New Crosstown argues that the agency
improperly issued the solicitation under the FSS (and
intends to award a task order to an FSS vendor) rather
than as an open market acquisition reserved for SDVOSBs.
Crosstown maintains that the agency erred in not first
conducting market research to determine whether there were
two or more SDVOSB (or veteran owned small business (VSOB))
concerns that could meet the agency’s requirement at a
fair and reasonable price that offers best value to the
government. Crosstown contends that, had the agency
conducted adequate market research, it would have found at
least two SDVOSB concerns that could meet the agency’s
requirements. In support of its position, Crosstown
directs our attention to 38 U.S.C. § 8127(d), which
embodies the market research and “rule of two” set-aside
requirements relied upon by Crosstown. Crosstown further
asserts that, inasmuch as the VA received only one quote
under its FSS solicitation, its proposed issuance of a
task order to MLS amounts to an improper sole source
contract award, and the agency has no assurance that it
will make the award at a fair and reasonable price, or
that the award will represent the best value to the
agency, as required by 38 U.S.C. § 8127(d).
The VA responds by repeating arguments it has made to our
Office in answer to prior protests filed by another SDVOSB
concern, Aldevra. Aldevra, B-405271, B-405524, Oct. 11,
2011, 2011 CPD ¶ 183; Aldevra, B-406205, Mar. 14, 2012,
2012 CPD ¶ 112. In essence, the VA argues that the VA Act
presents no bar to the agency’s ability to proceed
directly to the FSS to purchase goods or services listed
on that schedule without regard to the SDVOSB status of
the vendor. We have addressed these arguments and found
them to be without merit. Id. Nonetheless, we conclude
that Crosstown cannot claim a prejudicial violation of
statute or regulation, as it appears that VA has statutory
authority for its actions here, despite the agency’s
failure to claim during the protest that it acted using
this authority.
As an initial matter, we point out that nothing in the
statutory authority relied on by Crosstown, 38 U.S.C. §
8127(d), requires the VA to conduct its market research
exclusively on the open market, as opposed to among FSS
vendors. The statute provides:
Except as provided in
subsections (b) and (c), for purposes of meeting the
goals under subsection (a), and in accordance with this
section, a contracting officer of the [VA] shall award
contracts on the basis of competition restricted to . .
. [VOSBs or SDVOSBs] if the contracting officer has a
reasonable expectation that two or more . . . [VOSBs or
SDVOSBs] will submit offers and that the award can be
made at a fair and reasonable price that offers best
value to the United States.
38 U.S.C. § 8127(d).
Thus, the agency’s initial decision to conduct market
research confined to FSS vendors was not, in and of
itself, objectionable, to the extent that the VA sought to
determine whether there were two or more SDVOSB (or VOSB)
FSS vendors capable of meeting its requirement.
As noted, however, the agency received an expression of
interest from only one concern. Accordingly, the agency
had no reasonable expectation of receiving proposals or
quotes from at least two FSS SDVOSB (or VOSB) vendors, nor
was there a basis for the agency to conclude from its
market research that it would be able to make award at a
fair and reasonable price. It follows that the agency
could not properly set aside this acquisition under the
FSS pursuant to the authority provided by 38 U.S.C. §
8127(d).
Even though we conclude that the agency could not have set
aside the acquisition under the FSS using the authority
under 38 U.S.C. § 8127(d), the VA Act permits the agency
properly to have confined its acquisition to MLS. Rather
than the provision at 38 U.S.C. § 8127(d), the provision
at 38 U.S.C. § 8127(b) is pertinent here and it provides:
(b) Use of
noncompetitive procedures for certain small
contracts.--For purposes of meeting the goals under
subsection (a), and in accordance with this section, in
entering into a contract with a . . . [SDVOSB or VOSB]
for an amount less than the simplified acquisition
threshold (as defined in section 134 of title 41), a
contracting officer of the Department may use procedures
other than competitive procedures.
