SDVOSB Set-Asides and the VA: How Veteran-Owned Businesses Win VA Contracts

Why the VA Is a Different Case

Every federal agency can set aside contracts for SDVOSB firms under the SBA's government-wide program (15 U.S.C. § 657f, implemented through FAR Part 19). That program is discretionary in the sense that a contracting officer weighs it alongside 8(a), HUBZone, and WOSB set-asides with no fixed order of preference among them.

The VA operates under a separate law: 38 U.S.C. §§ 8127-8128, part of the Veterans Benefits, Health Care, and Information Technology Act of 2006. This authority created what the VA still calls the Veterans First Contracting Program, and it does two things the general SBA program doesn't. First, it makes the SDVOSB/VOSB preference mandatory rather than discretionary — VA contracting officers must apply it before considering any other acquisition method. Second, it puts SDVOSB and VOSB ahead of every other socioeconomic category specifically at the VA, a hierarchy that exists nowhere else in government.

This isn't a theoretical distinction. In Kingdomware Technologies, Inc. v. United States (2016), the Supreme Court ruled unanimously that the VA must apply its Rule of Two to virtually every acquisition — including orders placed against existing Federal Supply Schedule contracts — not just open-market purchases. The VA had argued it could skip the veteran preference when buying off an existing schedule. The Court disagreed. That ruling is why VA contracting officers today treat the SDVOSB/VOSB sequence as a legal obligation, not a best practice.

Verification: Where Things Stand in 2026

If you need a refresher on eligibility and the certification process itself, our SDVOSB certification guide covers it in full. The short version relevant to VA work: certification authority moved from the VA's Center for Verification and Evaluation (CVE) to the SBA on January 1, 2023. Applications now go through the SBA's Veteran Small Business Certification program (VetCert) at veterans.certify.sba.gov, and self-certification was eliminated — as of December 22, 2024, only firms certified through VetCert count toward SDVOSB awards and goals, for VA contracts as much as anywhere else.

The VA's own VetBiz portal (vetbiz.va.gov) is still active, but its role has changed. It no longer verifies SDVOSB or VOSB status — that's the SBA's job now, with the SBA's Dynamic Small Business Search (DSBS) serving as the public system of record contracting officers check. VetBiz has repositioned as a business development hub: procurement forecasts, training programs, and the events calendar for OSDBU-hosted industry days, which matters more for winning VA work than the portal ever did as a certification tool.

The VA's Rule of Two — With Its Own Order of Priority

Under VAAR 819.7005, VA contracting officers work through a fixed sequence before they can move to full and open competition. It runs like this:

• 1. SDVOSB set-aside. The contracting officer must first determine whether at least two SDVOSB firms can perform the work at a fair and reasonable price. If so, the contract is set aside for SDVOSBs — full stop.
• 2. VOSB set-aside. If the Rule of Two can't be met with SDVOSBs, the officer checks whether it can be met with VOSB firms (veteran-owned, no disability requirement).
• 3. Other SBA socioeconomic set-asides. Only after SDVOSB and VOSB are ruled out does the officer move to 8(a), HUBZone, WOSB, or general small business set-asides under FAR Part 19 — the same programs that get no order of precedence at other agencies.
• 4. Full and open competition. The last resort, used only when none of the above can satisfy the Rule of Two.

Compare that to a typical civilian agency, where FAR 19.203 tells a contracting officer to consider 8(a), HUBZone, SDVOSB, and WOSB set-asides as a group with no mandated order. At the VA, SDVOSB firms get first look at nearly everything the agency buys, ahead of every other certification. That's the single biggest structural advantage SDVOSB status carries at the VA compared to anywhere else in government.

VA Sole-Source Authority: A Flatter, Not Necessarily Higher, Threshold

Sole-source authority lets a contracting officer award directly to one SDVOSB firm without a competition, provided the price is fair and reasonable. Both the SBA's government-wide program and the VA's own authority allow this, but the dollar thresholds don't track each other exactly — and the difference is worth understanding before you assume a number from one context applies to the other.

