For qualifying veteran entrepreneurs, earning the Small Business Administration’s (SBA) Service-Disabled Veteran-Owned Small Business (SDVOSB) certification helps firms get a leg up in the federal contracting landscape. It can make a company eligible for federal set-asides, sole-source opportunities and gives procurement teams a recognized way to verify that the business is owned and controlled by a service-disabled veteran.
The benefits provided by the SDVOSB certification are extremely valuable. However, its limitations for veteran-owned businesses expanding into state government contracting can be surprising. This is due to states creating their own veteran-business programs with unique qualification requirements, certification processes, and contracting rules. Having an SBA SDVOSB certification does not necessarily mean that a business is qualified as a veteran-owned company for state work.
Texas: Federal SBA SDVOSB Status Is Not Enough
Texas is a good example of how varying state requirements can be. In 2026, Texas restructured its veteran contracting program as Veteran Heroes United in Business, or VetHUB. The program is administered by the Texas Comptroller and focuses specifically on qualifying service-disabled veteran-owned small businesses.
A business cannot simply show Texas that it is an SBA SDVOSB and assume it qualifies for VetHUB. Texas has its own eligibility requirements. To become VetHUB certified, at least 51 percent of the company must be owned, managed and operated by qualifying service-disabled veterans who are Texas residents. Those owners must have a service-connected disability rating of at least 20 percent, and the business must be primarily based in Texas and meet applicable SBA small-business size standards.
That immediately disqualifies many federally certified SDVOSBs. The SBA requires an SDVOSB to be at least 51 percent owned and controlled by one or more veterans rated as service-disabled, but the federal program does not enforce residency requirements in the area the firm wants to perform work. In other words, a company can qualify for the SBA SDVOSB program and still fail to qualify for Texas’s VetHUB certification.
New York: Another Certification, Another Set of Rules
New York operates its own Service-Disabled Veteran-Owned Business, or SDVOB, program through the Office of General Services (OGS). The program was created specifically to increase the participation of service-disabled veteran-owned companies in New York State government contracting.
The practical value of the New York certification can be seen directly in state solicitations as all state agencies, public authorities, and public benefit corporations are subject to a statewide SDVOB utilization goal of 6 percent. For example, current OGS construction procurements regularly include specific SDVOB participation goals. Some contracts carry six percent goals, while individual portions of larger projects can carry different percentages depending on the procurement.
The Limitation of SDVOSB Certification
This is probably the most important point for veteran-owned businesses to understand: certification creates eligibility, not contracts.
Federal SDVOSB certification makes a company eligible for certain federal contracting opportunities. Texas VetHUB certification will position a company within Texas’s veteran contracting program. New York SDVOB certification will position it for opportunities connected to New York’s program. None of these certifications guarantee work, however. Winning contracts requires a certified contractor having relevant past performance, competitive pricing, the right capabilities, relationships with agencies and primes, appropriate registrations and a realistic understanding of where its services fit into the market.
There is also a geographic limitation that becomes increasingly important as veteran-owned businesses grow. A contractor working only with federal agencies may be able to build much of its strategy around a single SBA SDVOSB certification. Once that same company starts pursuing state work, the certification landscape becomes fragmented. Texas and New York demonstrate that the definition and treatment of a service-disabled veteran-owned business can change simply by crossing a state line.
Before entering a new state market, veteran-owned businesses should determine whether their federal certification is recognized, whether another state-level certification is required, whether ownership or residency requirements are different for that certification, and whether certification actually influences the contracts they plan to pursue. The worst time to discover those differences is after a solicitation is released.
For growing Service Disabled Veteran owned firms, the better approach is to identify target markets first and build the required certifications around that strategy. This will create the most direct path to obtaining the right certifications for the firm’s business model and avoid irrelevant or redundant certification processes.
