Veteran Full Time Employment in Other Businesses

We received many questions in response to our September 4th newsletter on how full-time employment in another business would impact Veteran Administration (VA) certification as a SDVOSB or VOSB. For example, one veteran business owner wondered if he took a job with SAIC full-time to generate an income to build his business, would the VA recertify his business?
Business experts frequently advise new business owners to not to give up their day job at the start of their business. On the other hand, the VA rules are restrictive regarding other employment. It is important to note that the burden is on the applicant or participant to demonstrate his or her ability to control the business while employed by another entity. The Veteran’s ability to control the business will not be presumed.
The Government Accountability Office (GAO) identified this issue in a report that found that a veteran cannot control a business while concurrently having a separate full-time job that operates during the same normal business hours as the applicant business (Source: GAO Report GAO-10-108: Service-Disabled Veteran-Owned Small Business Program–Case Studies Show Fraud and Abuse Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts, October 2009).
This high standard for control often results in a denial of certification or recertification.
To obtain certification or recertification, the Veteran must provide the Center for Verification and Evaluation (CVE) with a written explanation that demonstrates that the outside employment does not affect his/her ability to manage and control the applicant or participant.

This statement should include examples of how the Veteran is responsible without delegating material elements of control.  Failure to provide a detailed explanation may result in a denial. The determination as to whether or not outside employment will bar inclusion in the VetBiz Vendor Information Pages (VIP) database is decided on a case-by-case basis. The decision is based upon lack of control and the particular facts and circumstances.

One common reason an applicant does not receive verified status is if the Veteran lists on his/her résumé that he/she currently holds a position other than that in the applicant and does not provide a written explanation demonstrating that the outside employment does not affect his/her ability to manage and control the applicant.
Accordingly, the burden is heavy to establish that full-time employment in another business does not vitiate management and control of the veteran enterprise. The written explanation justifying the outside employment must be carefully drafted.