Under the VA's own authority (VAAR 819.7008 and 819.7009), a contracting officer can sole-source to a certified SDVOSB or VOSB when the anticipated award price — including options — will not exceed $5 million. That figure is flat: it applies the same way regardless of whether the work falls under a services NAICS code or a manufacturing NAICS code.

The government-wide threshold under FAR 19.1406 works differently. Following the October 1, 2025 inflation adjustment, the general SDVOSB sole-source ceiling sits at $5 million for most NAICS codes but rises to $8.5 million for manufacturing requirements. In practice, that means the VA's sole-source cap now lines up with the government-wide services threshold, but the VA does not get the higher manufacturing allowance that applies elsewhere. For services work — which is the overwhelming majority of what SDVOSB firms sell to the VA — the number to know is $5 million either way.

How Much VA Work Actually Goes to SDVOSBs

The government-wide statutory SDVOSB contracting goal was raised from 3% to 5% of prime and subcontract dollars under the FY2024 National Defense Authorization Act (P.L. 118-31). The VA sets its own internal goal well above that — 15% of prime contract dollars — and has consistently reported performance above even its own target.

For FY2024, the VA reported roughly $10.2 billion, or about 23% of total prime contract dollars, awarded to SDVOSB firms — more than four times the government-wide statutory goal — spread across more than 2,300 SDVOSB firms. Those figures come from the VA's own reporting and the SBA's procurement scorecard process, and they move year to year, so treat the exact percentage as directional rather than a number to bid a proposal against. The consistent pattern across recent fiscal years is the point: this isn't a token preference. It's a substantial share of one of the largest civilian contracting budgets in government.

Where to Find VA-Specific Opportunities

SAM.gov remains the base layer — filter by agency (Department of Veterans Affairs) and set-aside type (SDVOSB) the same way you would for any other agency. But VA-specific channels surface opportunities earlier, before they become a formal solicitation:

• VA Forecast of Contracting Opportunities. A rolling, agency-published list of anticipated procurements, often 6-18 months before a solicitation posts. Reviewing it by VISN (Veterans Integrated Service Network) or program office tells you what's coming before your competitors start paying attention.
• Sources sought notices and RFIs. The VA uses these heavily to conduct market research and confirm whether a Rule of Two set-aside is realistic. Responding well is one of the few ways to influence how a requirement gets structured before it's locked in — see our guide to responding to sources sought notices for how to do this well.
• OSDBU industry days and office hours. The VA's Office of Small and Disadvantaged Business Utilization, working with program offices like the Technology Acquisition Center, regularly hosts industry days and recurring office hours tied to specific procurement pipelines. These are direct access to the people who write requirements.

VA's IT and Healthcare Portfolio: Concrete Target Areas

The VA is one of the largest civilian IT and healthcare buyers in the federal government, and several long-running modernization efforts create durable, recurring demand rather than one-off contracts. If you're building a VA-focused pipeline, these are the programs worth tracking. (For the broader federal IT contracting landscape — NAICS codes, GWACs, and set-asides across agencies — see our government IT contracts guide.)

Electronic Health Record Modernization (EHRM)

The VA's move to a common Oracle Health electronic health record has been the agency's highest-profile IT program for years, and it has not gone smoothly — a multi-year pause in new site deployments followed early rollout problems. Deployments resumed in 2026, rolling out in waves to additional VA medical centers across several states over the course of the year. Every wave generates infrastructure, integration, training, and support work at the local and regional level, much of it sized for small businesses rather than the prime integrator alone.

VistA, Still the Backbone

EHRM is a multi-year rollout, and the large majority of VA medical centers continue to run on VistA, the VA's decades-old legacy electronic health record system, while the transition proceeds facility by facility. That means real, ongoing demand for VistA sustainment, interoperability work between VistA and the new EHR at transitioning sites, and legacy system support — work that will persist for years even as EHRM expands.

Telehealth

VA telehealth infrastructure — home telehealth platforms, virtual care tools, and the technology supporting remote clinical delivery — has been a sustained investment area independent of the EHRM timeline, with contract activity spanning both large national platform awards and smaller regional and facility-level telehealth support work.

