Disabled Veteran Businesses Get Five Percent Preference in State Contracting: 2009 Wis. Act 299

On May 12, 2010, Governor Doyle signed into law 2009 Assembly Bill 228. Act 299 modifies the statute granting minority-owned businesses a five percent preference on state contract bids and proposals by adding the category of service-related veteran-owned small businesses (SDVOSBs). The Act does not allow “stacking,” however. That is, if a business qualifies as both an SDVOSB and a minority-owned business, preferences cannot be combined, but rather, only a single five percent preference will apply.

Under the newly created Wis. Stat. § 560.0335, the definition of a disabled veteran for purposes of certification is a veteran who, at the time of application for certification, is a resident of the state of Wisconsin and is in receipt of a U.S. Department of Veterans Affairs disability rating of at least 30 percent. The Wisconsin Department of Commerce is responsible for certifying businesses as SDVOSBs and the certification process would be similar to that for minority-owned business certification under Wis. Stat. § 560.036. Requirements for certification as an SDVOSB are:

1. One or more disabled veterans have a 51 percent or more ownership in the business, or if the business is publicly owned, 51 percent or more of the stock
2. One or more disabled veterans have management control of the business
3. The principal place of business is in Wisconsin
4. The business is “currently performing a useful business purpose”

Under this new law, state agencies that are subject to the requirement to make purchases through a competitive bidding process or by competitive sealed proposals will be allowed, but not required, to accept a bid or proposal from an SDVOSB that is no more than five percent higher than the apparent low bid or most advantageous proposal. Additionally, the state agency responsible for contracting public debt by competitive sale will be required to “make efforts to ensure that a portion of the total public indebtedness contracted in each fiscal year is underwritten by disabled veteran-owned investment firms.” Finally, the Department of Commerce will “develop, maintain and keep current” a disabled veteran-owned business database.

Under the previous preference law relating only to minority-owned businesses, in addition to the five percent preference, the state had also established goals for the number of bids that should be given to minority-owned businesses each year. Act 299 provides no such goals for SDVOSBs. Act 299 is also distinguishable from federal procurement requirements for service-disabled veterans who own (SDVO) small business concerns (SBC). Under federal law, sole source and set aside contracts are available for SDVO SBCs, but no price preference is allowed. Additionally, while federal law provides for certification of the veteran business owner with any percentage of disability, zero to 100 percent, Act 299 requires that the veteran have a disability rating of 30 percent or greater to qualify.

Wisconsin Stat. § 560.0335 becomes effective on May 27, 2010. The remainder of the Act becomes effective on November 1, 2010.