSB/VOSB must also meet SBA 
requirements at 13 CFR part 121, Small Business Size Regulations and 13 
CFR part 125, Government Contracting Programs, including the 
nonmanufacturer rule requirements at 13 CFR 121.406(b) and limitations 
on subcontracting at 13 CFR 125.6. The nonmanufacturer rule (see 13 CFR 
121.406) and the limitations on subcontracting requirements apply to 
all SDVOSB and VOSB set-aside and sole source contracts above the 
micro-purchase threshold. An offeror shall submit a certification of 
compliance to be considered eligible for any award under this part (see 
819.7004).
    (e) Pursuant to 38 U.S.C. 8127(g), any business concern that is 
determined by VA to have willfully and intentionally misrepresented a 
company's SDVOSB/VOSB status is subject to debarment from contracting 
with the Department for a period of not less than five years. This 
includes the debarment of all principals in the business. See 809.406-
270, Additional causes for debarment.


819.7004   Limitations on subcontracting compliance requirements.

    (a) A contract awarded under this subpart is subject to the SBA 
limitations on subcontracting requirements in 13 CFR 125.6, provided 
that--
    (1) Only VIP-listed SDVOSBs are considered eligible and/or 
``similarly situated'' under an SDVOSB sole source or set-aside.
    (2) A VOSB is subject to the same limitations on subcontracting 
that apply to an SDVOSB.
    (3) Any VIP-listed SDVOSB/VOSB is considered eligible and/or 
``similarly situated'' under a VOSB sole source or set-aside.
    (b) Pursuant to the authority of 38 U.S.C. 8127(k)(2), a 
contracting officer may award a contract under this subpart only after 
obtaining from the offeror a certification that the offeror will comply 
with the limitations on subcontracting requirement as provided in the 
solicitation and which shall be included in the resultant contract (see 
819.7011).
    (1) The formal certification must be completed, signed and returned 
with the offeror's bid, quotation, or proposal.
    (2) The Government will not consider offers for award from offerors 
that do not provide the certification with their bid, quotation, or 
proposal, and all such responses will be deemed ineligible for 
evaluation and award.
    (c) An otherwise eligible first tier subcontractor must meet the 
NAICS size standard assigned by the prime contractor and be listed in 
VIP to count as similarly situated. Any work that a first tier VIP-
listed subcontractor further subcontracts will count towards the 
percent of subcontract amount that cannot be exceeded.
    (d) An SDVOSB/VOSB awarded a contract on the basis of a set-aside, 
sole source, or an evaluation preference is required to comply with the 
limitations on subcontracting either by--
    (1) The end of the base term, and then by the end of each 
subsequent option period; or, by the end of the performance period for 
each order issued under the contract, at the contracting officer's 
discretion; and
    (2) For an order set aside for SDVOSB/VOSB as described in 808.405 
and FAR 16.505(b)(2)(i)(F), or for an order issued directly to an 
SDVOSB/VOSB in accordance with FAR 19.504(c)(1)(ii), by the end of the 
performance period for the order.
    (e) The contracting officer may also, at their discretion, require 
the contractor to demonstrate its compliance with the limitations on 
subcontracting at any time during performance of the contract, and upon 
completion of a contract if the information regarding such compliance 
is not already available to the contracting officer. Evidence of 
compliance includes, but is not limited to, invoices, copies of 
subcontracts, or a list of the value of tasks performed.
    (f) Pursuant to Public Law 116-183, the Office of the Small and 
Disadvantaged Business Utilization (OSDBU) and Chief Acquisition 
Officer (CAO), will implement a process to monitor compliance with the 
requirement in this section. The OSDBU and CAO shall jointly refer any 
violations or suspected violations to the VA Office of Inspector 
General. This referral obligation does not relieve contracting officers 
of their obligation to report suspected violations of law to the OIG.
    (1) If the Secretary or designee determines in consultation with 
the Inspector General that an SDVOSB/VOSB awarded a contract pursuant 
to 38 U.S.C. 8127 did not act in good faith with respect to the 
requirements described in 819.7003 paragraph (d), such SDVOSB/VOSB 
shall be subject to any or all of the following--
    (i) Referral to the VA Suspension and Debarment Committee;
    (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.
    (2) The Inspector General shall report to the Congress annually on 
the number of referred violations and suspected violations, and the 
disposition of such violations, including the number of small business 
concerns suspended or debarred from federal contracting or referred for 
Department of Justice prosecution.


819.7005   Contracting order of priority.

    (a) In determining the acquisition strategy applicable to a 
procurement requirement not otherwise covered under 808.002, the 
contracting officer shall observe the order of contracting preferences 
in 38 U.S.C. 8127(h).
    (b) Specifically, preferences for awarding contracts to small 
business concerns shall be applied in the following order of priority:
    (1) Contracts awarded to small business concerns owned and 
controlled by Veterans with service-connected disabilities as provided 
in this subpart.
    (2) Contracts to small business concerns owned and controlled by 
Veterans that are not covered by paragraph (a)(1) of this section as 
provided in this subpart.
    (3) Contracts awarded pursuant to--
    (i) Section 8(a) of the Small Business Act (15 U.S.C. 637(a) as 
provided in FAR subpart 19.8--Contracting with the Small Business 
Administration (The 8(a) Program); or
    (ii) Section 31 of the Small Business Act (15 U.S.C. 657a) as 
provided in FAR subpart 19.13--Historically Underutilized Business Zone 
(HUBZone) Program.
    (4) Contracts awarded pursuant to any other small business set 
aside contracting preference, with due deference to the priority for 
awarding to Women-owned small businesses as provided in FAR 19.203(b) 
through (e) and FAR subpart 19.15.


819.7006   VA service-disabled veteran-owned small business set-aside 
procedures.

    (a) The contracting officer shall consider SDVOSB set-asides before 
considering VOSB set-asides. Except as authorized by 808.002, 813.106, 
819.7007, and 819.7008, the contracting officer shall set-aside a 
contract action exceeding the micro-purchase threshold

[[Page 13617]]

for competition restricted to VIP-listed SDVOSB upon a reasonable 
expectation based on market research that--
    (1) Offers/quotations will be received from two or more eligible 
VIP-listed SDVOSBs; and
    (2) Award can be made at a fair and reasonable price that offers 
the best value to the Government.
    (b) When conducting SDVOSB set-asides, the contracting officer 
shall ensure that--
    (1) Offerors are registered and verified as eligible in the VIP 
database at the time of submission of offers and at time of award; and
    (2) Offerors affirmatively represent their SDVOSB and small 
business status based on the size standard corresponding to the North 
American Industrial Classification System (NAICS) code assigned to the 
solicitation/contract, as set forth in 819.7003(b) or (c).
    (c) If the contracting officer receives only one acceptable offer 
at a fair and reasonable price from an eligible VIP-listed SDVOSB, the 
contracting officer may make an award to that concern. If the 
contracting officer receives no acceptable offers from eligible 
SDVOSBs, the set-aside shall be withdrawn and the requirement, if still 
valid, set aside for VOSB competition if warranted or otherwise 
procured using the most appropriate strategy based on the results of 
market research.


