FAR 52.219-27—Notice of Set-Aside for, or Sole-Source Award to, Service-Disabled Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under the SDVOSB Program.
Plain-English Summary
FAR 52.219-27 is the notice clause used when the Government is restricting competition to Service-Disabled Veteran-Owned Small Business (SDVOSB) concerns or making a sole-source award to an SDVOSB concern eligible under the SDVOSB Program. It explains who qualifies as an SDVOSB concern, including the ownership and control requirements, the special definition of a service-disabled veteran, and the post-2024 certification framework tied to SBA certification in SAM or a timely pending certification application submitted by December 31, 2023. The clause also states when it applies, including set-asides and sole-source awards, portions of multiple-award contracts set aside for SDVOSBs, and certain set-aside or direct orders under multiple-award contracts. In practice, it tells offerors that only eligible SDVOSB concerns may compete and that ineligible offers will not be considered. It also addresses joint ventures, including when a joint venture may qualify as an SDVOSB concern and the requirement that the SDVOSB party perform at least 40 percent of the work, with more than administrative participation. This clause matters because it is the solicitation and award notice that enforces SDVOSB eligibility rules and helps contracting officers avoid improper awards while giving contractors clear notice of the certification and performance standards they must meet.
Key Rules
Only eligible SDVOSBs may compete
For SDVOSB set-asides and sole-source procurements, the Government may solicit only from concerns that meet the clause’s eligibility criteria. Offers from firms that do not satisfy those criteria must not be considered.
Ownership and control matter
An SDVOSB concern must generally be at least 51 percent owned and controlled by one or more service-disabled veterans, or, for a publicly owned business, at least 51 percent of the stock must be owned by one or more service-disabled veterans. Management and daily operations must also be controlled by service-disabled veterans, with a limited exception for a veteran with a permanent and severe disability.
Service-disabled veteran definition is specific
A service-disabled veteran is a veteran with a service-connected disability as defined by statute and registered in VA’s beneficiary system or successor system. This definition is part of the eligibility test and is not satisfied by self-identification alone.
SBA certification governs post-2024 eligibility
Effective January 1, 2024, an SDVOSB eligible under the program must be designated in SAM as certified by SBA, or have represented SDVOSB status in SAM and submitted a complete certification application to SBA on or before December 31, 2023. This clause reflects the transition from self-certification to SBA certification.
Applies to several award types
The clause applies to full contract set-asides and sole-source awards, set-aside portions of multiple-award contracts, set-aside orders under multiple-award contracts, and certain direct orders issued to SDVOSBs under multiple-award contracts. It is not a general clause for all SDVOSB-related acquisitions.
Joint ventures can qualify
A joint venture may be treated as an SDVOSB concern if its managing partner meets the SDVOSB ownership and control criteria and the joint venture complies with 13 CFR 128.402. The joint venture structure must satisfy both the regulatory and clause requirements.
SDVOSB must perform meaningful work
In a qualifying joint venture, the SDVOSB party or parties must perform at least 40 percent of the work performed by the joint venture. That work must be substantive and cannot be limited to administrative tasks.
Responsibilities
Contracting Officer
Use the clause when the acquisition is set aside for SDVOSBs or awarded on a sole-source basis to an SDVOSB concern eligible under the program, and ensure the solicitation limits competition to eligible firms only. Verify that offers are received only from concerns that meet the clause’s eligibility and certification requirements, and reject offers from ineligible firms.
Contractor / Offeror
Confirm that the firm meets the SDVOSB ownership, control, and certification requirements before submitting an offer. If competing as a joint venture, ensure the joint venture structure complies with the applicable SBA rules and that the SDVOSB participant will perform at least 40 percent of the work.
SDVOSB Concern
Maintain qualifying ownership and control, keep SAM and SBA certification information current, and ensure the firm remains eligible for the specific procurement. For joint ventures, ensure the SDVOSB party performs substantive work and not merely administrative functions.
SBA
Certify SDVOSB concerns in accordance with 13 CFR part 128 and maintain the certification framework reflected in SAM. Evaluate certification applications and determine whether firms qualify under the SDVOSB Program.
