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GAO's Sanction Against Latvian Connection and Its Principal

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28 minutes ago, Don Mansfield said:

Yes, it's FAR Case 2016-002. Overseas contracting officers are in a tough spot. If they follow the FAR, they risk losing a protest that they didn't conduct a set-aside. If they follow the SBA regulations, they are deviating from the FAR. They have the FAR Councils to thank for that. I think that an interim FAR rule should be issued to make the FAR consistent with the SBA regulations.

Has anyone actually had a sustained protest?

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Don, don't forget the statutory changes to the limitation on subcontracting and SBA's changes in its regulations on that topic.  However, I have not seen a FAR case to change the FAR to be consistent with the clear language of the statute and SBA rules.

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I've been following Latvian's protests for a long time. I was probably copied on all 150+ submitted this fiscal year. In a lot of cases, the agency took corrective action by either setting aside the procurement or cancelling the solicitation. The Air Force was the only one to argue that the FAR trumped the SBA regulations. I can't wait for that decision.

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5 minutes ago, Retreadfed said:

Don, don't forget the statutory changes to the limitation on subcontracting and SBA's changes in its regulations on that topic.  However, I have not seen a FAR case to change the FAR to be consistent with the clear language of the statute and SBA rules.

You're right. I think an interim FAR rule is in order.

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.Don, in regard to the AF arguing that the FAR trumps the SBA rules, see MCS Portable Restroom Service, B-299291 (March 28, 2007).  This was another protest where the AF interpreted the FAR in a manner inconsistent with statute and the SBA's regulations.

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51 minutes ago, joel hoffman said:

Why? I think it's stupid. I think The FAR Council needs to fight, delay as long as possible and get the law changed if necessary, at least for construction contracting. 

Because Congress has spoken and, per the Constitution, it's the executive branch's responsibility to enforce the law. 

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9 hours ago, Retreadfed said:

Joel, what is stupid?  The statement you quoted was in regard to a change in the limitation on subcontracting.

Retreadfed, Thanks for clarifying that the reference was to limitations on subcontracting. I thought the reference was to FAR 19.000( b). My objection is withdrawn on that basis. 

I wasn't reading closely enough when the discussion veered off course, slightly to subcontracting issues. And then you referred a GAO decision that involved a domestic solicitation for services at my Alma Mater. I don't think that that case is on point. There, the FAR apparently wasn't harmonious with SBA and clear statute.
 
I think there is a distinction.  The argument between SBA and FAR  concerning FAR 19.000(  b )  has been based upon differences in interpretation of Statute from what I read. 
 

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18 hours ago, Don Mansfield said:

The SBA regulations have required set-asides overseas when the applicable conditions are met for over two years. The GAO and the COFC have consistently held that the SBA regulations trump the FAR when there is a conflict. 

15 USC § 644(a) says, in part:

Quote

To effectuate the purposes of this chapter, small-business concerns within the meaning of this chapter shall receive any award or contract or any part thereof, and be awarded any contract for the sale of Government property, as to which it is determined by the Administration and the contracting procurement or disposal agency (1) to be in the interest of maintaining or mobilizing the Nation's full productive capacity, (2) to be in the interest of war or national defense programs, (3) to be in the interest of assuring that a fair proportion of the total purchases and contracts for property and services for the Government in each industry category are placed with small-business concerns, or (4) to be in the interest of assuring that a fair proportion of the total sales of Government property be made to small-business concerns... These determinations may be made for individual awards or contracts or for classes of awards or contracts.

I don't think FAR 19.000(b) is all that important to the actual issue, which is whether overseas procurements are subject to set-asides. The statute says that the SBA and the contracting agencies get to decide whether or not to set aside a procurement or class of procurements. I think DOD or State could simply declare, on a class basis, based on sound argument, that overseas procurements will not be set aside for reasons of national security, which could include foreign relations. Such a determination would be subject to court review, but I doubt that a court would jeopardize overseas operations by overruling a class determination by the Department of Defense or the Department of State, assuming that it's based on a reasonable argument.

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Vern has brought up some valid points.  However, there are some subsidiary issues relating to this topic.  First, is the set aside requirement for procurements over $2,500 but below the SAT.  That requirement is contained in a separate subsection of 15 U.S.C. 644.  Thus, it would be interesting to see how an agency argues that that requirement does not apply to contracts awarded overseas.  Second, is achievement of small business contracting goals.  I understand that there is disagreement between the SBA and some agencies as to whether overseas contracts should be included in the determination of whether an agency met its goals.

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According to this story, overseas contracts will be included when calculating goals and achievements for DoD. The only exceptions will be for contingency operations and procurements subject to a SOFA.

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Yes, the goals now contain overseas spend.  So while we achieved 41% last year, our goal for this year was negotiated with SBA to be 22.5%.  We may make it this year due to a huge contract award  to a  large business slipping from this year into next.   But that same action will almost certainly have us failing next year.    