819.7007   VA veteran-owned small business set-aside procedures.

    (a) The contracting officer shall consider SDVOSB set-asides before 
considering VOSB set-asides. Except as authorized by 808.002, 813.106, 
819.7007, and 819.7008, the contracting officer shall set aside a 
contract action exceeding the micro-purchase threshold for competition 
restricted to VIP-listed VOSBs upon a reasonable expectation based on 
market research that--
    (1) Offers/quotations will be received from two or more VIP-listed 
VOSBs; and
    (2) Award can be made at a fair and reasonable price that offers 
the best value to the Government.
    (b) When conducting VOSB set-asides, the contracting officer shall 
ensure that--
    (1) Offerors are registered and verified as eligible in the VIP 
database at the time of submission of offers and at time of award; and
    (2) Offerors affirmatively represent their SDVOSB/VOSB and small 
business status based on the size standard corresponding to the NAICS 
code assigned to the solicitation/contract (see 819.7003(b) and (c)).
    (c) If the contracting officer receives only one acceptable offer 
at a fair and reasonable price from an eligible VIP-listed VOSB in 
response to a VOSB set-aside, the contracting officer may make an award 
to that concern. If the contracting officer decides not to make an 
award to the single acceptable offer received, or if the contracting 
officer receives no acceptable offers from eligible VOSBs, the set-
aside shall be withdrawn and the requirement, if still valid, set aside 
for other small business programs in accordance with 819.7005 or 
otherwise procured using the most appropriate strategy based on the 
results of market research.


819.7008   Sole source awards to verified service-disabled veteran-
owned small businesses.

    (a) A contracting officer may award a contract to a VIP-listed 
service-disabled veteran-owned small business (SDVOSB) using other than 
competitive procedures provided--
    (1) The anticipated award price of the contract (including options) 
will not exceed $5 million;
    (2) The requirement is synopsized and the required justification 
pursuant to FAR 6.302-5(c)(2)(ii) is posted in accordance with FAR part 
5;
    (3) The SDVOSB has been determined to be a responsible contractor 
with respect to performance; and
    (4) In the estimation of the contracting officer contract award can 
be made at a fair and reasonable price that offers best value to the 
Government.
    (b) The contracting officer's determination to make a sole source 
award is a business decision wholly within the discretion of the 
contracting officer. To ensure that opportunities are available to the 
broadest number of SDVOSBs, this authority is to be used only when in 
the best interest of the Government.
    (c) A determination that only one SDVOSB can meet the requirement 
is not required. However, in accordance with FAR 6.302-5(c)(2)(ii), 
contracts awarded using this authority shall be supported by a written 
justification and approval described in FAR 6.303 and 6.304, as 
applicable.
    (d) When conducting a SDVOSB sole source acquisition, the 
contracting officer shall ensure the business meets eligibility 
requirements in 819.7003.
    (e) A procurement requirement estimated to exceed the legislative 
threshold of $5 million shall not be split or subdivided to permit the 
use of this SDVOSB sole source authority.


819.7009   Sole source awards to verified veteran-owned small 
businesses.

    (a) A contracting officer may award a contract to a VIP-listed 
veteran-owned small business (VOSB) using other than competitive 
procedures provided--
    (1) The anticipated award price of the contract (including options) 
will not exceed $5 million;
    (2) The requirement is synopsized and the required justification 
pursuant to 6.302-5(c)(2)(ii) is posted in accordance with FAR part 5;
    (3) The VOSB has been determined to be a responsible contractor 
with respect to performance;
    (4) In the estimation of the contracting officer contract award can 
be made at a fair and reasonable price that offers best value to the 
Government; and
    (5) No responsible SDVOSB has been identified.
    (b) The contracting officer's determination to make a sole source 
award is a business decision wholly within the discretion of the 
contracting officer. To ensure that opportunities are available to the 
broadest number of VOSBs, this authority is to be used only when in the 
best interest of the Government.
    (c) A determination that only one VOSB can meet the requirement is 
not required. However, in accordance with FAR 6.302-5(c)(2)(ii), 
contracts awarded using this authority shall be supported by a written 
justification and approval described in FAR 6.303 and 6.304, as 
applicable.
    (d) When conducting a VOSB sole source acquisition, the contracting 
officer shall ensure the business meets eligibility requirements in 
819.7003.
    (e) A procurement requirement estimated to exceed the legislative 
threshold of $5 million shall not be split or subdivided to permit the 
use of this VOSB sole source authority.


819.7010   Tiered set-aside evaluation.

    (a) Pursuant to the authority of 38 U.S.C. 8127 and under limited 
circumstances as set forth in this section, contracting officers may 
consider using a tiered set-aside evaluation approach to minimize 
delays in the re-solicitation process.
    (b) Tiered evaluation of offers is a procedure that may be used in 
competitive negotiated acquisitions, including construction and 
acquisitions for commercial products and commercial services when the 
VA Rule of Two determination indicates a set-aside is required, but 
other circumstances preclude a confident conclusion that an award can 
be made at the SDVOSB or VOSB tier. The contracting officer--
    (1) Solicits and receives offers from targeted tiers of small 
business groups, with SDVOSB as the first tier and VOSB as the second 
tier;

[[Page 13618]]

    (2) Establishes a tiered order of priority for evaluating offers 
that is specified in the solicitation; and
    (3) If no award can be made at the first tier, evaluates offers at 
the next lower tier, until award can be made.
    (c) Market research, which shall be conducted and documented in 
advance of issuing the solicitation, will inform which of the following 
types of tiers will be included in the solicitation:
    (1) Tiered evaluations limited to SDVOSBs or VOSBs;
    (2) Tiered evaluations including 8(a) and HUBZone small businesses; 
or
    (3) Tiered evaluations including all other small business concerns.
    (d) The tiered order of priority shall be consistent with 819.7005. 
Consideration shall be given to HUBZone and 8(a) small business 
concerns before evaluating offers from other small business concerns.