Department of Veterans Affairs / Beneficiary Identification System
Maintain the veteran registration system referenced in the definition of service-disabled veteran, which supports verification of service-disabled veteran status.
Practical Implications
Contractors can no longer rely on simple self-representation for new SDVOSB set-aside or sole-source awards; they must be SBA-certified in SAM unless they fall within the limited grandfathered application category.
A common pitfall is assuming that being a veteran-owned small business is enough; the clause requires both SDVOSB status and the specific certification/eligibility rules tied to the SDVOSB Program.
Joint ventures are allowed, but they are heavily regulated: the managing partner must qualify, the joint venture must comply with SBA rules, and the SDVOSB participant must do at least 40 percent of the work.
Contracting officers should screen offers early for eligibility because offers from firms that do not meet the clause’s criteria are not to be considered, which can avoid award delays and protests.
For contractors, keeping SAM and SBA certification records current is critical; a lapse or mismatch between claimed status and certification can make an otherwise competitive offer ineligible.
Official Regulatory Text
As prescribed in 19.1408 , insert the following clause: Notice of Set-Aside for, or Sole-Source Award to, Service-Disabled Veteran-Owned Small Business (SDVOSB) Concerns Eligible Under the SDVOSB Program. (Feb 2024) (a) Definition . Service-disabled veteran-owned small business (SDVOSB) concern means a small business concern— (1) (i) Not less than 51 percent of which is owned and controlled 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; and (ii) The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran; or (2) A small business concern eligible under the SDVOSB Program in accordance with 13 CFR part 128 (see subpart 19.14 ). (3) Service-disabled veteran , as used in this definition, 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) and who is registered in the Beneficiary Identification and Records Locator Subsystem, or successor system that is maintained by the Department of Veterans Affairs’ Veterans Benefits Administration, as a service-disabled veteran. Service-disabled veteran-owned small business (SDVOSB) concern eligible under the SDVOSB Program means an SDVOSB concern that— (1) Effective January 1, 2024, is designated in the System for Award Management (SAM) as certified by the Small Business Administration (SBA) in accordance with 13 CFR 128.300; or (2) Has represented that it is an SDVOSB concern in SAM and submitted a complete application for certification to SBA on or before December 31, 2023. Service-disabled veteran-owned small business (SDVOSB) Program means a program that authorizes contracting officers to limit competition, including award on a sole-source basis, to SDVOSB concerns eligible under the SDVOSB Program. (b) Applicability . This clause applies only to— (1) Contracts that have been set aside for, or awarded on a sole-source basis to, SDVOSB concerns eligible under the SDVOSB Program; (2) Part or parts of a multiple-award contract that have been set aside for SDVOSB concerns eligible under the SDVOSB Program; (3) Orders set aside for SDVOSB concerns eligible under the SDVOSB Program, under multiple-award contracts as described in 8.405-5 and 16.505 (b)(2)(i)(F); and (4) Orders issued directly to SDVOSB concerns eligible under the SDVOSB Program, under multiple-award contracts as described in 19.504 (c)(1)(ii). (c) General. (1) Effective January 1, 2024, for SDVOSB set-aside or sole-source procurements, offers are solicited only from, and awards resulting from this solicitation will be made only to, concerns— (i) Designated in SAM as an SDVOSB concern certified by SBA; or (ii) That have represented their status as an SDVOSB in SAM and submitted a complete application for certification to SBA on or before December 31, 2023. (2) Offers received from concerns that do not meet the criteria of paragraph (c)(1)(i) or (ii) of this clause, shall not be considered. (d) A joint venture may be considered an SDVOSB concern if the managing partner of the joint venture complies with the criteria defined in paragraph (a) of this clause and 13 CFR 128.402. (e) In a joint venture that complies with paragraph (d) of this clause, the SDVOSB party or parties to the joint venture shall perform at least 40 percent of the work performed by the joint venture. Work performed by the SDVOSB party or parties to the joint venture must be more than administrative functions. (End of clause)