Under a program called “Veterans First,” service-disabled veteran-owned small businesses and veteran-owned small businesses can get a powerful leg up in federal government contracting. For SDVOSBs, VOSBs and potential teammates, understanding the contours and limitations of this powerful program can make a big strategic difference in selling to Uncle Sam.
What Is Veterans First?
Veterans First is a Congressional mandate designed to ensure that the U.S.Department of Veterans Affairs prioritizes SDVOSBs and VOSBs in its contracting. The rules governing Veterans First are implemented through the VA’s Federal Acquisition Regulation supplement, the VAAR.
How Does Veterans First Prioritize SDVOSBs & VOSBs?
The Veterans First rules establish a Contracting Order of Priority, with SDVOSBs at the top and VOSBs second, followed by other types of small businesses. Additionally, the VAAR imposes a “rule of two” requirement under which the VA often must issue a solicitation as an SDVOSB or VOSB set-aside when, based on market research, the VA determines that two or more qualified, capable SDVOSBs or VOSBs are likely to submit offers at fair and reasonable prices. In 2016, the U.S. Supreme Court unanimously confirmed the breadth of the VA’s “rule of two” requirement in Kingdomare Technologies, Inc. v. United States.
Does Veterans First Apply Outside the VA?
Contrary to a relatively common misconception, the Veterans First program is limited solely to the VA. Non-VA federal agencies are not part of the Veterans First initiative.
In a recent decision, the U.S. Government Accountability Office confirmed that, while non-VA federal agencies have the power to use SDVOSB set-asides, these agencies are not required to prioritize SDVOSBs above other categories of small businesses, such as 8(a) Program participants and woman-owned small businesses. Additionally, agencies other than the VA do not enjoy the power to use VOSB set-asides or award sole source contracts to VOSBs.
How Does Veterans First Impact VA Contracting?
Veterans First has a major impact on the VA’s contracting profile. In Fiscal Year 2024, the VA awarded 23.63% of its prime contracting dollars to SDVOSBs. In contrast, the government as a whole awarded 5.14% of prime contracting dollars to SDVOSBs.
How Can Contractors Leverage Veterans First?
For SDVOSBs and VOSBs, the powerful Veterans First preferences mean that the VA may be an important customer to consider pursuing–provided, of course, that the VA buys what the company sells.
For non-veteran companies, in contrast, Veterans First may make selling to the VA somewhat more challenging. Non-veteran companies looking to make inroads at the VA may wish to consider teaming strategies to work with SDVOSBs and VOSBs as a subcontractor, joint venture partner, and/or SBA-approved mentor.
For more information about Government Contracting, contact your CIRAS Government Contracting Specialist or complete our Request for Counseling form.
This APEX Accelerator is funded in part through a cooperative agreement with the Department of Defense.