819.7011   Contract clauses.

    (a) The contracting officer shall insert clause 852.219-73, VA 
Notice of Total Set-Aside for Verified Service-Disabled Veteran-Owned 
Small Businesses, or clause 852.219-74, VA Notice of Total Set-Aside 
for Verified Veteran-Owned Small Businesses, as applicable, in 
solicitations, orders and contracts that are set-aside, reserved, 
evaluated or awarded under this subpart. This includes sole source 
awards as well as multiple-award contracts when orders may be set aside 
for SDVOSBs/VOSBs as described in 808.405 and FAR 19.504(c)(1)(ii).
    (b) The contracting officer shall insert the clause at 852.219-75, 
VA Notice of Limitations on Subcontracting--Certificate of Compliance 
for Services and Construction, in solicitations and contracts for 
services and construction, including BPAs, BOAs, and orders, for 
acquisitions that are evaluated, set-aside, or awarded on a sole source 
basis under this subpart. This includes orders awarded under multiple-
award contracts to SDVOSBs/VOSBs.
    (c) The contracting officer shall insert the clause at 852.219-76, 
VA Notice of Limitations on Subcontracting--Certificate of Compliance 
for Supplies and Products, in solicitations and contracts for supplies 
or products, including BPAs, BOAs, and orders, for acquisitions that 
are to be awarded on the basis of an SDVOSB/VOSB set-aside, sole 
source, or an evaluation preference under this subpart. This includes 
orders awarded under multiple-award contracts to SDVOSBs/VOSBs. The 
contracting officer shall appropriately tailor the clause as set forth 
in paragraph (a)(2)(iii) of this section.

Subpart 819.71--[Reserved]

PART 832--CONTRACT FINANCING

0
10. The authority citation for part 832 continues to read as follows:

    Authority:  40 U.S.C. 121(c); 41 U.S.C. 1303, 41 U.S.C. 1702; 
and 48 CFR 1.301 through 1.304.

Subpart 832.9 [Removed and Reserved]

0
11. Remove and reserve subpart 832.9.

PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
12. Revise the authority citation for part 852 to read as follows:

    Authority:  38 U.S.C. 8127-8128, and 8151-8153; 40 U.S.C. 
121(c); 41 U.S.C. 1121(c)(3), 41 U.S.C. 1303; 41 U.S.C. 1702; and 48 
CFR 1.301 through 1.304.

Subpart 852.2--Text of Provisions and Clauses


852.207-70   [Removed and Reserved]

0
13. Remove and reserve section 852.207-70.
0
14. Add Section 852.208-70 to read as follows:


852.208-70   Service-Disabled Veteran-Owned and Veteran-Owned Small 
Business Evaluation Factors--Orders or BPAs.

    As prescribed in 808.405-570, insert the following clause:

SERVICE-DISABLED VETERAN-OWNED AND VETERAN-OWNED SMALL BUSINESS 
EVALUATION FACTORS--ORDERS OR BPAs (DATE)

    (a) In an effort to increase contracting opportunities for 
Veterans, depending on the evaluation factors included in the 
solicitation, VA will evaluate responses received based on the schedule 
Contractor's VIP-verified service-disabled veteran-owned small 
business/veteran-owned small business (SDVOSB/VOSB) status; and/or 
their proposed use of VIP-listed SDVOSB/VOSB as subcontractors or 
teaming partners.
    (b) To receive credit under this clause a contractor or 
subcontractor must be listed, at time of submission of offer/quotes and 
at time of award, as an eligible SDVOSB/VOSB in the Vendor Information 
Pages (VIP) database at https://www.vetbiz.va.gov/vip/.
    (c) A VIP-listed SDVOSB schedule holder will receive full credit, 
and a VIP-listed VOSB schedule holder will receive partial credit for 
the SDVOSB/VOSB status evaluation factor.
    (d) Offerors other than SDVOSBs or VOSBs proposing to use VIP-
listed SDVOSBs/VOSBs as subcontractors/teaming partners, will receive 
some consideration under this evaluation factor. To receive 
consideration, offerors must provide in their proposals:
    (1) The name(s) and contact information of the VIP-listed 
SDVOSB(s)/VOSB(s) with whom they intend to team or subcontract.
    (2) A brief description of the proposed team or subcontractor(s) 
arrangement.
    (3) The approximate dollar value of the proposed teaming 
arrangements or subcontract(s).
    (4) Evidence of teaming partner/subcontractor's VIP database 
registration and verification.
    (e) Pursuant to 38 U.S.C. 8127(g), any business concern that is 
determined by VA to have willfully and intentionally misrepresented a 
company's SDVOSB/VOSB status is subject to debarment for a period of 
not less than five years. This includes the debarment of all principals 
in the business.


(End of clause)

0
15. Add section 852.208-71 to read as follows:


852.208-71   Service-Disabled Veteran-Owned and Veteran-Owned Small 
Business Evaluation Factor Commitments--Orders and BPAs.

    As prescribed in 808.405-570, insert the following clause:

SERVICE-DISABLED VETERAN-OWNED AND VETERAN-OWNED SMALL BUSINESS 
EVALUATION FACTOR COMMITMENTS--ORDERS AND BPAs (DATE)

    (a) The Contractor agrees, if selected on the basis of service-
disabled veteran-owned small business (SDVOSB) or veteran-owned small 
business (VOSB) status, to comply with the eligibility requirements in 
subpart 819.70, including the limitation on subcontracting requirements 
at 13 CFR 125.6.
    (b) The Contractor agrees, if selected for award on the basis of 
teaming/subcontracting in accordance with 852.208-70, Service-Disabled 
Veteran-Owned and Veteran-Owned Small Business Evaluation Factors--
Orders and BPAs, to use the evaluated firm(s) as proposed or if 
approved by contracting officer to substitute one or more VIP-verified 
SDVOSB/VOSB for work of the same or similar value.
    (c) Pursuant to 38 U.S.C. 8127(g), any business concern that is 
determined by VA to have willfully and intentionally misrepresented a 
company's SDVOSB/VOSB status is subject to debarment for a period of 
not less than five years. This includes the debarment of all principals 
in the business.


[[Page 13619]]



(End of clause)


852.219-9   [Removed]

0
16. Remove Section 852.219-9.
0
17. Add section 852.219-70to read as follows:


852.219-70   VA Small Business Subcontracting Plan Minimum 
Requirements.