The FAR council was orginally going to delete 19.000(b) to make all of FAR 19 apply overseas but are now going reword (due to Department of State and DoD input).  Using US small business will be the preference but overseas contracting activities will be able document the file with why not using US small business is preferable (e.g. faster and cheaper to buy down the street, cost of shipping excessive, in country policy requires use of local vendors, etc). Any purchase made with a  US vendor would have to comply.   I am not sure how the final wording may come out in final rule.  Our concern now is how intensive does the justification for the file have to be to satisfy outside auditors or a protest venue.  Market research not currently done and documentation will still increase Post workload and cost.   This will not relieve us of counting those dollars in our goals however. 

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4 hours ago, Boof said:

...overseas contracting activities will be able document the file with why not using US small business is preferable (e.g. faster and cheaper to buy down the street, cost of shipping excessive, in country policy requires use of local vendors, etc). 

Our concern now is how intensive does the justification for the file have to be to satisfy outside auditors or a protest venue.

The "Rule of Two" should still apply, without any additional FAR provisions, correct? The Rule is not an overseas or stateside only practice. (FAR 19.502-2(a))

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On 8/29/2016 at 1:04 PM, Desparado said:

I would have liked to see their side of the story.

PepeTheFrog just finished reading an article in NCMA's November edition of Contract Management called "How Many Bid Protests Is Too Many?" NCMA members can read it online at NCMA's website.

It covers the one-year suspension and includes an interview with Latvian Connection LLC's CEO.

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Guest Jason Lent
21 hours ago, PepeTheFrog said:

PepeTheFrog just finished reading an article in NCMA's November edition of Contract Management called "How Many Bid Protests Is Too Many?" NCMA members can read it online at NCMA's website.

It covers the one-year suspension and includes an interview with Latvian Connection LLC's CEO.

I wish I still had my login for the site.

After browsing his other interactions with the internet, I would love to see how he interacted with the interviewer.

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On 11/2/2016 at 9:43 AM, Jason Lent said:

After browsing his other interactions with the internet, I would love to see how he interacted with the interviewer.

The article is mainly of summary of the background of Latvian's protests. The interview, which comes at the very end, consisted of only six questions, one of which was why the company is named "Latvian." The owner of the company comes across as entirely reasonable and rational. He wants agencies to comply with FAR Part 19, and he doesn't think that enough are doing that. There are no fireworks.

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On 11/2/2016 at 2:50 PM, Vern Edwards said:

...He wants agencies to comply with FAR Part 19, and he doesn't think that enough are doing that. There are no fireworks.

I don't totally agree with that statement. See FAR 19.000 Scope of Part: 

"...(b) This part, except for Subpart 19.6, applies only in the United States or its outlying areas. Subpart 19.6 applies worldwide."

 Latvian Connection has protested numerous solicitations for foreign acquisitions. The SBA doesn't agree with FAR, as discussed earlier here. 

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On ‎8‎/‎22‎/‎2016 at 11:24 PM, joel hoffman said:

"Fair"? You bet it's fair to have an inherent right to fight to maintain the integrity of the system. 

I'm not a lawyer but it was always fun watching a certain Judge in the TV series "The Good Wife" blasting and sanctioning the lawyers for their various legal antics. 

I miss The Good Wife - one of the best shows on TV.

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Due to the SBA opinion, the FAR has a proposed rule change to encourage use of FAR 19 overseas. It will make most of FAR 19 apply to overseas but allow use of local vendors when more practical or required by local country agreements.  The downside is that it expects every award  not being made to U.S. small business to have a justification in the folder with research as to why it is required or more economical to procure the item locally.  This will increase work load at our 269 posts around the world.  It could be a really big manhour waster if the oversight agencies end up wanting extensive market research and cost comparisons in each file.  They never have any common sense from what I have observed.    

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In the GAO Bid Protest Annual Report to Congress for Fiscal Year 2016 (B-158766, December 15, 2016), GAO reports that there was no such instance in which "a final decision in a protest was not rendered within 100 days after the date the protest is submitted to the Comptroller General."

http://www.gao.gov/assets/690/681662.pdf

The "ban" or "suspension" of Latvian Connection LLC and its principal in Latvian Connection LLC (B-413442) was issued August 18, 2016-- less than 100 days before the end of fiscal year 2016.

Based on published interviews and articles covering Latvian Connection LLC's future plans, PepeTheFrog assumes that Latvian Connection LLC has continued to file bid protests at the GAO, despite the "ban" or "suspension." PepeTheFrog assumes that GAO will not issue a "final decision" for these protests.

Does this mean that in the 2017 report, GAO must report to Congress that there were (many) protests from Latvian Connection LLC that GAO chose to ignore based on B-413442?

Does anyone think Congress will care? Remember, as others in this thread pointed out: Congress asked GAO years ago what power GAO needs to deal with so-called "frivolous" protestors, and GAO balked, likely to protect their bid protest turf from the Court of Federal Claims.

Instead, will GAO issue several batches of unusually short and nondescript "final decisions" to address-- within 100 days-- each Latvian Connection LLC protest launched after August 18, 2016? Perhaps that will avoid the need to report failures to render "final decisions," but such attention and process would seem to contradict the "ban" or "suspension" in B-413442.

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