Contractor Not an SDVOSB When Veteran Owner Works Full-Time for Another Company; CVE Protest of Covenant Construction Services Re; Concord Construction, LLC, SBA NO. CVE-152-P

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Protest challenging concern’s status as a service-disabled veteran owned small business is sustained. The challenged concern’s managing member was a service-disabled veteran, but he worked full time for another company. To be an SDVOSB, a concern must be controlled by a service-disabled veteran. OHA found that the managing member’s work for the other company meant that he was not controlling the day-to-day operations of the putative SDVOSB.

The Department of Veteran Affairs issued an invitation for bids, seeking construction services. The solicitation was set aside for service-disabled veteran-owned small businesses.

The VA announced that it was awarding the contract to Concord Construction. A disappointed bidder, Covenant Construction, filed a protest, challenging Concord’s status as an SDVOSB. Covenant argued that while Concord’s managing member was a service-disabled veteran, he worked full time for another company and thus did not control Concord. Concord responded that it was a new business, and the managing member could not support himself by working exclusively for Concord.

To be an eligible SDVOSB, a concern must be owned and controlled by a service-disable veteran. The SBA’s Office of Hearing and Appeals noted that SBA regulations establish a rebuttable presumption that a service-disabled veteran does not control a firm when the veteran is not able to work for the firm during normal working hours. When a veteran is not working for a company during normal business hours, then control of the company may have been ceded to someone who is not a veteran. OHA found that Concord was unable to rebut this presumption.

Concord argued that it had disclosed to the VA’s Center for Evaluation and Verification that the managing member worked for another company. OHA found, however, that such a disclosure does not insulate a concern from a status protest. Indeed, a status protest against an SDVOSB is, by definition, a protest that has been brought against a concern that has been verified by CVE.

Concord provided a letter from a manager of the other company where Concord’s managing member worked. This letter stated that there were no conflict between the work the managing member did for his own company and his other employer. But OHA dismissed this letter finding that it did not address the salient issue in the case—namely, whether Concord’s managing member controlled Concord.

OHA concluded that Concord had not provided any evidence that the managing member controlled the day-to-day operations of the company. Indeed, it appeared that the company was controlled by the managing member’s son who was not a service-disabled veteran.

Covenant is represented by its President, Alan Sprinkle. Concord is represented by Paul Hutton its Managing Member.

SBA - Covenant Construction Services