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Office of Small & Disadvantaged Business Utilization

Managerial Experience Brief

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Issue:  What type of managerial experience does a Veteran need to have?  How is the “extent and complexity” of managerial experience determined?

The Regulation

38 CFR § 74.4

(b) “…An applicant or participant’s management and daily business operations must be conducted by one or more Veterans or service-disabled Veterans.  Individuals managing the concern must have managerial experience of the extent and complexity needed to run the concern.  A Veteran need not have the technical expertise or possess a required license to be found to control an applicant or participant if he or she can demonstrate that he or she has ultimate managerial and supervisory control over those who possess the required licenses or technical expertise.  However, where a critical license is held by a non-Veteran having an equity interest in the applicant or participant firm, the non-Veteran may be found to control the firm. 

What This Means

  • The determination as to whether a Veteran meets the necessary managerial experience requirement is decided by evaluating the résumés and personal history statements of the Veteran owner(s) of the applicant.

  • The Center for Verification and Evaluation (CVE) considers the military service, the civilian work experience, and the educational background of the Veteran owner(s).

  • In many cases, the evaluation is straight forward.  The Veteran has military and/or work experience directly in the business field of the applicant.  An example:  Veteran served in the U.S. Army Corps of Engineers, then worked many years for a civilian general construction company as project manager, then formed his/her own construction company.

  • The Veteran owner(s) need not have direct experience in the field if the applicant’s submission includes other information supporting ultimate managerial and supervisory control.  For example, the Veteran has a Masters degree in Business Administration (MBA).

  • In applications where the Veteran’s résumé or personal history (1) does not reflect prior managerial experience, or shows no experience within the industry the applicant business operates within; the Veteran needs to provide further written explanation as to how he/she can effectively manage the applicant without undue reliance on non-Veteran(s) with applicable knowledge and experience.

Excerpts from Current Denial Letters

Example #1
“…for a concern to qualify as an SDVOSB, “…Individuals managing the concern must have managerial experience of the extent and complexity needed to run the concern.  A Veteran need not have the technical expertise…if he or she can demonstrate that he or she has ultimate managerial and supervisory control over those who possess the…technical expertise…” 38 CFR § 74.4(b).  The LLC’s website states that, “[o]ur primary expertise is the supply of clothing and textile products to the federal government as well as the private sector on an international scale.”  According to the service-disabled Veteran’s résumé, he has experience as an education benefits counselor with the Department of Veteran Affairs and as a Sales Representative at a car dealership.  His military service is unrelated to the clothing industry.  However, the résumés for the two non-Veteran owners indicate that they each have substantial years of experience in the clothing industry.  Based upon the documentation submitted, CVE cannot reasonably conclude that the service-disabled Veteran has the ultimate managerial and supervisory control over the much more experienced non-Veteran owners as is required by 38 CFR § 74.4(b).

Example #2
“…according to 38 CFR § 74.4(b), “[i]ndividuals managing the concern must have managerial experience of the extent and complexity needed to run the concern.”  The applicant business is a newly formed construction business.  The résumé for the service-disabled Veteran shows he is the current Owner/CEO of the applicant and that he was previously an elementary school teacher from 2006-2012.  From 2009-2011, the service-disabled Veteran owned and operated his own catering business and was enlisted in the U.S. Air Force from 1998-2003 as a Fire Protection Crew Chief.  The service-disabled Veteran holds a Bachelors Degree in Education.  The Veteran has not provided adequate explanation as to how his prior work experience and educational background would prepare him to manage a construction business on a day-to-day basis.  Therefore, the application provided by the service-disabled Veteran does not reflect the necessary experience needed to satisfy the control requirement of 38 CFR § 74.4(b).

*For Informational Purposes Only*

This information has been provided by CVE for general informational purposes and should not be construed as providing legal advice.  You should contact your attorney to obtain advice with respect to any particular issue or problem.  In addition, CVE makes no representation as to the accuracy or whether the above information is currently up-to-date.  All applicants must read the applicable regulations and determine how best to meet these requirements.  The Verification Assistance Briefs do not constitute legal notice or replace the regulations.

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