As noted above, the
value of the requirement at issue here is $9,990, which is
well below the simplified acquisition threshold. The VA
therefore has authority to use “other than competitive
procedures” to award to SDVOSB (or VOSB) vendors, which is
what it has done here.
We conclude that the agency’s acquisition here amounted to
the solicitation and award of a requirement using “other
than competitive procedures” as authorized by 38 U.S.C. §
8127(b). Moreover, under 38 U.S.C. §8127(b), there is no
requirement for the VA to conduct market research of any
sort, so long as the value of the procurement is below the
simplified acquisition threshold and award is made to an
SDVOSB (or VOSB). (Crosstown
Courier Service, Inc., B-406336, Apr 23, 2012) (pdf)
New The procurements are being
conducted pursuant to General Services Administration
Federal Supply Schedule (FSS) procedures and implementing
regulations, set forth at Federal Acquisition Regulation
(FAR) subpart 8.4. In accordance with those regulations,
the solicitations were issued on an unrestricted basis to
vendors holding FSS contracts.
Aldevra asserts that the VA acted improperly by using FSS
procedures without first conducting market research to
determine whether the procurements should be set aside for
SDVOSB (or VOSB) concerns. Aldevra maintains that if the
agency had conducted market research, it would have found
that at least two SDVOSBs could meet the requirements at a
reasonable price. The agency concedes that it did not
conduct market research to determine whether two or more
SDVOSB (or VOSB) concerns could meet the requirements at a
reasonable price.
In March, we sustained a protest filed by Aldevra against
a VA procurement being conducted pursuant to FSS
procedures in which, like here, the protester asserted
that the agency failed to comply with the requirements of
the [Veterans Benefits, Health Care, and Information
Technology Act of 2006, 38 U.S.C. §§ 8127-8128 (2006)] VA
Act and its implementing regulations. Aldevra, B-406205,
Mar. 14, 2012, CPD ¶ 112. The issue raised and the
agency’s arguments in the recent Aldevra protest are the
same as the issue and arguments presented here.
For the same reasons that we discussed at length in our
recent decision, we reject the VA’s arguments in the
current protests. Here, as in Aldevra, supra, the VA has
not conducted market research to determine if there are
two or more eligible SDVOSB (or VOSB) concerns capable of
performing the agency’s requirements. Consistent with our
recent decision, we conclude that the 2006 VA Act requires
that the agency make a determination whether these
acquisitions should be set aside for SDVOSB (or VOSB)
concerns prior to conducting the procurements using FSS
procedures. We therefore sustain Aldevra’s protest.
(Aldevra, B-406331,
B-406391, Apr 23, 2012) (pdf)
The protester maintains that
there are no SDVOSBs that can meet the terms of the
solicitation which requires, among other things, for the
successful contractor to maintain documentation that it
meets all requirements of federal, state, county or city
codes regarding the operation of wheelchair/stretcher
transportation service vehicles. RFP at 10. More
specifically, the RFP requires that the successful
contractor must be licensed to perform the contemplated
services in Hillsborough County, Florida, by the
Hillsborough County Public Transportation Commission (HCPTC).
Id. According to the protester, none of the prospective
SDVOSB offerors is licensed to perform the services by the
HCPTC.
We find no merit to the protest. The VA Act, by its terms,
requires that the contracting activity set aside
acquisitions for SDVOSBs where it has a reasonable
expectation that there are at least two such concerns that
will submit offers, and that award can be made at a fair
and reasonable price. 38 U.S.C. § 8127(d).
Here, the record shows that the agency conducted market
research in connection with its decision to set aside this
acquisition. Specifically, the agency issued a sources
sought request for information. The agency received 12
responses to its request for information. Of the 12
responses, three were from verified SDVOSBs, three were
from registered, but as yet not verified SDVOSBs, one was
from a verified veteran owned small business and the
remainder were from small or large businesses not owned by
veterans. Agency Report (AR), exh. 4. On the basis of this
market research, the contracting officer concluded that
there was a reasonable expectation that the agency would
receive proposals from at least two SDVOSBs, and that
prices submitted likely would be competitive. Id. The
record thus shows that the contracting officer here acted
in accordance with the requirements of the VA Act and,
based on his market research, determined to set aside the
acquisition for SDVOSBs. 38 U.S.C. § 8127(d).