    As prescribed in 819.708, insert the following clause:

VA SMALL BUSINESS SUBCONTRACTING PLAN MINIMUM REQUIREMENTS (DATE)

    (a) This clause does not apply to small business concerns.
    (b) If the offeror is required to submit an individual 
subcontracting plan, the minimum goals for award of subcontracts to VA 
verified service-disabled veteran-owned small business and veteran-
owned small business SDVOSB/VOSB shall be at least commensurate with 
the Department's annual SDVOSB/VOSB subcontracting goals.
    (c) For a commercial plan, the minimum goals for award of 
subcontracts to SDVOSB/VOSB shall be at least commensurate with the 
Department's annual service-disabled veteran-owned small business and 
veteran-owned small business subcontracting goals for the total value 
of projected subcontracts to support the sales for the commercial plan.
    (d) To be credited toward goal achievements, SDVOSB/VOSBs must be 
verified as eligible in the VA's Vendor Information Pages (VIP) 
database at https://www.vetbiz.va.gov/vip/. A contractor may reasonably 
rely on a subcontractor's status as shown in the VIP database as of the 
date of subcontract award, provided the contractor retains records of 
the results of the VIP database query.
    (e) The Contractor shall annually submit a listing of SDVOSB/VOSB 
(for which credit toward goal achievement is to be applied) for review 
by personnel in the Office of Small and Disadvantaged Business 
Utilization. Use VA Form 0896A, Report of Subcontracts to Small and 
Veteran-Owned Business.
    (f) Pursuant to 38 U.S.C. 8127(g), any business concern that is 
determined by VA to have willfully and intentionally misrepresented a 
company's SDVOSB/VOSB status is subject to debarment for a period of 
not less than five years. This includes the debarment of all principals 
in the business.


(End of clause)

0
18. Revise section 852.219-71 to read as follows:


852.219-71   Notification of Competition Limited to Eligible 8(a) 
Participants.

    As prescribed in 819.811-370, when FAR 52.219-18, Notification of 
Competition Limited to Eligible 8(a) Participants, is utilized, use 
this clause in conjunction with the FAR clause.

NOTIFICATION OF COMPETITION LIMITED TO ELIGIBLE 8(a) PARTICIPANTS 
(DATE)

    Substitute paragraph (c) in FAR Clause 52.219-18 as follows:
    (c) Any award resulting from this solicitation will be made 
directly by the Contracting Officer to the successful 8(a) offeror. 
Although SBA is not identified as such in the award form, SBA is still 
the Prime Contractor. Contractor shall comply with the limitations on 
subcontracting as provided in 13 CFR 125.6 and other 8(a) program 
requirements, as set forth in 13 CFR part 124.


(End of clause)

0
19. Revise section 852.219-72 to read as follows:


852.219-72   Notification of Section 8(a) Direct Award.

    As prescribed in 819.811-370, paragraph (a), insert the following 
clause:

NOTIFICATION OF SECTION 8(a) DIRECT AWARD (DATE)

    (a) Offers are solicited only from small business concerns 
expressly certified by the Small Business Administration (SBA) for 
participation in the SBA's 8(a) Program. By submission of its offer, 
the Offeror represents that it is in good standing and that it meets 
all of the criteria for participation in the program in accordance with 
13 CFR part 124.
    (b) Any award resulting from this solicitation will be made 
directly by the Contracting Officer to the successful 8(a) offeror. 
Although SBA is not identified as such in the award form, SBA is still 
the Prime Contractor.
    (c) This contract is issued as a direct award between the 
contracting activity and the 8(a) Contractor pursuant to the 
Partnership Agreement (PA) between the Small Business Administration 
(SBA) and the Department of Veterans Affairs.
    (d) SBA retains responsibility for 8(a) certification, 8(a) 
eligibility determinations and related issues, and providing counseling 
and assistance to the 8(a) Contractor under the 8(a) program. The 
cognizant SBA district office is:

[To be completed by the Contracting Officer at the time of award]

    (e) The contracting activity is responsible for administering the 
contract and taking any action on behalf of the Government under the 
terms and conditions of the contract. However, the contracting activity 
shall give advance notice to the SBA before it issues a final notice 
terminating performance, either in whole or in part, under the 
contract. The contracting activity shall obtain SBA's approval prior to 
processing any novation agreement(s). The contracting activity may 
assign contract administration functions to a contract administration 
office.
    (f) The Contractor agrees:
    (1) To notify the Contracting Officer, simultaneous with its 
notification to SBA (as required by SBA's 8(a) regulations), when the 
owner or owners upon whom 8(a) eligibility is based plan to relinquish 
ownership or control of the concern.
    (2) Consistent with 15 U.S.C. 637(a)(21), transfer of ownership or 
control shall result in termination of the contract for convenience, 
unless SBA waives the requirement for termination prior to the actual 
relinquishing of ownership and control.
    (3) It will adhere to the requirements of 52.219-14, Limitations of 
Subcontracting and other requirements in 13 CFR part 124 and 13 CFR 
125.6, as applicable
    (g) Any proposed joint venture involving an 8(a) Participant must 
be approved by SBA before contracts are awarded.


(End of clause)


852.219-10   [Removed]

0
20. Remove section 852.219-10.
0
21. Add section 852.219-73 to read as follows:


852.219-73   VA Notice of Total Set-Aside for Verified Service-Disabled 
Veteran-Owned Small Businesses.

