Starting a Veteran-Owned Government Contractor (SDVOSB): Complete Guide

The federal government wants to do business with veteran-owned companies. In fact, there's a statutory goal that 3% of all federal contracting dollars go to Service-Disabled Veteran-Owned Small Businesses (SDVOSBs). That represents billions of dollars annually in opportunities specifically set aside for veteran entrepreneurs.

If you're a service-disabled veteran considering government contracting, this guide covers what you need to know to get started.

Understanding Veteran Business Certifications

SDVOSB (Service-Disabled Veteran-Owned Small Business)

Definition:

• Owned 51%+ by service-disabled veteran(s)
• Controlled by service-disabled veteran(s)
• Service-connected disability (any percentage)
• Small business by SBA size standards

Benefits:

• Sole-source contracts up to $5 million
• Set-aside competitions
• Evaluation preferences
• Access to specialized opportunities

VOSB (Veteran-Owned Small Business)

Definition:

• Owned 51%+ by veteran(s)
• Controlled by veteran(s)
• No disability requirement
• Small business by size standards

Benefits:

• Fewer set-asides than SDVOSB
• Still valuable for some opportunities
• Pathway to other certifications

VA Verification vs. SBA Certification

SBA Certification (Veteran Small Business Certification Program):

• Government-wide certification
• Required for most SDVOSB set-asides
• Rigorous review process
• Valid for 3 years

VA Verification (VetCert):

• Specific to VA contracts
• Now administered by SBA
• Required for VA set-asides
• Must meet SBA requirements

Eligibility Requirements

Service-Disabled Veteran

Must have:

• Honorable discharge
• Service-connected disability rating from VA
• Any percentage qualifies (even 0%)

Documentation:

• DD-214
• VA disability rating letter
• Benefits summary letter

Ownership Requirements

51% unconditional ownership by:

• Service-disabled veteran(s)
• Must be direct ownership (not through trusts, etc.)
• Control of business decisions

Control Requirements

Service-disabled veteran must:

• Hold highest officer position
• Control day-to-day operations
• Make long-term decisions
• Have management experience for the work

Small Business Size

Must meet SBA size standards:

• Varies by NAICS code
• Based on annual receipts or employees
• Check specific NAICS codes for your industry

Getting Certified

Step 1: Prepare Your Business

Before applying:

• Business formation: Establish legal entity (LLC, Corporation)
• Operating agreement/bylaws: Document veteran ownership and control
• Business plan: Show capability and experience
• Financial records: Demonstrate business operations

Step 2: Register in Government Systems

Required registrations:

SAM.gov (System for Award Management):

• Required for any federal contracting
• Free registration
• Renew annually
• Get your Unique Entity ID (UEI)

DSBS (Dynamic Small Business Search):

• SBA's small business database
• Free profile
• Helps agencies find you

Step 3: Apply for SBA Certification

Application through certify.sba.gov:

Documentation required:

• Birth certificate or passport
• DD-214
• VA disability rating letter
• Business formation documents
• Operating agreement/bylaws
• Tax returns
• Bank statements
• Resume showing relevant experience
• Additional documentation as requested

Timeline:

• 90-day processing goal
• Can take longer
• Respond promptly to requests

Step 4: Maintain Certification

Ongoing requirements:

• Annual recertification
• Report changes immediately
• Maintain eligibility
• Keep documentation current

Finding Government Opportunities

Set-Aside Contracts

SDVOSB set-asides:

• Contracts reserved for SDVOSB competition only
• Can be any size (though typically smaller)
• Must have certified SDVOSB status

Sole-source contracts:

• Direct award without competition
• Up to $5 million
• Agency must justify
• Requires certified SDVOSB

Where to Find Opportunities

SAM.gov:

• Primary federal opportunity site
• Search by SDVOSB set-aside
• Filter by NAICS code
• Set up alerts

Agency procurement forecasts:

• Each agency publishes anticipated needs
• Plan ahead for large opportunities
• Build relationships early

GovWin/Deltek:

• Commercial intelligence service
• Paid but valuable
• Earlier visibility into opportunities

SubNet:

• SBA's subcontracting database
• Prime contractors seeking subs
• Path to larger contracts

VA-Specific Opportunities

Veterans First Contracting Program:

• VA prioritizes SDVOSB/VOSB
• Largest federal buyer from veteran businesses
• Significant opportunities
• Must be VetCert verified

Winning Government Contracts

Capability Statement

Essential marketing tool:

• One-page summary of your company
• Core competencies
• Past performance
• Differentiators
• Contact information
• SDVOSB certification status
• NAICS codes

Past Performance

Building your track record:

• Start small
• Subcontracting builds experience
• Commercial work counts
• Document everything
• Collect references