The record further shows that, in response to the RFP, the
agency received 5 proposals, two from verified SDVOSBs,
one from a registered, but as yet not verified, SDVOSB,
one from a verified veteran owned small business and one
from a large business (the protester). AR, exh. 4. The
results of the competition thus effectively validated the
contracting officer’s initial expectation that the agency
would receive at least two proposals from SDVOSBs.
As a final matter, we point out that general solicitation
provisions of the type included here that require the
“contractor” to obtain all necessary licenses or permits
needed to perform the work do not require that a bidder or
offeror demonstrate compliance prior to award. Chem-Spray-South,
Inc., B-400928.2, June 25, 2009, 2009 CPD ¶ 144 at 5-6.
Instead, the securing of licenses or permits is a
performance requirement that may be satisfied during
contract performance. Id. The issue of whether the
successful contractor here ultimately obtains the licenses
and permits is a matter of contract administration, which
our Office does not review. See id.; 4 C.F.R. §21.5(a)
(2011). (American Medical
Response, B-406274, Mar 16, 2012) (pdf)
Kevcon makes numerous arguments
challenging the VA’s determination that the agency did not
have a reasonable expectation that it would receive offers
from two or more SDVOSBs capable of performing the stated
requirements. We have considered all of the protester’s
arguments, although we only address the primary ones, and
find that none provide a basis to object to the VA’s
decision to set aside the RFP for small businesses.
Under the Veterans Benefits, Health Care, and Information
Technology Act of 2006, 38 U.S.C. § 8127, and the VA’s
implementing regulations, VA Acquisition Regulation (VAAR)
§§ 819.7004, 819.7705, the VA is required to set aside
acquisitions for SDVOSBs whenever it determines that there
is a reasonable expectation that offers will be received
from at least two SDVOSB firms and that award can be made
at a fair and reasonable price. 38 U.S.C. § 8127(d); VAAR
§ 819.7005. The determination as to whether there is a
reasonable expectation of receiving offers from two or
more SDVOSB firms that are capable of performing the
required work is a matter of informed business judgment
within the contracting officer’s discretion that we will
not disturb absent a showing that it was unreasonable. Buy
Rite Transport, B-403729, B-403768, Oct. 15, 2010, 2010
CPD ¶ 245 at 3. While the use of a particular method of
assessing the availability of capable SDVOSB firms is not
required, an analysis of factors such as the
recommendations of appropriate small business specialists,
market surveys that include responses to sources sought
announcements, and prior procurement history, may all
constitute adequate grounds for a contracting officer’s
decision not to set aside a procurement. FlowSense, LLC,
B-310904, Mar. 10, 2008, 2008 CPD ¶ 56 at 3. The
assessment must be based on sufficient evidence to
establish its reasonableness. See Rochester Optical Mfg.
Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 CPD ¶ 138 at
5.
Kevcon complains that the VA’s market research was flawed,
because the agency’s emails to SDVOSBs to determine
whether any were interested in performing this work was
limited to firms conducting business in Washington, Oregon
and/or Idaho. Kevcon contends, given the size of this
procurement, that SDVOSBs outside this geographic area
would be interested in this procurement. Comments at 4.
There is no merit to this complaint. Although it is true
that the VA emailed approximately 250 SDVOSBs within this
tri-state area, this additional research followed the
agency’s earlier posting of the requirement, without any
geographic limitations, on FedBizOpps. As noted above, the
agency only received expressions of interest from three
SDVOSBs, only one of which (Kevcon) was capable of
performing the work.
Although Kevcon has identified numerous SDVOSBs that it
believes may be interested in performing this work, it has
not demonstrated that the VA’s posting of a sources sought
notice on FedBizOpps and other market research was
inadequate. Also, apart from the two other SDVOSBs that
Kevcon earlier identified to the agency (and which the VA
found incapable of performing the work), Kevcon has not
identified any SDVOSBs interested in performing this work.