    As prescribed in 819.7011, insert the following clause:

VA NOTICE OF TOTAL SET-ASIDE FOR VERIFIED SERVICE-DISABLED VETERAN-
OWNED SMALL BUSINESSES (DATE)

    (a) Definition. For the Department of Veterans Affairs, ``Service-
disabled Veteran-owned small business concern or SDVOSB'':
    (1) Means 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 of which is owned by 
one or more service-disabled Veterans or eligible surviving spouses 
(see VAAR 802.201, Surviving Spouse definition);
    (ii) The management and daily business operations of which are

[[Page 13620]]

controlled by one or more service-disabled Veterans (or eligible 
surviving spouses) or, in the case of a service-disabled Veteran with 
permanent and severe disability, the spouse or permanent caregiver of 
such Veteran;
    (iii) The business meets Federal small business size standards for 
the applicable North American Industry Classification System (NAICS) 
code identified in the solicitation document;
    (iv) The business has been verified for ownership and control 
pursuant to 38 CFR part 74 and is listed in VA's Vendor Information 
Pages (VIP) database at https://www.vetbiz.va.gov/vip/; and
    (v) The business will comply with VAAR subpart 819.70 and Small 
Business Administration (SBA) regulations regarding small business size 
and government contracting programs at 13 CFR part 121 and 125, 
provided that any reference therein to a service-disabled veteran-owned 
small business concern or SDVO SBC, is to be construed to apply to a VA 
verified and VIP-listed SDVOSB, unless otherwise stated in this clause.
    (2) The term ``Service-disabled Veteran'' means a Veteran, as 
defined in 38 U.S.C. 101(2), with a disability that is service-
connected, as defined in 38 U.S.C. 101(16).
    (3) The term ``small business concern'' has the meaning given that 
term under section 3 of the Small Business Act (15 U.S.C. 632).
    (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)), except that for a VA contract the firm must be 
listed in the VIP database (see paragraph (a)(1)(iv) above).
    (b) General. (1) Offers are solicited only from VIP-listed SDVOSBs. 
Offers received from entities that are not VIP-listed SDVOSBs at the 
time of offer shall not be considered.
    (2) Any award resulting from this solicitation shall be made to a 
VIP-listed SDVOSB who is eligible at the time of submission of offer(s) 
and at the time of award.
    (3) The requirements in this clause apply to any contract, order or 
subcontract where the firm receives a benefit or preference from its 
designation as an SDVOSB, including set-asides, sole source awards, and 
evaluation preferences.
    (c) Representation. Pursuant to 38 U.S.C. 8127(e), only VIP-listed 
SDVOSBs are considered eligible to receive award of a resulting 
contract. By submitting an offer, the prospective contractor represents 
that it is an eligible SDVOSB as defined in this clause, 38 CFR part 
74, and VAAR subpart 819.70.
    (d) Agreement. When awarded a contract action, including orders 
under multiple-award contracts, an SDVOSB agrees that in the 
performance of the contract, the SDVOSB shall comply with requirements 
in VAAR subpart 819.70 and SBA regulations on small business size and 
government contracting programs at 13 CFR part 121 and part 125, 
including the non-manufacturer rule and limitations on subcontracting 
requirements in 13 CFR 121.406(b) and 13 CFR 125.6. Unless otherwise 
stated in this clause, a requirement in 13 CFR part 121 and 125 that 
applies to an SDVO SBC, is to be construed to also apply to a VIP-
listed SDVOSB. For the purpose of limitations on subcontracting, only 
VIP-listed SDVOSBs (including independent contractors) shall be 
considered eligible and/or ``similarly situated'' (i.e., a firm that 
has the same small business program status as the prime contractor). An 
otherwise eligible firm further agrees to comply with the required 
certification requirements in this solicitation (see 852.219-75 or 
852.219-76 as applicable). These requirements are summarized as 
follows:
    (1) Services. In the case of a contract for services (except 
construction), the SDVOSB prime contractor will not pay more than 50% 
of the amount paid by the government to the prime for contract 
performance to firms that are not VIP-listed SDVOSBs (excluding direct 
costs to the extent they are not the principal purpose of the 
acquisition and the SDVOSB/VOSB does not provide the service, such as 
airline travel, cloud computing services, or mass media purchases). 
When a contract includes both services and supplies, the 50 percent 
limitation shall apply only to the service portion of the contract
    (2) Supplies/products. (i) In the case of a contract for supplies 
or products (other than from a non-manufacturer of such supplies), the 
SDVOSB prime contractor will not pay more than 50% of the amount paid 
by the government to the prime for contract performance, excluding the 
cost of materials, to firms that are not VIP-listed SDVOSBs. When a 
contract includes both supply and services, the 50 percent limitation 
shall apply only to the supply portion of the contract.
    (ii) In the case of a contract for supplies from a non-
manufacturer, the SDVOSB prime contractor will supply the product of a 
domestic small business manufacturer or processor, unless a waiver as 
described in 13 CFR 121.406(b)(5) has been granted. Refer to 13 CRF 
125.6(a)(2)(ii) for guidance pertaining to multiple item procurements.
    (3) General construction. In the case of a contract for general 
construction, the SDVOSB prime contractor will not pay more than 85% of 
the amount paid by the government to the prime for contract 
performance, excluding the cost of materials, to firms that are not 
VIP-listed SDVOSBs.
    (4) Special trade construction contractors. In the case of a 
contract for special trade contractors, no more than 75% of the amount 
paid by the government to the prime for contract performance, excluding 
the cost of materials, may be paid to firms that are not VIP-listed 
SDVOSBs.
    (5) Subcontracting. An SDVOSB must meet the NAICS size standard 
assigned by the prime contractor and be listed in VIP to count as 
similarly situated. Any work that a first tier VIP-listed SDVOSB 
subcontractor further subcontracts will count towards the percent of 
subcontract amount that cannot be exceeded. For supply or construction 
contracts, the cost of materials is excluded and not considered to be 
subcontracted. When a contract includes both services and supplies, the 
50 percent limitation shall apply only to the portion of the contract 
with the preponderance of the expenditure upon which the assigned NAICS 
is based. For information and more specific requirements, refer to 13 
CFR 125.6.
    (e) Required limitations on subcontracting compliance measurement 
period. An SDVOSB shall comply with the limitations on subcontracting 
as follows:

[Contracting Officer check as appropriate.]

__ By the end of the base term of the contract or order, and then by 
the end of each subsequent option period; or
__ By the end of the performance period for each order issued under the 
contract.

    (f) Joint ventures. A joint venture may be considered eligible as 
an SDVOSB if the joint venture is listed in VIP and complies with the 
requirements in 13 CFR 125.18(b), provided that any requirement therein 
that applies to an SDVO SBC is to be construed to apply to a VIP-listed 
SDVOSB. A joint venture agrees that, in the performance of the 
contract, the applicable percentage specified in paragraph (d) of this 
clause will be performed by the aggregate of the joint venture 
participants.

[[Page 13621]]

    (g) Precedence. The VA Veterans First Contracting Program, as 
defined in VAAR 802.101, subpart 819.70 and this clause, takes 
precedence over any inconsistencies between the requirements of the SBA 
Program for SDVO SBCs, and the VA Veterans First Contracting Program.
    (h) Misrepresentation. Pursuant to 38 U.S.C. 8127(g), any business 
concern, including all its principals, that is determined by VA to have 
willfully and intentionally misrepresented a company's SDVOSB status is 
subject to debarment from contracting with the Department for a period 
of not less than five years (see VAAR 809.406-2 Causes for Debarment).


