38 U.S.C. § 8127
Veterans First Contracting Program (Department of Veterans Affairs)
In Plain English
38 U.S.C. § 8127 is the law that makes the Department of Veterans Affairs the most veteran-friendly buyer in the federal government. It directs the VA to use a 'Veterans First' contracting hierarchy that considers SDVOSBs first and VOSBs next — ahead of other socioeconomic categories — when the Rule of Two is met. This is the statutory basis for the VA's distinctive set-aside priority, and it is the reason VOSB-specific set-asides exist at the VA but not elsewhere.
Who It Applies To
- Contracting officers at the Department of Veterans Affairs conducting acquisitions.
- SDVOSBs and VOSBs competing for VA work under the Veterans First hierarchy.
- Firms weighing whether VA opportunities justify SDVOSB or VOSB certification.
Key Provisions
| Provision | What It Means |
|---|---|
| Priority for veteran-owned firms | The VA must give priority to SDVOSBs and then VOSBs when awarding contracts, applying a Rule of Two before considering other set-aside categories. |
| VA Rule of Two | If the contracting officer reasonably expects offers from two or more eligible veteran-owned firms at a fair and reasonable price, the requirement is set aside for them — and case law has made this Rule of Two mandatory at the VA, not discretionary. |
| Sole-source authority | The statute authorizes SDVOSB and VOSB sole-source awards at the VA up to defined thresholds when only one eligible firm can perform. |
| Certification requirement | To receive a Veterans First award, a firm must be certified — since 2023 through SBA VetCert under 13 CFR Part 128 — and remain small under the procurement's NAICS code. |
Common Pitfalls
- Assuming Veterans First priority applies governmentwide — it is unique to the VA; other agencies use FAR 19.14 and do not run VOSB set-asides.
- Believing the VA Rule of Two is discretionary — the Supreme Court's Kingdomware decision confirmed it is mandatory when the conditions are met.
- Overlooking that VOSB (non-disabled veteran) set-asides exist only at the VA.
- Forgetting that VA awards still require current SBA VetCert certification.
Frequently Asked
What is 38 U.S.C. § 8127?
It is the statute that establishes the VA's 'Veterans First' contracting program, directing the Department of Veterans Affairs to prioritize SDVOSBs and then VOSBs when awarding contracts under a Rule of Two.
Is the VA Rule of Two mandatory?
Yes. The U.S. Supreme Court's 2016 Kingdomware decision confirmed that the VA must apply the Rule of Two and set work aside for veteran-owned firms whenever two or more eligible firms are expected to bid at a fair and reasonable price.
Why can VOSBs win set-asides at the VA but not elsewhere?
Because 38 U.S.C. § 8127 is unique to the VA. Other agencies use FAR Subpart 19.14, which authorizes SDVOSB set-asides but not VOSB-specific set-asides. Only the VA runs set-asides for veteran-owned firms without a service-connected disability.
Primary Sources
Plain-English explainer, not legal advice. SDVOSB rules are still settling after the 2023 transfer of certification to the SBA, and federal acquisition dollar thresholds are periodically adjusted for inflation — verify current figures and procedures against the cited authority and your contracting officer before acting.
Change log (1)
- LaunchedPublished plain-English regulation explainers for 13 CFR Part 128 (VetCert), FAR Subpart 19.14, 13 CFR § 125.6 (limitations on subcontracting), 38 U.S.C. § 8127 (Veterans First), FAR 52.219-27, and 13 CFR Part 134 Subpart J (status protests) — each with a key-provisions table, common pitfalls, FAQPage and Legislation structured data, primary-source citations, and cross-links into the glossary, how-to guides, FAQ, and comparisons.