The federal government has established a goal to award at least 5% of all federal contracting dollars to Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) each year. This initiative provides significant opportunities for veteran entrepreneurs to secure lucrative government contracts and grow their businesses. However, many firms struggle to win awards due to recurring errors in the bidding process.
Experts said that most SDVOSBs lose bids because of certification issues, non-compliant proposals, and unrealistic pricing rather than a lack of capability. Addressing these mistakes requires a disciplined approach to documentation and proposal management. Successful contractors often utilize systematic checklists to ensure every requirement is met before submission.
Understanding the specific pitfalls of the SDVOSB program is critical for long-term success. Firms that identify and correct these errors can dramatically improve their win rates and avoid the risk of bid protests. The following sections outline the seven most common mistakes and provide actionable solutions for each.
1. Inaccurate VetCert Documentation
The Small Business Administration (SBA) recently took over the certification process from the Department of Veterans Affairs, introducing the VetCert program. Many firms fail to submit accurate, complete, or consistent documentation during this transition. This can lead to certification denials or disqualification during the bid evaluation phase.
Contracting officers said that inconsistencies between a firm’s operating agreements and its SDVOSB claims are a frequent cause for rejection. Businesses must ensure that the service-disabled veteran genuinely owns at least 51% of the company. They must also demonstrate that the veteran exercises day-to-day management and long-term decision-making control.
To fix this, firms should build a comprehensive document checklist for the VetCert process. This list should include ownership agreements, disability documentation, tax records, and resumes of key personnel. Keeping these files current is essential as any change in ownership or control must be reported immediately to the SBA.
2. Incomplete or Inaccurate SAM Registration
A major hurdle for many small businesses is the maintenance of their System for Award Management (SAM) profile. Many SDVOSBs fail to complete or update their SAM registration correctly, which makes them ineligible for awards. An inactive or expired registration will result in an automatic rejection by most federal agencies.
Officials said that wrong North American Industry Classification System (NAICS) codes are among the most common errors in SAM profiles. These codes determine whether a business qualifies as "small" for a specific set-aside opportunity. If the NAICS code in the proposal does not match the firm's SAM profile, the bid may be deemed non-responsive.
Contractors should verify that their SAM registration is active and accurate before submitting any bid. It is also important to align the SAM profile with the firm's SDVOSB strategy. This includes selecting the core NAICS codes that match target opportunities and ensuring all representations and certifications are up to date.
3. Chasing Inappropriate Opportunities
Many SDVOSBs attempt to bid on every opportunity labeled as a set-aside without evaluating their own capabilities. This "shotgun" approach often leads to a low win rate and wastes valuable internal resources. Bidding on contracts that do not fit the firm's size or scope can also damage its reputation with contracting officers.
Market researchers said that qualifying each opportunity before bidding is a hallmark of successful firms. Businesses should ask whether they meet the core requirements and if they have relevant past performance. They should also consider if they understand the specific mission of the agency issuing the contract.
The solution is to develop a "go/no-go" qualification process for every potential bid. Firms should focus on opportunities where their specific experience and SDVOSB status provide a clear competitive advantage. Studying agency forecasts and buying patterns can help contractors identify the most promising prospects.
4. Submitting Non-Compliant Proposals
Across all federal agencies, non-compliance with solicitation requirements is a leading reason for bid rejection. These errors often involve missing forms, ignoring formatting rules, or failing to meet page limits. Even a technically superior solution will be disqualified if the proposal does not strictly follow the Request for Proposal (RFP) instructions.
Federal procurement experts said that treating proposal compliance as an audit-driven process is necessary for success. This includes adhering to font sizes, margins, and the specific order of content requested by the agency. Late submissions, even by a few seconds, are almost always rejected without exception.
To fix this, firms should create a compliance matrix for every bid. This matrix acts as a checklist that tracks every requirement, attachment, and eligibility condition mentioned in the RFP. Double-checking the final package against this matrix before submission can prevent simple mistakes from resulting in a disqualification.
5. Unrealistic or Poorly Justified Pricing
Pricing errors can manifest as either "suicide bids" that are too low to be credible or bids that are too high to be competitive. Unrealistic pricing suggests to the government that the contractor does not fully understand the scope of work. This can lead to financial strain or poor performance if the contract is actually awarded.
Contracting officers said that pricing should be based on market data, historical awards, and defensible labor rates. If a firm's price is higher than the competition, it must clearly articulate the added value it provides. This value might include lower risk, better quality, or specialized veteran expertise that justifies the cost.
Successful SDVOSBs use historical contract data to inform their pricing strategies. They avoid underbidding just to win a contract, as this often leads to negative performance reviews. Instead, they focus on providing a "fair and reasonable" price that ensures both project success and company profitability.
6. Violating Limitations on Subcontracting
For set-aside awards, small businesses must comply with Federal Acquisition Regulation (FAR) limitations on subcontracting. Some SDVOSBs mistakenly over-subcontract the work, allowing larger firms to perform the majority of the contract. This violation can trigger investigations, loss of awards, and potential debarment from federal contracting.
Legal experts said that monitoring workshare is essential to staying compliant with FAR 52.219-14. In most service contracts, the SDVOSB must perform at least 50% of the cost of the contract with its own employees. Understanding these percentages is vital when forming teaming agreements or joint ventures.
To address this, contractors should track their workshare throughout the duration of the project. Teaming agreements should be structured specifically to preserve SDVOSB control and meet SBA requirements. Proper internal controls can help ensure that the firm remains the primary performer of the work as required by law.
7. Weak Presentation of Past Performance
SDVOSBs often have limited federal past performance and fail to effectively present their commercial experience. This creates a perceived risk for the government, which prefers contractors with a proven track record. Many firms also fail to provide detailed contact information for references, making it difficult for evaluators to verify their work.
Business development consultants said that firms can leverage teaming and joint ventures to mitigate a lack of past performance. By partnering with more experienced firms, an SDVOSB can "borrow" relevant experience while still fulfilling the set-aside requirements. It is also helpful to translate commercial projects into "federal language" that speaks to government needs.
Firms should maintain a well-organized portfolio of all previous projects and performance reviews. This includes documenting how non-federal work meets the scale and complexity of the current bid. Regularly checking and updating veterans affairs news can also help firms stay informed about new ways to demonstrate their capabilities.
For more updates on government contracting and federal policy, readers can visit the USGov.News articles page or subscribe to the daily newsletter.