(End of clause)


852.219-11   [Removed]

0
22. Remove section 852.219-11.
0
23. Add section 852.219-74 to read as follows:


852.219-74   VA Notice of Total Set-Aside for Verified Veteran-Owned 
Small Businesses.

    As prescribed in 819.7011, insert the following clause:

VA NOTICE OF TOTAL SET-ASIDE FOR VERIFIED VETERAN-OWNED SMALL 
BUSINESSES (DATE)

    (a) Definition. For the Department of Veterans Affairs, ``Veteran-
owned small business or VOSB'':
    (1) Means a small business concern--
    (i) Not less than 51 percent of which is 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 Veteran(s);
    (ii) The management and daily business operations of which are 
controlled by one or more Veteran(s);
    (iii) The business meets Federal small business size standards for 
the applicable North American Industry Classification System (NAICS) 
code identified in the solicitation document;
    (iv) The business has been verified for ownership and control 
pursuant to 38 CFR part 74 and is listed in VA's Vendor Information 
Pages (VIP) database at: https://www.vetbiz.va.gov/vip/; and
    (v) The business will comply with VAAR subpart 819.70 and Small 
Business Administration (SBA) regulations regarding small business size 
and government contracting programs at 13 CFR part 121 and 125, 
provided that any requirement therein that applies to a service-
disabled veteran-owned small business concern or SDVO SBC, is to be 
construed to also apply to a VA verified and VIP-listed VOSB, unless 
otherwise stated in this clause.
    (vi) The term VOSB includes VIP-listed service-disabled veteran-
owned small businesses (SDVOSB).
    (2) ``Veteran'' is defined in 38 U.S.C. 101(2).
    (3) The term ``small business concern'' has the meaning given that 
term under section 3 of the Small Business Act (15 U.S.C. 632).
    (4) 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)), except that for a VA contract 
the firm must be listed in the VIP database (see paragraph (a)(1)(iv) 
of this clause).
    (b) General. (1) Offers are solicited only from VIP-listed VOSBs, 
including VIP-listed SDVOSBs. Offers received from entities that are 
not VIP-listed at the time of offer shall not be considered.
    (2) Any award resulting from this solicitation shall be made only 
to a VIP-listed VOSB who is eligible at the time of submission of 
offer(s) and at time of award.
    (3) The requirements in this clause apply to any contract, order or 
subcontract where the firm receives a benefit or preference from its 
designation as a VOSB, including set-asides, sole source awards, and 
evaluation preferences.
    (c) Representation. Pursuant to 38 U.S.C. 8127(e), only VIP-listed 
VOSBs are considered eligible to receive award of a resulting contract. 
By submitting an offer, the prospective contractor represents that it 
is an eligible VOSB as defined in this clause, 38 CFR part 74, and VAAR 
subpart 819.70.
    (d) Agreement. When awarded a contract action, including orders 
under multiple-award contracts, a VOSB agrees that in the performance 
of the contract, the VOSB shall comply with requirements in VAAR 
subpart 819.70 and SBA regulations on small business size and 
government contracting programs at 13 CFR part 121 and part 125, 
including the non-manufacturer rule and limitations on-subcontracting 
requirements in 13 CFR 121.406(b) and 125.6. Unless otherwise stated in 
this clause, any requirement in 13 CFR part 121 and part 125 that 
applies to an SDVO SBC, is to be construed to also apply to a VIP-
listed VOSB. For the purpose of the limitations on subcontracting, only 
VIP-listed VOSB, (including independent contractors) is considered 
eligible and/or ``similarly situated'' (i.e., a firm that has the same 
small business program status as the prime contractor). An otherwise 
eligible firm further agrees to comply with the required certification 
requirements in this solicitation (see 852.219-75 and/or 852.219-76 as 
applicable). These requirements are summarized as follows:
    (1) Services. In the case of a contract for services (except 
construction), the VOSB prime contractor will not pay more than 50% of 
the amount paid by the government to the prime for contract performance 
to firms that are not VIP-listed VOSBs (excluding direct costs to the 
extent they are not the principal purpose of the acquisition and the 
SDVOSB/VOSB does not provide the service, such as airline travel, cloud 
computing services, or mass media purchases). When a contract includes 
both services and supplies, the 50 percent limitation shall apply only 
to the service portion of the contract.
    (2) Supplies/products. (i) In the case of a contract for supplies 
or products (other than from a non-manufacturer of such supplies), the 
VOSB prime contractor will not pay more than 50% of the amount paid by 
the government to the prime for contract performance, excluding the 
cost of materials, to firms that are not VIP-listed VOSBs. When a 
contract includes both supply and services, the 50 percent limitation 
shall apply only to the supply portion of the contract.
    (ii) In the case of a contract for supplies from a non-
manufacturer, the VOSB prime contractor will supply the product of a 
domestic small business manufacturer or processor, unless a waiver as 
described in 13 CFR 121.406(b)(5) has been granted. Refer to 13 CFR 
125.6(a)(2)(ii) for guidance pertaining to multiple item procurements.
    (3) General construction. In the case of a contract for general 
construction, the VOSB prime contractor will not pay more than 85% of 
the amount paid by the government to the prime for contract 
performance, excluding the cost of materials, to firms that are not 
VIP-listed VOSBs.
    (4) Special trade construction contractors. In the case of a 
contract for special trade contractors, no more than 75% of the amount 
paid by the government to the prime for contract performance, excluding 
the cost of materials, may be paid to firms that are not VIP-listed 
VOSBs.
    (5) Subcontracting. A VOSB must meet the NAICS size standard 
assigned by the prime contractor and be listed in VIP to count as 
similarly situated. Any work that a first tier VIP-listed VOSB 
subcontractor further subcontracts will count towards the percent of 
subcontract amount that cannot be exceeded. For supply or construction

[[Page 13622]]

contracts, the cost of materials is excluded and not considered to be 
subcontracted. When a contract includes both services and supplies, the 
50 percent limitation shall apply only to the portion of the contract 
with the preponderance of the expenditure upon which the assigned NAICS 
is based. For information and more specific requirements, refer to 13 
CFR 125.6.
    (e) Required limitations on subcontracting compliance measurement 
period. A VOSB shall comply with the limitations on subcontracting as 
follows:

[Contracting Officer check as appropriate.]