T4NG2

Transformation Twenty-One Total Technology Next Generation 2 (T4NG2) is the VA's flagship multi-award IT and health IT services vehicle, run by the VA Technology Acquisition Center, covering systems integration, software development, cybersecurity, and program management. A substantial share of the awarded prime slots are reserved for SDVOSB firms. If you're not one of the primes, subcontracting under a T4NG2 holder is a realistic entry point into recurring VA IT task order work — worth confirming current details directly with the VA Technology Acquisition Center, since large IDIQ vehicles periodically add or substitute awardees.

Positioning: Build the Relationship Before You Bid

Certification and a SAM.gov search alert get you visibility. Winning VA work consistently takes more than that.

Show Up to OSDBU Events

The VA's OSDBU runs vendor days, industry days, and recurring office hours tied to specific program offices — VA Office of Information and Technology events are a good example of a recurring, program-specific series. These aren't generic networking events. Program office staff and contracting officers attend specifically to meet capable small businesses before a requirement is finalized. Showing up consistently, not just once, is what builds the kind of relationship that gets you a call when a sources sought notice goes out.

Understand VISN-Level Buying

A meaningful share of VA procurement happens at the regional and facility level, not centrally. Building relationships with contracting staff at the VISN or medical center level — not just VA Central Office — surfaces smaller, less-competed opportunities that never generate the attention a national award does.

Respond to Market Research, Every Time

Because the Rule of Two is mandatory at the VA, contracting officers have a real incentive to find out whether enough SDVOSB firms exist to support a set-aside — and they do that primarily through sources sought notices and RFIs. A well-written response doesn't just express interest; it gives the contracting officer defensible evidence that the Rule of Two can be met with SDVOSB firms, which is exactly what they need to justify the set-aside instead of defaulting to full and open competition.

Don't Skip Subcontracting

T4NG2 and other VA IDIQ vehicles create a layer of subcontracting demand that's easy to overlook if you're focused only on prime opportunities. Prime holders on large VA vehicles need capable SDVOSB subcontractors to meet both contractual requirements and their own past performance goals — a practical way to build a VA track record before you compete as a prime.

How GovConToday Tracks VA Opportunities

GovConToday scans SAM.gov daily and matches new opportunities to your NAICS codes, set-aside certifications, and preferences — including SDVOSB. If VA is a priority buyer for your firm, set your certifications and NAICS codes once and your dashboard surfaces new VA SDVOSB set-asides alongside everything else you're tracking, without you running manual searches or checking the VA forecast page by hand every week.

Key Takeaways

• The VA operates under its own statutory authority (38 U.S.C. §§ 8127-8128, the Veterans First Contracting Program) — separate from and stronger than the SBA's general government-wide SDVOSB program. It's mandatory, not discretionary, per the Supreme Court's Kingdomware ruling.
• VA contracting officers must apply a fixed order of priority: SDVOSB first, VOSB second, other SBA socioeconomic set-asides third, full and open competition last. No other agency uses this sequence.
• VA sole-source authority caps at $5 million flat (services and manufacturing alike) under VAAR 819.7008/819.7009 — aligned with, but not identical to, the current government-wide FAR 19.1406 thresholds of $5M services / $8.5M manufacturing.
• Certification runs through the SBA's VetCert (veterans.certify.sba.gov), not the VA directly — the VA's legacy CVE program was folded into VetCert in 2023, and self-certification was eliminated at the end of 2024.
• The VA has consistently awarded well above both the government-wide and its own internal SDVOSB goals in recent fiscal years — this is a real, substantial share of agency spending, not a symbolic preference.
• EHRM, VistA sustainment, telehealth, and the T4NG2 IDIQ are concrete, recurring VA IT and healthcare target areas for SDVOSB firms, as primes or subcontractors.
• Certification and search alerts aren't enough — win rates improve with OSDBU relationship-building, VISN-level engagement, and consistent responses to sources sought notices.