The Veterans Small Business Enhancement Act, signed into law in January 2019 as Public Law 115-416, lets SBA-certified veteran-owned small businesses acquire federal surplus property — equipment, vehicles, office furniture, tools, and other movable goods that federal agencies no longer need — through the same state-level distribution system that has long served public agencies and nonprofits.1Congress.gov. S.2679 – Veterans Small Business Enhancement Act of 2018 Before this law, for-profit veteran-owned businesses were shut out of surplus donations entirely.2Office of the Law Revision Counsel. 40 USC 549 – Donation of Personal Property Through State Agencies The implementing rules sit in 13 CFR Part 128, Subpart G.3eCFR. 13 CFR Part 128 Subpart G – Surplus Personal Property for Veteran-Owned Small Business Concerns
The property itself is essentially free. You pay a handling fee to the state agency that processes the transfer, not a purchase price, and you commit to actually using the item in your business for at least a year.
Who Qualifies
Your business needs SBA certification as either a Veteran-Owned Small Business (VOSB) or a Service-Disabled Veteran-Owned Small Business (SDVOSB). The core test is the same for both: one or more veterans must unconditionally and directly own at least 51 percent of the business, control its management and daily operations, and make the long-term decisions.4eCFR. 13 CFR Part 128 – Veteran Small Business Certification Program “Directly” means the veteran personally holds the equity and voting rights, not through a trust or holding company.
For SDVOSB status, the controlling veteran also needs a service-connected disability rating from the Department of Veterans Affairs.5Veterans Affairs. About Disability Ratings A veteran who is permanently and totally disabled and cannot run day-to-day operations can still qualify if a spouse or permanent caregiver handles management.6U.S. Small Business Administration. Veteran Contracting Assistance Programs
You also have to fit the SBA’s size standard for your industry. The thresholds are tied to your NAICS code and are stated as a maximum employee count or average annual revenue.7U.S. Small Business Administration. Table of Size Standards A construction firm and a software company face very different ceilings, so check the table for your code before anything else.
Getting Certified Through VetCert
Apply through the SBA’s MySBA Certifications portal at certifications.sba.gov. The portal walks you through eligibility screening, a pre-application checklist, and the application itself.6U.S. Small Business Administration. Veteran Contracting Assistance Programs
Have your DD Form 214 ready — the official record of military separation and service characterization — along with your business formation documents and paperwork showing the veteran owner’s ownership stake and management control.8National Archives. DD Form 214 – Discharge Papers and Separation Documents The SBA uses this package to confirm the veteran’s service qualifies, the ownership structure meets the 51 percent threshold, and the business is legitimate.
How to Get Surplus Property Once You’re Certified
Federal agencies constantly retire equipment. When they declare items surplus, the General Services Administration passes them to State Agencies for Surplus Property (SASPs), and each state’s SASP distributes what it receives to eligible recipients within that state. Veteran-owned small businesses are now among those recipients.
Register with the SASP in the state where your business operates. The state agency creates a profile for you in the federal system and gives you access to search available inventory. Some SASPs use the GSA’s online property system; others run their own catalogs or a warehouse you can walk through in person.
When you find something useful, submit a request through the SASP. You’ll need to state in writing what you plan to use the item for and confirm it fits your normal business activities.3eCFR. 13 CFR Part 128 Subpart G – Surplus Personal Property for Veteran-Owned Small Business Concerns A landscaping company asking for a truck reads differently from one asking for an industrial generator, and the SASP will notice.
Inspect before you commit. Surplus property transfers as-is, and condition ranges from nearly new to well-worn. Once your request is approved, you’re responsible for picking the item up from the SASP warehouse within the timeframe the agency sets.
What It Costs
Most SASPs fund themselves through service charges rather than state appropriations, so you pay a handling fee when you take property.9eCFR. 41 CFR Part 102-37 – Donation of Surplus Personal Property Federal rules let SASPs use those funds for warehouse costs, equipment, rehabilitation of property, and audits, but they don’t cap the fee at a set percentage.
Some states charge a small percentage of the item’s original federal acquisition cost; others charge flat handling fees. Either way, it runs far below what buying the equivalent on the open market would cost. Ask your state SASP for its current fee schedule before you commit.
The Strings Attached
You don’t get full title on day one. You receive conditional title, and it stays conditional until you satisfy the restriction period. The federal baseline: put the property to use for its stated purpose within one year of receiving it, and keep using it for at least one year after that.9eCFR. 41 CFR Part 102-37 – Donation of Surplus Personal Property During that window, you cannot sell, trade, lease, or otherwise dispose of the item without prior approval from the SASP or GSA.
Items with an original acquisition cost of $5,000 or more, and all passenger motor vehicles, carry additional terms the SASP can impose on top of the federal baseline, sometimes extending the restriction period or adding reporting requirements.9eCFR. 41 CFR Part 102-37 – Donation of Surplus Personal Property Full title vests only after every condition in the transfer document is met.
Violate the terms — for instance, by selling during the restriction period — and you’re liable to the federal government for the fair market value or the sale price, whichever is greater.3eCFR. 13 CFR Part 128 Subpart G – Surplus Personal Property for Veteran-Owned Small Business Concerns If you simply never put the property to work within a year, the SBA can order you to return it to the SASP at your expense. Both the GSA and the SASP can inspect the property and your records at any time.
Aircraft and Large Vessels Are Different
If you’re eyeing something big, know that the standard one-year rule doesn’t apply. Any fixed- or rotary-wing aircraft, or a donable vessel 50 feet or longer with an original acquisition cost of $5,000 or more, carries a five-year restriction period from the date you first use it for its stated purpose.10eCFR. 41 CFR 102-37.460 – What Special Terms and Conditions Apply to the Donation of Aircraft and Vessels Combat-configured aircraft are restricted in perpetuity, meaning title never fully transfers and the government can reclaim them if the terms are breached.
Keeping Your Eligibility
Eligibility isn’t a one-time check. On the date of each property transfer, your business still has to be SBA-certified, cannot be debarred or suspended from federal programs, and must be actively engaged in business activities that make the item useful.3eCFR. 13 CFR Part 128 Subpart G – Surplus Personal Property for Veteran-Owned Small Business Concerns If your certification lapses, or ownership changes so that veterans no longer hold at least 51 percent, you lose access to future transfers, and any property still inside a restriction period becomes a compliance problem you’ll need to sort out.
The same VetCert certification also qualifies you for federal contracting set-asides reserved for VOSBs and SDVOSBs, so if you’re already going through the process for surplus property, the contracting side is worth a look while you’re there.