__ By the end of the base term of the contract or order, and then by 
the end of each subsequent option period; or
__ By the end of the performance period for each order issued under the 
contract.

    (f) Joint ventures. A joint venture may be considered eligible as a 
VOSB if the joint venture is listed in VIP and complies with the 
requirements in 13 CFR 125.18(b), provided that any requirement therein 
that applies to an SDVO SBC is to be construed to also apply to a VIP-
listed VOSB. A joint venture agrees that, in the performance of the 
contract, the applicable percentage specified in paragraph (d) of this 
clause will be performed by the aggregate of the joint venture 
participants.
    (g) Precedence. The VA Veterans First Contracting Program, as 
defined in VAAR 802.10, subpart 819.70 and this clause, takes 
precedence over any inconsistencies between the requirements of the SBA 
Program for SDVO SBCs and the VA Veterans First Contracting Program.
    (h) Misrepresentation. Pursuant to 38 U.S.C. 8127(g), any business 
concern, including all its principals, that is determined by VA to have 
willfully and intentionally misrepresented a company's VOSB status is 
subject to debarment from contracting with the Department for a period 
of not less than five years (see VAAR 809.406-2 Causes for Debarment).


(End of clause)

0
24. Add section 852.219-75 to read as follows:


852.219-75   VA Notice of Limitations on Subcontracting--Certificate of 
Compliance for Services and Construction.

    As prescribed in 819.7011(b), insert the following clause:

VA NOTICE OF LIMITATIONS ON SUBCONTRACTING--CERTIFICATE OF COMPLIANCE 
FOR SERVICES AND CONSTRUCTION (DATE)

    (a) Pursuant to 38 U.S.C. 8127(k)(2), the offeror certifies that--
    (1) If awarded a contract (see FAR 2.101 definition), it will 
comply with the limitations on subcontracting requirement as provided 
in the solicitation and the resultant contract, as follows: 
[Contracting Officer check the appropriate box below based on the 
predominant NAICS code assigned to the instant acquisition as set forth 
in FAR 19.102.]

(i) [square] Services. In the case of a contract for services (except 
construction), the contractor will not pay more than 50% of the amount 
paid by the government to it to firms that are not VIP-listed SDVOSBs 
as set forth in 852.219-73 or VOSBs as set forth in 852.219-74. Any 
work that a similarly situated VIP-listed subcontractor further 
subcontracts will count towards the 50% subcontract amount that cannot 
be exceeded. Other direct costs may be excluded to the extent they are 
not the principal purpose of the acquisition and small business 
concerns do not provide the service as set forth in 13 CFR 125.6.
(ii) [square] General construction. In the case of a contract for 
general construction, the contractor will not pay more than 85% of the 
amount paid by the government to it to firms that are not VIP-listed 
SDVOSBs as set forth in 852.219-73 or VOSBs as set forth in 852.219-74. 
Any work that a similarly situated VIP-listed subcontractor further 
subcontracts will count towards the 85% subcontract amount that cannot 
be exceeded. Cost of materials are excluded and not considered to be 
subcontracted.
(iii) [square] Special trade construction contractors. In the case of a 
contract for special trade contractors, the contractor will not pay 
more than 75% of the amount paid by the government to it to firms that 
are not VIP-listed SDVOSBs as set forth in 852.219-73 or VOSBs as set 
forth in 852.219-74. Any work that a similarly situated subcontractor 
further subcontracts will count towards the 75% subcontract amount that 
cannot be exceeded. Cost of materials are excluded and not considered 
to be subcontracted.

    (2) The offeror acknowledges that this certification concerns a 
matter within the jurisdiction of an Agency of the United States. The 
offeror further acknowledges that this certification is subject to 
Title 18, United States Code, Section 1001, and, as such, a false, 
fictitious, or fraudulent certification may render the offeror subject 
to criminal, civil, or administrative penalties, including prosecution.
    (3) If VA determines that an SDVOSB/VOSB awarded a contract 
pursuant to 38 U.S.C. 8127 did not act in good faith, such SDVOSB/VOSB 
shall be subject to any or all of the following:
    (i) Referral to the VA Suspension and Debarment Committee;
    (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.
    (b) The offeror represents and understands that by submission of 
its offer and award of a contract it may be required to provide copies 
of documents or records to VA that VA may review to determine whether 
the offeror complied with the limitations on subcontracting requirement 
specified in the contract. Contracting officers may, at their 
discretion, require the contractor to demonstrate its compliance with 
the limitations on subcontracting at any time during performance and 
upon completion of a contract if the information regarding such 
compliance is not already available to the contracting officer. 
Evidence of compliance includes, but is not limited to, invoices, 
copies of subcontracts, or a list of the value of tasks performed.
    (c) The offeror further agrees to cooperate fully and make 
available any documents or records as may be required to enable VA to 
determine compliance with the limitations on subcontracting 
requirement. The offeror understands that failure to provide documents 
as requested by VA may result in remedial action as the Government 
deems appropriate.
    (d) Offeror completed certification/fill-in required. The formal 
certification must be completed, signed and returned with the offeror's 
bid, quotation, or proposal. The Government will not consider offers 
for award from offerors that do not provide the certification, and all 
such responses will be deemed ineligible for evaluation and award.

Certification

    I hereby certify that if awarded the contract, [insert name of 
offeror] will comply with the limitations on subcontracting specified 
in this clause and in the resultant contract. I further certify that I 
am authorized to execute this certification on behalf of [insert name 
of offeror].


Printed Name of Signee:
-----------------------------------------------------------------------

[[Page 13623]]

Printed Title of Signee:
-----------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Company Name and Address:
-----------------------------------------------------------------------

-----------------------------------------------------------------------

(End of clause)

0
25. Add section 852.219-76 to read as follows:


852.219-76   VA Notice of Limitations on Subcontracting--Certificate of 
Compliance for Supplies and Products.