With respect to the two SDVOSBs that responded to the
sources sought notice and the other two SDVOSBs identified
by Kevcon as interested in the procurement, Kevcon does
not specifically argue that the agency unreasonably found
that these firms could not perform this work. Rather,
Kevcon complains that the agency’s judgment as to the
capability of these firms to perform this work was
essentially a responsibility determination. See Comments
at 5-6. Although Kevcon suggests that the VA used an
overly stringent standard in finding that these firms
could not perform this work, it does not identify any
specific part of the agency’s analysis that was
unreasonable. Contrary to Kevcon’s arguments, the record
shows that the VA’s judgment as to the capability of these
firms was part of an informed business judgment that there
was not a reasonable expectation of receiving offers from
two or more SDVOSBs capable of performing the contract.
(Kevcon, Inc., B-406101,
B-406101.2, B-406101.3, Feb 6, 2012) (pdf)
Interpretation of the VA Act
and the JWOD Act
ACE and PFM argue that the plain language of the [Veterans
Benefits, Health Care, and Information Technology Act of
2006] VA Act requires the VA to consider setting aside
these requirements for SDVOSB or VOSB concerns before
considering any other mandatory preferences, such as that
provided for AbilityOne organizations. ACE Protest
(B-406291.2) at 3; PFM Protest (B-406291.1) at 2. The VA
disagrees with the protesters’ assertion that the VA Act
reaches the AbilityOne program. Rather, the VA contends
that the VA Act is silent as to how the statute should
operate with respect to the mandatory statutory preference
created by the JWOD Act. See Hearing Transcript at 15-16.
Where, as here, the relationship between two statutes is
at issue, the rule is to give effect to both if possible.
United States v. Borden Co., 308 U.S. 188, 198 (1939).
When two statutes are capable of co-existence, absent a
clearly expressed congressional intention to the contrary,
each must be regarded as effective. Morton v. Mancari, 417
U.S. 535, 551 (1974). Repeal by implication is strongly
disfavored. Id., at 549; B-307720, Sept. 27, 2007.
The statutes at issue in this case unambiguously provide
for mandatory contracting preferences. The JWOD Act
provides that federal agencies shall procure items on the
procurement list from an AbilityOne organization, absent
certain circumstances not relevant here. See 41 U.S.C. §
8504. The VA Act provides that the VA must set aside
procurements for SDVOSB or VOSB concerns if the
contracting officer can expect at least two such concerns
could meet the requirement at a reasonable price. 38 U.S.C.
§ 8127(d).
We find that the two statutes can be read so as not to
conflict. In this regard, we agree with the VA that the VA
Act does not expressly address the preference required by
the JWOD Act. That is, the VA Act neither expressly
overrides the JWOD preference nor provides that the
preference for SDVOSB or VOSB concerns is subordinate to
that of the AbilityOne program. Moreover, although the
legislative history stresses the importance of the VA
providing contracting opportunities for SDVOSB and VOSB
concerns, the legislative history does not address the
role of SDVOSB or VOSB contracting priorities in relation
to the AbilityOne program.
Where Congress has explicitly left a gap to fill, there is
an express delegation of authority to the agency to
elucidate a specific provision of the statute by
regulation. Such regulations are given controlling weight
unless they are arbitrary, capricious, or manifestly
contrary to the statute. Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984).
Because the VA Act is silent with respect to the
AbilityOne program, we look to the agency’s interpretation
of the statute through its regulations.
The VA, however, did not explicitly address the
relationship between the two statutes in its regulations.
Rather, the agency addressed the AbilityOne preference in
the preamble to the agency’s regulations implementing the
VA Act and in its internal guidelines. As noted above, the
VA stated in its preamble that the priority status of the
AbilityOne program would not be impacted. See 74 Fed. Reg.
64,622. In its internal guidelines, the VA instructed
contracting officers to give priority to SDVOSB or VOSB
concerns for items not on the AbilityOne procurement list
and before seeking to place an item on the list, but to
give priority to AbilityOne organizations when seeking to
purchase items that were already on the procurement list.
