SBA Revised Ownership and Control Standards for SDVOSB (Final Rule)
SBA updated 13 CFR Part 128 to clarify 'unconditional ownership' and 'control' requirements for SDVOSB eligibility. Key changes address managing member roles in LLCs, operating agreements, and supermajority voting thresholds.
Change log (3)
- Data refreshRe-checked rule statuses and comment deadlines against the latest Federal Register postings.
- Structured dataCross-linked related rules and added affected-area tags to each change.
- LaunchedPublished the tracker covering major 2023–2025 SBA/VA/DoD/FAR rule changes affecting SDVOSBs.
| Agency | Small Business Administration |
| Rule Type | Final Rule |
| Status | Effective |
| Published | 2024-03-14 |
| Effective Date | 2024-04-15 |
| FR Citation | 89 FR 18388 |
| Rule / Docket | RIN 3245-AH55 |
| Affected Areas | EligibilityCertificationCompliance |
Rule Details
SBA published a final rule amending 13 CFR Part 128 to clarify the ownership and control requirements that a service-disabled veteran must satisfy to certify a business as an SDVOSB. The rule addresses ambiguities that had generated protest activity and inconsistent certification outcomes.
The key changes include: (1) Clarification that 'unconditional' ownership means the veteran's ownership interest cannot be subject to any conditions, contingencies, or provisions that divest or limit control — including standard venture capital or investor protections that are common in operating agreements. (2) New guidance on LLC managing member roles, specifying that the service-disabled veteran must hold the managing member position and cannot be contractually restricted from exercising that authority. (3) Updated supermajority threshold rules, confirming that provisions requiring more than 51% approval for major business decisions may constitute a transfer of control away from the qualifying veteran.
The rule also clarifies the distinction between 'day-to-day management' (which the veteran must exercise) and 'long-term strategic decisions' (which may involve other stakeholders, within limits). SBA noted that some flexibility exists for veterans who are unable to perform certain management functions due to their disability.
Protests based on ownership and control are adjudicated by the SBA's Office of Hearings and Appeals (OHA). The rule aligns the standards previously applied in VA/CVE certifications with SBA's existing 8(a) and Women-Owned Small Business program control standards.
Frequently Asked Questions
What does SBA Revised Ownership and Control Standards for SDVOSB (Final Rule) mean for SDVOSBs?
SBA updated 13 CFR Part 128 to clarify 'unconditional ownership' and 'control' requirements for SDVOSB eligibility. Key changes address managing member roles in LLCs, operating agreements, and supermajority voting thresholds.
When does this rule take effect?
This rule has an effective date of 2024-04-15. SDVOSBs should update their compliance procedures and SAM.gov representations accordingly.
Where can I read the full text of 89 FR 18388?
The full text of this rule is published in the Federal Register under citation 89 FR 18388. You can search for it at federalregister.gov using the citation or docket number RIN 3245-AH55.