Alabama Veteran-Owned Business Bid Preference

The Chief Procurement Officer or a purchasing agency may award a state contract to an Alabama business more than half owned by a qualifying veteran when its bid is no more than 5% above the lowest bid. The preference is allowed, not required, and now lives in section 41-4-131.

Also called: veteran owned, SDVOSB, bid preference, state contract, 5%, 41-4-130, 41-4-131, 41-16-20, preferred vendor.

For: Veteran or service member.

Where it applies

Written for the jurisdictions listed here.

AlabamaState

The preference is in Code sections 41-4-130(4)d. and 41-4-131(b). Act 2021-296 repealed the old competitive bid article, including section 41-16-20, effective October 1, 2022, and re-enacted the preferred vendor rule in the new state procurement article under the Chief Procurement Officer. The Department of Veterans Affairs' September 2026 booklet still cites section 41-16-20, which the Code now shows as repealed. A contracting officer or a lawyer looking for the rule will find it at 41-4-130 and 41-4-131. A preferred vendor is a business that meets one of four priorities. The fourth is the veteran priority: the business is physically located in Alabama and is more than 50 percent owned by a person who was discharged or released under conditions other than dishonorable and who has at least 24 months of active service, or less than 24 months and was separated with a service-connected disability, or is a National Guard member or reservist who completed active federal service other than for training or served at least 180 days of continuous service other than for training. The other three priorities are for in-state manufacturers, in-state assembly or distribution, and Alabama-organized businesses with an in-state outlet for a year. When a responsible preferred vendor's bid or offer is no more than 5% greater than the bid of the lowest responsible bidder who is not a preferred vendor, the Chief Procurement Officer or purchasing agency may award the contract to the preferred vendor. The law allows the selection. It does not require it, and a veteran-owned business competing against another preferred vendor gets no advantage from the veteran priority. There is no disability rating in this preference. The Department of Veterans Affairs describes it as a business "more than 50% owned by veteran(s)". The statute asks for more than half ownership by a person who meets its service test, which is other than dishonorable rather than honorable, and has its own 24-month and Guard and reserve rules.

Thresholds

No rating or income gate is recorded. Read the detail and the official source.

Sources

Legislation

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Act 2021-296 (SB77) Repealed section 41-16-20 and moved the veteran preferred vendor rule to sections 41-4-130 and 41-4-131

Needs reviewEnacted

2021 Regular SessionTakes effect 2022-10-01

Introduced Done, 2021-02-02, step 1 of 6
In committee Done, 2021-02-02, step 2 of 6
Passed one chamber Done, 2021-02-09, step 3 of 6
Passed both chambers Done, 2021-04-15, step 4 of 6
Signed by the governor Done, date not recorded, step 5 of 6
In effect Done, 2022-10-01, step 6 of 6

No change to benefits Moves the veteran-owned business preference to sections 41-4-130 and 41-4-131 without changing it.

Created the Office of the Chief Procurement Officer and repealed the old state competitive bid articles, including Code section 41-16-20, effective October 1, 2022. The preferred vendor definition, with its fourth priority for an Alabama business more than half owned by a veteran, is now section 41-4-130(4)d., and the discretion to award within 5 percent of the lowest non-preferred bid is section 41-4-131(b). No figure or gate changed. Flagged because the Department of Veterans Affairs’ September 2026 booklet still cites the repealed section 41-16-20.

Sponsor

Touches Code of Ala. § 41-16-20 · Code of Ala. § 41-4-130 · Code of Ala. § 41-4-131

Official record

Updated

Last updated 2026-09-30.

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Disclaimer

VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.