See ACE Post-Hearing Comments, exhib. 8, VA Guidelines,
Apr. 28, 2010, at 2.
We agree with the protesters that the VA’s preamble and
internal guidance are not entitled to Chevron deference,
given that neither construction reflects formal rulemaking
or is a regulation. Nevertheless, this does not mean, as
the protesters presume, that the agency’s construction of
its statute, which the VA was entrusted to administer, is
entitled to no deference. While the preamble of a
regulation does not control the meaning of the regulation
and is not entitled to the same level of deference, the
preamble is evidence of an agency’s contemporaneous
understanding of its rules. Wyoming Outdoor Council v.
U.S. Forest Serv., 165 F.3d 43, 53 (D.C. Cir. 1999).
Likewise, an agency’s internal guidelines, although not
entitled to the same level of deference as regulations,
nonetheless are “entitled to respect” to the extent that
they are persuasive. Skidmore v. Swift & Co., 323 U.S.
134, 140 (1944).
We find that the VA’s construction of the two statutes in
its preamble and guidelines is entitled to Skidmore
deference, which the protesters have not shown to be
inconsistent with the statutes or unreasonable. In this
regard, we disagree with the protesters’ contention that
the VA’s construction of the statutes is unreasonable
because it failed to give weight to the more recent and
specific VA Act. ACE Comments (B-406291.2) at 2-3; PFM
Comments (B-406291.1) at 4-5. However, a later, more
specific statute only trumps an earlier general one where
the two statutes are in conflict. See Morton v. Mancari,
supra, at 550-51; NISH; RCI, Inc. v. Rumsfeld, 348 F.3d
1263, 1272 (10th Cir. 2003) (to the extent a conflict
exists between two statutes, the more specific statute
must control); Coalition for a Sustainable Delta v.
McCamman, 725 F.Supp. 2d 1162, 1199 (2010).
This is consistent with the recent decision of the United
States Court of Federal Claims in Angelica Textile Servs.,
Inc. v. U.S., 95 Fed. Cl. 208 (2010).[11] There, the court
addressed the application of the VA Act to requirements
that VA sought to fulfill by procuring from the AbilityOne
program, without consideration of SDVOSB or VOSB concerns.
The court found no real conflict between the VA Act and
the JWOD Act and gave deference to the VA’s interpretation
that the VA Act did not impact items already on the
AbilityOne procurement list. See id. at 221-222. In this
regard, the court gave a limited form of deference to the
VA’s guidelines, concluding that:
The Department is
responsible for implementing the Veterans Benefits Act;
indeed, it is the only federal department or agency to
which the Act’s requirements apply. The Department’s New
Guidelines provide detailed instructions to “fill[] a
space” between the Veterans Benefits Act and
Javits-Wagner-O’Day Act and their accompanying
regulations. . . . The New Guidelines reflect
agency-wide policy and do not conflict with the Veterans
Benefits Act, the Javits-Wagner-O’Day Act, or the VA
Acquisition Regulations.
Id. at 222.
In short, we conclude, as did the court in Angelica, that
the VA’s decision to give the AbilityOne program
contracting priority for items already on the procurement
list was not unreasonable in light of the statute’s
silence regarding this issue. In reaching our conclusion,
we give due deference, as did the Court of Federal Claims,
to the agency’s guidelines. See id., citing U.S. v. Mead
Corp., 533 U.S. 218, 229 (2001). (Alternative
Contracting Enterprises, LLC; Pierce First Medical,
B-406265, B-406266, B-406291, B-406291.2, B-406318.1,
B-406318.2, B-406343, B-406356, B-406357, B-406369,
B-406371, B-406374, B-406400, B-406404, B-406428, Mar 26,
2012) (pdf)
Encompass, which is not a SDVOSB
concern, complains that the RFPs should not have been set
aside for SDVOSB concerns. The protester contends that
there are no SDVOSB concerns that can actually manufacture
or assemble textiles in accordance with the solicitation
requirements. Encompass also complains that the agency’s
market survey did not adequately consider the application
of the Buy American Act.
