Verification Assistance Briefs (VAB)

In an effort to assist applicants in obtaining verification for the Veterans First program we provide the following Verification Assistance Briefs (VAB). We have developed VAB to clarify the rules associated with 38 CFR 74. They are based on an analysis of issues that cause the majority of denials.

Board Goverance

Documenting Control – Corporation Board Of Directors’ Governance

Issue:  Demonstrating control.
Board of Directors governance rules, usually found in Corporate Bylaws, is the number one reason why corporations are found to be ineligible for the Veterans First Procurement Program under Public Law (P.L.) 109-461. additional info

Trusts

Issue:  How can a firm be eligible if the Veteran owner establishes a Trust?

The Regulations

38 CFR § 74.3

• An applicant or participant must be at least 51 percent unconditionally and directly owned by one or more veterans or service-disabled veterans. additional info
  

Transfer Restrictions

Issue:  Can there be any restrictions on the veteran owners ability to transfer ownership of the frm?

The Regulations

38 CFR § 74.3 – As relating to the ownership requirements:

• (b) Ownership must be unconditional.  Ownership by one or more veterans or service-disabled veterans must be unconditional ownership.  Ownership must not be subject to conditions precedent, conditions subsequent, executory agreements, voting trusts, restrictions on assignments of voting rights, or other arrangements causing or potentially causing ownership benefits to go to another (other than after death or incapacity). additional info
  

Joint Ventures

Issue:  How can a Joint Venture be eligible for verification?

The Regulations

38 CFR § 74.1

• Joint venture is an association of two or more small business concerns to engage in and carry out a single, specific business venture for joint profit, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally.  For VA contracts, a joint venture must be in the form of a separate legal entity. additional info
  

Full Time Control

Issue:  Must I work full-time for the applicant firm? Can I hold outside employment?

The Regulations

38 CFR § 74.4

•  (c)(1) An applicant or participant must be controlled by one or more veterans or service-disabled veterans who possess requisite management capabilities.  Owners need not work full-time but must show sustained and significant time invested in the business. additional info
  

Fast Track

Issue: How can a verification application be expedited?

Regulatory Requirement:

Community Property

Issue:  How do Veterans in community property states demonstrate ownership and control?

Definition:
Community Property: All property or income acquired by either spouse during marriage is considered equally owned by both spouses for purposes of the division of the property upon death or divorce or for purposes of business transacted by either spouse. additional info