    As prescribed in 819.7011(c), insert the following clause. The 
contracting officer shall tailor the clause in paragraph (a)(2)(iii) as 
appropriate:

VA NOTICE OF LIMITATIONS ON SUBCONTRACTING--CERTIFICATE OF COMPLIANCE 
FOR SUPPLIES AND PRODUCTS (DATE)

    (a) Pursuant to 38 U.S.C. 8127(k)(2), the offeror certifies that--
    (1) If awarded a contract (see FAR 2.101 definition), it will 
comply with the limitations on subcontracting requirement as provided 
in the solicitation and the resultant contract, as follows: [Offeror 
check the appropriate box]

(i) [square] In the case of a contract for supplies or products (other 
than from a non-manufacturer of such supplies), it will not pay more 
than 50% of the amount paid by the government to it to firms that are 
not VIP-listed SDVOSBs as set forth in 852.219-73 or VOSBs as set forth 
in 852.219-74. Any work that a similarly situated VIP-listed 
subcontractor further subcontracts will count towards the 50% 
subcontract amount that cannot be exceeded. Cost of materials are 
excluded and not considered to be subcontracted.
(ii) [square] In the case of a contract for supplies from a 
nonmanufacturer, it will supply the product of a domestic small 
business manufacturer or processor, unless a waiver as described in 13 
CFR 121.406(b)(5) is granted. The offeror understands that, as provided 
in 13 CFR 121.406(b)(7), such a waiver has no effect on requirements 
external to the Small Business Act, such as the Buy American Act or the 
Trade Agreements Act.

    (2) Manufacturer or nonmanufacturer representation and 
certification. [Offeror fill-in--check each applicable box below. The 
offeror must select the applicable provision below, identifying itself 
as either a manufacturer or nonmanufacturer]:

(i) [square] Manufacturer or producer. The offeror certifies that it is 
the manufacturer or producer of the end item being procured, and the 
end item is manufactured or produced in the United States, in 
accordance with paragraph (a)(1)(i).
(ii) [square] Nonmanufacturer. The offeror certifies that it qualifies 
as a nonmanufacturer in accordance with the requirements of 13 CFR 
121.406(b) and paragraph (a)(1)(ii). The offeror further certifies it 
meets each element below as required in order to qualify as a 
nonmanufacturer. [Offeror fill-in--check each box below.]

[square] The offeror certifies that it does not exceed 500 employees 
(or 150 employees for the Information Technology Value Added Reseller 
exception to NAICS code 541519, which is found at 13 CFR 121.201, 
footnote 18).
[square] The offeror certifies that it is primarily engaged in the 
retail or wholesale trade and normally sells the type of item being 
supplied.
[square] The offeror certifies that it will take ownership or 
possession of the item(s) with its personnel, equipment, or facilities 
in a manner consistent with industry practice.

(iii) [square] The offeror certifies that it will supply the end item 
of a small business manufacturer, processor, or producer made in the 
United States, unless a waiver as provided in 13 CFR 121.406(b)(5) has 
been issued by SBA. [Contracting Officer fill-in or removal (see 13 CFR 
121.1205). This requirement must be included for a single end item. 
However, if SBA has issued an applicable waiver of the nonmanufacturer 
rule for the end item, this requirement must be removed in the final 
solicitation or contract.]
    or [Contracting officer tailor clause to remove one or other block 
under subparagraph (iii).]

[square] If this is a multiple item acquisition, the offeror certifies 
that at least 50% of the estimated contract value is composed of items 
that are manufactured by small business concerns. [Contracting Officer 
fill-in or removal. See 13 CFR 121.406(d) for multiple end items. If 
SBA has issued an applicable nonmanufacturer rule waiver, this 
requirement must be removed in the final solicitation or contract.]

    (3) The offeror acknowledges that this certification concerns a 
matter within the jurisdiction of an Agency of the United States. The 
offeror further acknowledges that this certification is subject to 
Title 18, United States Code, Section 1001, and, as such, a false, 
fictitious, or fraudulent certification may render the offeror subject 
to criminal, civil, or administrative penalties, including prosecution.
    (4) If VA determines that an SDVOSB/VOSB awarded a contract 
pursuant to 38 U.S.C. 8127 did not act in good faith, such SDVOSB/VOSB 
shall be subject to any or all of the following:
    (i) Referral to the VA Suspension and Debarment Committee;
    (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.
    (b) The offeror represents and understands that by submission of 
its offer and award of a contract it may be required to provide copies 
of documents or records to VA that VA may review to determine whether 
the offeror complied with the limitations on subcontracting requirement 
specified in the contract or to determine whether the offeror qualifies 
as a manufacturer or nonmanufacturer in compliance with the limitations 
on subcontracting requirement. Contracting officers may, at their 
discretion, require the contractor to demonstrate its compliance with 
the limitations on subcontracting at any time during performance and 
upon completion of a contract if the information regarding such 
compliance is not already available to the contracting officer. 
Evidence of compliance includes, but is not limited to, invoices, 
copies of subcontracts, or a list of the value of tasks performed.
    (c) The offeror further agrees to cooperate fully and make 
available any documents or records as may be required to enable VA to 
determine compliance. The offeror understands that failure to provide 
documents as requested by VA may result in remedial action as the 
Government deems appropriate.
    (d) Offeror completed certification/fill-in required. The formal 
certification must be completed, signed and returned with the offeror's 
bid, quotation, or proposal. The Government will not consider offers 
for award from offerors that do not provide the certification, and all 
such responses will be deemed ineligible for evaluation and award.

Certification

    I hereby certify that if awarded the contract, [insert name of 
offeror] will comply with the limitations on subcontracting specified 
in this clause and in the resultant contract. I further certify that I 
am authorized to execute

[[Page 13624]]

this certification on behalf of [insert name of offeror].


Printed Name of Signee:
-----------------------------------------------------------------------
Printed Title of Signee:
-----------------------------------------------------------------------
Signature:
-----------------------------------------------------------------------
Date:
-----------------------------------------------------------------------
Company Name and Address:
-----------------------------------------------------------------------

-----------------------------------------------------------------------

(End of clause)

PART 853--FORMS

0
26. Revise the authority citation for part 853 to read as follows:

    Authority:  40 U.S.C. 121(c); 41 U.S.C. 1702; and 48 CFR 1.301 
through 1.304.

Subpart 853.2--Prescription of Forms

0
27. Add section 853.219 to read as follows:


853.219   Small business forms.

    (a) VA Form 2268, Small Business Program and Contract Bundling 
Review. VA Form 2268 is prescribed for use to document actions and 
recommendations related to small business, as specified in 819.202.
    (b) VA Form 0896A, Report of Subcontracts to Small and Veteran-
Owned Businesses. VA Form 0896A is prescribed for use to submit 
subcontracting information, as specified in 819.704-70.
    (c) Forms are available at: https://www.va.gov/vaforms.

[FR Doc. 2022-03677 Filed 3-8-22; 8:45 am]
BILLING CODE 8320-01-P