The Veterans Benefits, Health Care, and Information
Technology Act of 2006, 38 U.S.C. §§ 8127-8128 (2006),
provides the VA with independent authority to set aside
contracts for SDVOSB and Veteran-Owned Small Business (VOSB)
concerns. The Act provides that SDVOSB firms receive first
priority for VA contract awards, and that VOSB firms
receive second priority. 38 U.S.C. § 8127(i). Further,
under the Act, acquisitions must be set aside for SDVOSB
firms if the VA determines that there is a reasonable
expectation that offers will be received by at least two
SDVOSB firms and that award can be made at a fair and
reasonable price. 38 U.S.C. § 8127(d). Generally, a
procurement set-aside determination is a business judgment
within the contracting officer’s discretion, which we will
not disturb absent a showing that it was unreasonable.
Eagle Home Med. Corp.-Costs, B-299821.3, Feb. 4, 2008,
2008 CPD ¶ 41 at 2.
Here, Encompass does not show that the VA’s set-aside
determination was unreasonable. As noted above, the agency
conducted market research from which it determined that
there were a number of SDVOSBs that appeared capable and
interested in performing these requirements. The agency
also determined that there were small business
manufacturers from which the VA had obtained the solicited
items in the past, and from which non-manufacturing
SDVOSBs could obtain the items for sale to the VA.
Although Encompass generally contends that the SDVOSBs
will not be able to satisfy all of the solicitation
requirements, we find that these general and speculative
arguments do not show that the VA’s business judgment was
unreasonable. Moreover, in this regard, we do not agree
with the protester’s apparent belief that the VA was
required to determine prospective offerors’ technical
acceptability or responsibility in order to determine
whether it was likely that it would receive offers from
two or more SDVOSBs that appeared capable of performing
and that award could be made at a fair and reasonable
price. (Encompass Group,
LLC, B-406346, Mar 23, 2012) (pdf)
This procurement is being
conducted pursuant to General Services Administration
Federal Supply Schedule (FSS) procedures and implementing
regulations, set forth at Federal Acquisition Regulation
(FAR) subpart 8.4. In accordance with those regulations,
the solicitation was conducted as a discretionary small
business set aside confined to small business vendors
holding FSS contracts. FAR § 805-5.
Crosstown asserts that the VA acted improperly by using
FSS procedures without first conducting market research to
determine whether the procurement should be set aside for
SDVOSB (or VOSB) concerns. Crosstown maintains that if the
agency had conducted market research, it would have found
that at least two SDVOSBs could meet the requirement at a
reasonable price. The agency concedes that it did not
conduct market research to determine whether two or more
SDVOSB (or VOSB) concerns could meet the requirement at a
reasonable price.
By decision dated March 14, 2012, Aldevra, B-406205, Mar.
14, 2012, 2012CPD ¶ __ , we sustained a protest filed by
another SDVOSB concern against a VA procurement being
conducted pursuant to FSS procedures in which, like here,
the protester asserted that the agency had failed to
comply with the requirements of the VA Act and its
implementing regulations. The issue raised and the
agency’s arguments in the recent Aldevra protest are the
same as the issue and arguments presented here; in fact,
the arguments presented in the agency’s briefs in both
cases are identical.
For the same reasons that we discussed at length in our
recent decision, we reject the VA’s arguments in the
current protest. Here, as in Aldevra, supra, the VA has
not conducted market research to determine if there are
two or more eligible SDVOSB (or VOSB) concerns capable of
performing the agency’s requirements. Consistent with our
recent decision, we conclude that the 2006 VA Act requires
that the agency make a determination whether an
acquisition should be set aside for SDVOSB (or VOSB)
concerns prior to conducting a procurement using FSS
procedures. We therefore sustain Crosstown’s protest.
