Bill H.R. 2749, known as Protecting Business Opportunities for Veterans Act of 2017, was recently introduced in the U.S. House of Representatives.  If the bill is passed, it would require the VA (under the terms of the Vets First Law) to identify and punish violations of the limitations on subcontracting (LOS) rule.

Under the Vets First Law, the VA can make sole source and set-aside awards to veteran-owned small businesses (VOSBs); must set aside procurements for VOSBs when the rule of two is met; and for open market acquisitions, give priority to service-disabled-veteran-owned small businesses (SDVOSBs) and VOSBs.

In general, the VA contracting rules do require Vets First participants to follow the LOS rule.  However, the Vets First Law does not contain any LOS language; and therefore, does not clearly authorize VA to extend such requirements to Vets First contracts.

The Small Business Act, on the other hand specifies that LOS rules apply to set-asides conducted under multiple sections of the Small Business Act, including the sections for 8(a), HUBZone, SDVOSB, WOSB, and EDWOSB contracts.

But Vets First contracts are awarded under the Vets First Law, not the Small Business Act.  This has created the question as to whether VA has the ability to apply the LOS rule to VA set-asides or not.

If H.R. 2749 is enacted, the Vets First Law would be amended to include LOS language and require Vets First participants to certify (prior to award) that they will comply.  The Bill also includes penalties for participants that violate the LOS rule.

The Bill also requires the VA to enforce compliance with the LOS and refer all violations to the VA’s Inspector General. If the Inspector General determines the participant did not act in good faith regarding the LOS, the Bill provides administrative and criminal penalties that may be levied, including debarment. Finally, the Bill would require the VA to submit an annual report to Congress outlining the details of all violations referred to the VA’s Debarment and Suspension Committee.

So what does all this mean to you?  If you are bidding on or being awarded contracts under the Vets First Law and are not complying with the limitation of subcontracting rules that apply under the Small Business Act, you may get caught in the crossfire if this Bill becomes law.  While the COs should ensure that any contractual vehicle is applicable to current laws and regulations, the VA has a long track record of misapplying such rules.