How SDVOSB Sole Source Awards Work: A Guide for Contracting Officers

What Is an SDVOSB Sole Source Award?

A sole source award to a Service-Disabled Veteran-Owned Small Business (SDVOSB) is a contract awarded without full and open competition to a firm that is verified and eligible under the SDVOSB program. Rather than posting a competitive solicitation, the contracting officer (CO) may proceed directly to a single qualified SDVOSB when specific statutory conditions are satisfied.

This is not a workaround or a loophole — it is a deliberate policy tool Congress created to advance veteran entrepreneurship in federal procurement.

Two Separate Statutory Pathways

Pathway 1: VAAR 819.7008 — VA Acquisitions

For the Department of Veterans Affairs, the governing authority is the Veterans Affairs Acquisition Regulation (VAAR) Part 819.7008, implementing the Veterans Benefits, Health Care, and Information Technology Act of 2006.

Under VAAR 819.7008, a VA contracting officer may award a sole source contract to a verified SDVOSB when:

The estimated value does not exceed $5 million for services or $7 million for manufacturing

Market research indicates there is not a reasonable expectation of receiving offers from two or more SDVOSBs at fair market price

The award can be made at a fair and reasonable price

The firm is verified in the SBA's certification database (currently certify.sba.gov)

The VA applies a "Rule of Two" cascade: before opening competition to any other set-aside category, the CO must determine whether SDVOSB or VOSB set-asides are feasible. Sole source is available within this SDVOSB-first framework.

Pathway 2: FAR 19.1406 — DoD and Civilian Agencies

For all other federal agencies — including all Department of Defense components and civilian departments outside VA — the applicable authority is FAR 19.1406 (implemented by the National Defense Authorization Act and subsequent statutory updates).

Under FAR 19.1406, a CO may award a sole source contract to an SDVOSB when:

The anticipated award value does not exceed $5.5 million (current threshold across most NAICS codes; manufacturing and construction thresholds may differ)

There is no reasonable expectation of two or more capable SDVOSBs submitting offers at a fair and reasonable price

The firm appears in SAM.gov as an active registrant with SDVOSB status verified through SBA

The dollar thresholds are adjusted periodically via Federal Acquisition Circular. COs should confirm current thresholds in the FAR supplement applicable to their agency.

The Justification and Approval (J&A) Process

Unlike a full and open competition, a sole source SDVOSB award requires a written justification. The CO must document:

Nature of the acquisition — a description of the requirement

Statutory authority — cite VAAR 819.7008 or FAR 19.1406 explicitly

Unique capability — why this particular SDVOSB can fulfill the requirement

Market research findings — evidence that a second qualified firm is unlikely to respond

Fair and reasonable price determination — how the CO established that the price is acceptable (prior contracts, catalog pricing, independent government cost estimates, or price analysis)

The J&A does not require agency-head approval for awards within the applicable thresholds — it is a CO-level action. However, it must be retained in the contract file and is subject to audit.

Verifying SDVOSB Eligibility

Before awarding, COs must confirm the firm's eligibility through two checks:

certify.sba.gov — as of January 2023, SBA assumed responsibility for all SDVOSB and VOSB verification from the VA's legacy VIP database. The SBA certification must be active.

SAM.gov — the firm must have an active registration with SDVOSB status reflected. An expired SAM registration, even with valid SBA certification, blocks award.

Do not rely on self-representation alone. Both databases must confirm active status at the time of award.

When Should a CO Use Sole Source?

Sole source is appropriate — and often efficient — when:

The requirement is time-sensitive and competition would cause unacceptable delay

Market research identifies only one qualified SDVOSB capable of performing the work within the required timeframe

The value falls within the statutory threshold and a fair price can be established independently

A prior competitive acquisition identified a single responsive SDVOSB and the follow-on requirement is similar in scope

Sole source is not a mechanism for circumventing competition when two or more SDVOSBs are realistically available. Agencies that routinely bypass competition draw OIG scrutiny and may face findings during contract audits.

Key Takeaways for Contracting Officers

SDVOSB sole source authority is a legitimate, efficient procurement tool available at both the VA (VAAR 819.7008) and across all federal agencies (FAR 19.1406). Used correctly — with verified eligibility, a documented J&A, and a fair price determination — it supports the government's statutory veteran-contracting goals without sacrificing accountability.

Corelon Federal Supplies & Solutions is SBA-verified as an SDVOSB and maintains an active SAM.gov registration. Contracting officers with requirements in IT products, federal supply chain, and related services are encouraged to inquire about sole source eligibility.