(Crosstown Courier Service, Inc.,
B-406262, Mar 21, 2012) (pdf)
Aldevra filed this protest prior
to the closing time for the solicitation, arguing that the
agency acted improperly by using FSS procedures without
first conducting market research to determine whether the
procurement should be set aside for [service-disabled
veteran-owned small business] SDVOSB concerns.
Protest at 1-2. Aldevra asserts that if the agency had
conducted market research, it would have found that at
least two SDVOSBs could meet the requirement at a
reasonable price. Id. at 2. The agency concedes that it
did not conduct market research to determine whether two
or more SDVOSB concerns could meet the requirement at a
reasonable price. Agency E-mail to GAO (Jan. 14, 2012).
The issue raised in this protest is identical to the issue
presented in a prior protest filed by Aldevra. See Aldevra,
B-405271, B-405524, Oct. 11, 2011, 2011 CPD ¶ 183.
Specifically, this protest concerns the Veterans Benefits,
Health Care, and Information Technology Act of 2006 (the
VA Act), which provides in part:
(d) Use of restricted competition.--Except as provided
in subsections (b) and (c), for purposes of meeting the
goals under subsection (a), and in accordance with this
section, a contracting officer of the Department shall
award contracts on the basis of competition restricted
to small business concerns owned and controlled by
veterans if the contracting officer has a reasonable
expectation that two or more small business concerns
owned and controlled by veterans will submit offers and
that the award can be made at a fair and reasonable
price that offers best value to the United States.
38 U.S.C. § 8127(d) (2006). The statute also establishes
an order of priority for awarding contracts to small
business concerns, providing that the first priority shall
be given to SDVOSB concerns, followed by veteran-owned
small business (VOSB) concerns. Id. § 8127(i). Following
enactment of the statute, the VA issued implementing
regulations which, as relevant here, state as follows:
(a) Except as authorized by 813.106, 819.7007 and
819.7008, the contracting officer shall set aside an
acquisition for competition restricted to SDVOSB
concerns upon a reasonable expectation that:
(1) Offers will be received from two or more eligible
SDVOSB concerns; and
(2) Award will be made at a reasonable price.
Veterans Administration Acquisition Regulation (VAAR),
48 C.F.R. § 819.7005(a) (2011).
Our Office sustained Aldevra’s prior protest, finding that
nothing in the VA Act or the VAAR provides the agency with
discretion to conduct a procurement under FSS procedures
without first determining whether the acquisition should
be set aside for SDVOSB concerns.
(section deleted)
The
Plain Meaning of 38 U.S.C. § 8127
With respect to the merits of Aldevra’s protest, the
agency maintains that it need not have considered whether
two or more SDVOSB concerns could meet the requirement at
a reasonable price before conducting the procurement
through the FSS program because our decision in the prior
protest was incorrect. AR at 1, 8-10. In this regard, the
agency argues that in resolving the prior protest, our
Office failed to recognize that 38 U.S.C. § 8127(d)
includes the phrase “for purposes of meeting the goals
under subsection (a),” which, according to the agency,
qualifies the requirement for the agency to preliminarily
determine whether a procurement should be set aside for
SDVOSB concerns. See id. at 8-9. Subsection (a), as
referenced in subsection (d), states in relevant part:
(1)
In order to increase contracting opportunities for [SDVOSB
and VOSB concerns], the Secretary [of the VA] shall--
(A) establish a goal for each fiscal year for
participation in Department contracts (including
subcontracts) by [VOSB concerns]; and
(B) establish a goal for each fiscal year for
participation in Department contracts (including
subcontracts) by [SDVOSB concerns].
38
U.S.C § 8127(a).
The agency argues that the phrase “for purpose of meeting
the goals under subsection (a)” signals that “Congress did
not . . . require that this authority [referenced in
subsection (d)] be used in conducting all VA procurements,
including FSS purchases.” AR at 2. Thus, according to the
agency, the statute should be interpreted to mean that the
“VA may consider its current achievements vis-ŕ-vis
attaining the Secretary’s SDVOSB/VOSB contracting goals in
deciding to do restricted competitions.” Id. at 9.
