SDVOSB Set-Aside Contracts

What Is the SDVOSB Program?

The SDVOSB program is a federal set-aside program that reserves certain government contracts exclusively for small businesses owned and controlled by service-disabled veterans. The federal government has a statutory goal of awarding at least 3% of all federal contracting dollars to SDVOSBs, which amounts to tens of billions of dollars annually. The government has exceeded this 3% goal every year since FY2016.

Contracting officers across all federal agencies can set aside contracts for SDVOSBs. The Department of Veterans Affairs (VA) has an even more aggressive target, with a goal of awarding 15% of its contract dollars to SDVOSBs and VOSBs combined, making VA one of the most active agencies for veteran-owned businesses.

The SDVOSB program differs from the VOSB (Veteran-Owned Small Business) program. VOSB status is for veteran-owned businesses without a service-connected disability. While the VA has set-aside authority for both VOSBs and SDVOSBs, government-wide set-asides are available only for SDVOSBs. If you have a service-connected disability, always pursue the SDVOSB designation — it gives you access to a much larger pool of contract opportunities.

Eligibility Requirements

To qualify as an SDVOSB, your business must meet these criteria:

• 1.Veteran ownership. The business must be at least 51% owned and controlled by one or more service-disabled veterans. The veteran must hold the highest officer position (or equivalent) and must control the day-to-day management and decision-making. If the veteran owns the company but someone else runs it, the application will be denied.
• 2.Service-connected disability. The veteran must have a disability rating from the VA that was incurred or aggravated during active military service. Any disability rating of 0% or higher qualifies. A 0% rating means the VA acknowledges the condition is service-connected but it does not currently rise to a compensable level. You will need your VA disability rating letter as proof.
• 3.Small business size. The business must qualify as small under the SBA size standard for its primary NAICS code. Size standards vary by industry — for example, most IT services fall under a $34 million annual revenue threshold, while manufacturing typically uses a 500 to 1,500 employee count.
• 4.Unconditional ownership. Ownership must be direct and unconditional. The SBA examines whether the veteran's ownership interest is subject to conditions, executory agreements, voting trusts, or other arrangements that could compromise control. Stock options, convertible notes, or agreements that would dilute the veteran's ownership below 51% can disqualify you.

Important note on permanent disability: If the service-disabled veteran becomes permanently and totally disabled, the spouse or permanent caregiver may be permitted to control the day-to-day management while the veteran retains ownership. This provision ensures that severely disabled veterans are not excluded from the program.

How to Get Certified: Step-by-Step

As of January 1, 2023, all SDVOSBs must be certified through the SBA's Veterans Small Business Certification (VetCert) program. Previously, the VA managed its own verification process, but this has been consolidated under the SBA. Here is how to apply:

Sole-Source Thresholds and Benefits

• •Sole-source contracts up to $5 million for services and $7 million for manufacturing. This means a contracting officer can award a contract directly to your SDVOSB firm without competition. Note that the SDVOSB sole-source threshold for services ($5M) is higher than the 8(a) and WOSB thresholds ($4.5M), giving SDVOSBs an advantage for larger service contracts.
• •Competitive set-asides where only certified SDVOSBs can compete. For a competitive SDVOSB set-aside, the contracting officer must have a reasonable expectation that at least two SDVOSB firms will submit offers and that the award will be at a fair market price. This dramatically reduces the number of bidders compared to full and open competition.
• •3% government-wide goal ensures that agencies across the federal government actively seek out SDVOSB contractors to meet their statutory targets. Agency scorecards are published annually by the SBA, and agencies that miss their targets face pressure to increase SDVOSB awards.
• •VA's "Rule of Two" and 15% goal for SDVOSB and VOSB firms makes the Department of Veterans Affairs one of the best agencies for veteran-owned businesses. Under VA's "Veterans First" contracting program, the VA must first consider setting aside contracts for SDVOSBs and VOSBs before using any other contracting method. The VA awarded over $7.5 billion to SDVOSBs alone in FY2024.
• •Evaluation preference on some full-and-open contracts, where SDVOSB status can serve as a positive evaluation factor. Some agencies include SDVOSB participation as a rated criterion in their source selection evaluation.
• •Subcontracting preference since large prime contractors must include SDVOSB firms in their small business subcontracting plans for contracts over $750,000. Being SDVOSB certified makes you a more attractive teaming partner because primes need to demonstrate SDVOSB participation.

