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HHS Small Business Program Policy Manual

Chapter 12: Service-Disabled Veteran Owned Small Business (SDVOSB) Procurement Program

Topics in this Chapter:

  1. Authority
  2. Market Research
  3. Small Business Goals
  4. SDVOSB Set-Aside and Sole Source
  5. HHS Small Business Specialist Review
  6. Parity Rule

This part sets forth policy and procedure about HHS’ procedure for awards small businesses certified as Veteran and Service-Disabled Veteran-Owned. It expands on key aspects of the Federal Acquisition Regulations (FAR) and the U.S. Health and Human Services Acquisition Regulations (HHSAR).

The purpose of this chapter is to provide a basic understanding of the small business program policy and procedure for the awards to Service-Disabled Veteran-Owned small businesses (SDVOSB).


In accordance with the FAR Subpart 19.201 (a), HHS provides “maximum practicable opportunities in its acquisitions to small business, veteran-owned small business (VOSB), service-disabled veteran-owned small business (SDVOSB), HUBZone small business, small disadvantaged business, and women-owned small business concerns.”

The Veterans Business Act 2003 established a procurement program for service-disabled veteran-owned small businesses. In accordance with 13 Code of Federal Regulations (CFR) Subpart 125, a SDVOSB must be 51 percent owned by a service-disabled veteran. The Veterans Administration (VA) determines the owner’s veteran status. The SDVOSB’s size is determined in accordance with the corresponding NAICS:

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In accordance with FAR 10, agencies shall conduct market research on an ongoing basis appropriate to the circumstances. The officials may search for SDVOSB through the following search engines:

Also, contact the OSBP SBS or the HHS Service-Disabled Veteran-Owned Small Business Representative.

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The Department’s small business goals for SDVOSBs are as follows:

Prime Contracting Goals: 3 percent
3 percent

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The CO shall set-aside a requirement if there is reasonable expectation that they will receive two or more offers from responsible SDVO small business (FAR Subpart 19.14). In accordance with FAR 6.206 and 19.14, the CO may set-aside requirements which exceed the micro-purchase threshold for SDVOSB concerns. The CO shall consider a set-aside for SDVOSB concerns before considering a SDVOSB sole source award.

The CO may issue a sole source award to a SDVOSB if 1) only one SDVOSB can perform the service or provide the product; 2) does not exceed $3 million or $5.5 million (manufacturing); considered to be responsible (i.e., past performance); and price offered is determined to be fair and reasonable.

The SBA PCR has the right to appeal the COs decision to not set-aside or sole source a requirement to a SDVOSB.

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The CO shall consult the SBS during the acquisition planning process (FAR 7.104(d)(1)). Once the acquisition strategy has been determined, refer to Chapter Two (2)-Acquisition Planning and Market Research, Chapter Four (4)- Small Business Set Asides, Chapter Five (5) - Small Business Review of Simplified Acquisition Actions, Chapter Six (6) Small Business Review of Contract Actions and Chapter Seven (7) - Subcontracting for details regarding the HHS SBS review.

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The HHS policy is succinct with the recent Department of Justice memorandum regarding the permissibility of SBA’s regulations governing the interplay among the 8(a), HUBZone, and the SDVOSB Programs. Market research must be conducted to determine and document program selection. Once market research is performed:

The decision to select between 8(a), HUBZone, or SDVOSB is discretionary for procurements between $3,000 and $100,000.

For procurements over $100,000: after conducting market research, HHS CO has substantial discretion to select between the three programs (8(a), HUBZone, or SDVOSB) before selecting to use a small business set-aside. And the final decision must be documented.

Procurements that are already in the 8(a) Program will remain in the 8(a) program unless released by SBA.

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Content created by Assist. Sec./Financial Resources - Small/Disadvantaged Business
Content last reviewed on July 25, 2014