Pricing Strategy

Understanding government pricing:

• Cost-plus vs. fixed-price
• Labor rates must be justified
• Competitive but sustainable
• Know your costs thoroughly

Proposal Writing

Winning proposals:

• Follow instructions exactly
• Answer all requirements
• Demonstrate understanding
• Show capability
• Highlight veteran ownership advantage
• Professional presentation

Compliance Requirements

Limitations on Subcontracting

SDVOSB prime contractors must:

• Perform certain percentage of work themselves
• Services: 50% of cost of contract performance
• Supplies: 50% of cost of manufacturing
• General construction: 15% of cost with own employees
• Construction (specialty): 25% with own employees

Joint Ventures

SDVOSB joint ventures:

• Can partner with larger companies
• Must meet specific requirements
• SDVOSB must control joint venture
• Approved mentor-protégé arrangements available

Reporting Requirements

Ongoing compliance:

• Report accurately
• Maintain eligibility
• Document veteran control
• Annual certification update

Building Your Business

Starting Out

Recommended approach:

1. Subcontracting first:

   • Work for prime contractors
   • Build past performance
   • Learn government processes
   • Develop relationships

2. Small contracts:

   • Micro-purchases (under $10,000)
   • GSA Schedule (see our guide)
   • Set-aside competitions
   • Build steadily

3. Grow strategically:

   • Expand capabilities
   • Hire carefully
   • Maintain quality
   • Protect your certification

Key Success Factors

What makes SDVOSB contractors successful:

Technical capability:

• Deliver quality work
• Meet deadlines
• Solve problems
• Exceed expectations

Business acumen:

• Know your costs
• Price appropriately
• Manage cash flow
• Plan for growth

Relationship building:

• Attend industry days
• Meet contracting officers
• Partner strategically
• Join industry associations

Compliance focus:

• Follow the rules
• Document everything
• Report accurately
• Maintain eligibility

Common Mistakes to Avoid

Pitfalls for new SDVOSB contractors:

• Underbidding: Winning contracts you can't afford to perform
• Overcommitting: Taking more than you can handle
• Poor documentation: Not tracking costs and performance
• Certification issues: Failing to maintain eligibility
• Cash flow problems: Government pays slowly; plan accordingly
• Ignoring compliance: Violations can be serious

Resources for Veteran Entrepreneurs

SBA Resources

Veterans Business Outreach Centers (VBOCs):

• Free counseling
• Training programs
• Business development
• Transition assistance
• vboc.org

SCORE:

• Free mentoring
• Veteran-specific programs
• Business workshops
• score.org

Small Business Development Centers (SBDCs):

• Business counseling
• Training
• Market research
• Local resources

Procurement Technical Assistance Centers (PTACs)

Free government contracting assistance:

• Proposal support
• Registration help
• Opportunity identification
• Compliance guidance
• aptac-us.org

Veteran Business Organizations

National Veteran Business Development Council:

• Certification program
• Corporate connections
• Networking
• nvbdc.org

American Legion:

• Small business resources
• Networking
• Advocacy
• legion.org

VetFran:

• Franchise opportunities
• Veteran discounts
• Business ownership path
• vetfran.org

Financial Considerations

Startup Costs

Budget for:

• Legal entity formation
• Accounting/legal support
• Insurance
• Registration fees
• Marketing materials
• Initial operations

Funding Sources

Capital for veteran businesses:

SBA loans:

• 7(a) loans
• 504 loans
• Microloans
• Veteran fee waivers

VA programs:

• Not direct loans, but assistance programs
• Veteran Readiness and Employment (VR&E) — the Ch. 31 self-employment track can help fund a veteran-owned startup

Private lenders:

• Banks with veteran programs
• CDFIs
• Alternative lenders

Personal/friends/family:

• Common startup source
• Be careful with structure

Managing Cash Flow

Government contracts and cash:

• Government pays in 30+ days
• Need working capital
• Plan for slow payments
• Consider invoice financing

The Bottom Line

Starting an SDVOSB can be rewarding:

• Significant opportunities in billions of set-aside dollars
• Competitive advantage from certification
• Mission continuation serving government
• Wealth building through business ownership
• Veteran community support and networking

But it requires:

• Real capability to deliver quality work
• Business acumen to manage operations
• Compliance focus to maintain certification
• Patience to build track record
• Capital to sustain operations

If you have a service-connected disability, relevant experience, and entrepreneurial drive, SDVOSB certification can open significant doors.

Start at sba.gov/veterans and certify.sba.gov

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Looking for other ways to leverage your veteran status in government work? Explore GSA Schedule contracts or federal employment options.

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Sources: USAJobs.gov, OPM Veterans Preference, VA Employment Center