Top Federal Agencies for SDVOSB Contracts

While all federal agencies have SDVOSB contracting goals, some agencies consistently award more to veteran-owned businesses:

• •Department of Veterans Affairs (VA) — the single largest source of SDVOSB contracts, with its Veterans First contracting preference
• •Department of Defense (DoD) — by dollar volume, the largest buyer overall; the Army, Navy, and Air Force each have active SDVOSB programs
• •Department of Homeland Security (DHS) — consistently exceeds its SDVOSB goals, with strong demand for IT, security, and professional services
• •General Services Administration (GSA) — offers SDVOSB-specific vehicles like VETS 2 GWAC for IT services

Common Mistakes and Pitfalls

• ✗Not getting your VA disability rating documented. Some veterans do not file for a VA disability rating or allow their claim to go unresolved for years. Without an official VA disability rating letter, you cannot certify as SDVOSB. If you have not filed a claim, contact your local VA office or a Veterans Service Organization (VSO) to start the process.
• ✗Failing to demonstrate operational control. The SBA closely examines whether the veteran actually controls the business. If a non-veteran spouse, business partner, or employee appears to make key decisions, hold primary banking authority, or have a dominant role in operations, your application will likely be denied.
• ✗Only targeting VA contracts. While the VA is the most active agency for SDVOSB set-asides, every federal agency has a 3% SDVOSB goal. Limiting yourself to VA work means missing opportunities at DoD, DHS, GSA, and civilian agencies. Cast a wide net.
• ✗Letting VetCert certification lapse. SDVOSB certification must be renewed every three years. If it lapses, you immediately lose eligibility for SDVOSB set-asides. Mark your calendar at least 90 days before expiration.
• ✗Not stacking certifications. If you qualify for multiple programs (e.g., SDVOSB + 8(a), or SDVOSB + HUBZone), you should pursue all of them. Each certification opens up additional sole-source and set-aside contract opportunities. Take our Set-Aside Quiz to see which programs you qualify for.

Tips for Winning SDVOSB Contracts

• ✓Start with the VA. The VA's Veterans First program gives SDVOSBs preferential treatment. Research upcoming VA requirements through forecast databases and attend VA industry days.
• ✓Use the VETS 2 GWAC for IT work. If you provide IT products or services, the VETS 2 GWAC is a government-wide contract vehicle specifically for SDVOSBs. Getting on this vehicle gives you access to task orders from any federal agency.
• ✓Respond to Sources Sought notices. When agencies research whether to set aside a contract for SDVOSBs, they post Sources Sought notices on SAM.gov. Your response directly influences the contracting officer's decision to use an SDVOSB set-aside.
• ✓Leverage veteran networks. Organizations like the National Veteran Small Business Coalition (NVSBC) and the American Legion provide networking events, training, and matchmaking opportunities that connect veteran business owners with federal buyers.
• ✓Contact Procurement Technical Assistance Centers (PTACs). PTACs offer free counseling for government contractors, including help with VetCert applications, proposal review, and opportunity identification.

Frequently Asked Questions

Finding SDVOSB Opportunities

SDVOSB set-aside opportunities are posted on SAM.gov, where you can filter solicitations by set-aside type (look for "Service-Disabled Veteran-Owned Small Business Set-Aside" and "Service-Disabled Veteran-Owned Small Business Sole Source"). The VA also posts veteran-specific opportunities through its own procurement channels, including the VA eCMS (Electronic Contract Management System). Many state governments have parallel programs for veteran-owned businesses with their own procurement portals.

Rather than checking SAM.gov, VA portals, and 50 state procurement sites manually, GovSentry monitors all of these sources continuously. Set your SDVOSB certification and NAICS codes in your profile, and GovSentry will alert you the moment a matching SDVOSB opportunity is posted anywhere. Each alert includes AI-generated bid intelligence with incumbent analysis, pricing benchmarks, and win probability estimates.

Related Resources

• Small Business Government Contracts: Getting Started Guide
• 8(a) Set-Aside Contracts Guide
• WOSB Set-Aside Contracts Guide
• Department of Defense Contracts Guide
• Set-Aside Eligibility Quiz