As an initial matter, although the agency has defended
numerous protests before our Office involving precisely
this issue, this is the first time that the agency has
raised these arguments. Thus, until this protest, the
agency had not suggested that the phrase “for purposes of
meeting the goals under subsection (a)” as it appears in
38 U.S.C. § 8127(d) grants the agency discretion to decide
that in some procurements the mandate in the statute will
apply, and in other procurements it will not.
In matters concerning the interpretation of a statute, the
purpose is clear: to determine and give effect to the
intent of the enacting legislature. Philbrook v. Glodgett,
421 U.S. 707, 713 (1975). In furtherance thereof, the
first question is whether the statutory language provides
an unambiguous expression of the intent of Congress. If it
does, the matter ends there, for the unambiguous intent of
Congress must be given effect. Chevron U.S.A. Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43
(1984).
We find that the plain language of 38 U.S.C. § 8127(d)
mandates that the VA “shall” conduct its procurements
using an SDVOSB (or VOSB) set-aside when there is a
reasonable expectation that two or more SDVOSB (or VOSB)
concerns can meet the requirement at a reasonable price.
The phrase “for purposes of meeting the goals” is part of
an introductory clause that establishes exceptions to the
mandate (those exceptions being when subsections (b) and
(c) apply). The phrase explains the purpose for the
mandate, which is to meet the goals established under
subsection (a); however, the phrase does not create an
exception to the mandate.
In addition, the exceptions set out in subsections (b) and
(c) of section 8127 use the discretionary term “may,” in
contrast to subsection (d)’s use of the mandatory term
“shall.” This distinction provides further evidence of a
congressional intent to require--rather than permit--SDVOSB
or VOSB set-asides under subsection (d), when conditions
of the statute are met.
Finally, we note that the legislative history of the VA
Act underscores that 38 U.S.C. § 8127 was intended to
broadly foster participation in VA procurements by SDVOSB
and VOSB concerns. For example, the House Committee on
Veterans’ Affairs report accompanying the bill that
ultimately was enacted stated, among other things, that
the bill would “[p]rovide veteran and service-disabled,
veteran-owned small businesses priority in VA contracting
. . . .” H.R. Rep. No. 109-592 (2006) at 12. The committee
report also included the statement that “the Committee
believes that small businesses owned and controlled by
veterans and service-disabled veterans should routinely be
granted the primary opportunity to enter into VA
procurement contracts.” Id. at 14-15. We read these
statements to reflect a congressional expectation that the
VA generally will conduct procurements with the purpose of
meeting the SDVOSB and VOSB participation goals.
VA’s Remaining Contentions
For the record, the VA argues that our Office should
abandon our previous conclusions about the plain meaning
of this statute, and should instead conclude that the
statute is ambiguous, and show deference to one of the
VA’s interpretations of the statute. In our view, the VA
has not yet proffered an interpretation to which we can
properly defer.
With respect to the VA’s newly-raised argument that our
Office should defer to its view that the phrase in section
8127(d) that states “for purposes of meeting the goals
under subsection (a)” permits the agency to, in some
circumstances, disregard the statute, we note first that
this interpretation is nowhere to be found in the VA’s
2009 notice and comment rulemaking. In essence, the VA
seeks Chevron deference for a rulemaking it has never
performed. Despite this lack of rulemaking, the VA now
claims blanket discretion to define the scope of
procurements to which the statutory mandate applies. We
see no basis for this broad discretion.
With respect to the VA’s previously-raised argument that
our Office should defer to its 2009 rulemaking that stated
that the FAR language in Part 19 applies to the SDVOSB
set-aside program created by the VA Act, the VA’s
conclusions in that rulemaking were refuted by the express
language of the FAR section upon which the VA relies. See
Aldevra, supra, at 5 (explaining that FAR subpart
19.14--the only subpart within FAR Part 19 that addresses
set-asides for SDVOSBs--implements the requirements of the
Veterans Benefit Act of 2003, which applies
government-wide, and not the 2006 VA Act, which applies
only to VA procurements).
Finally, we turn to the VA’s additional argument that our
decision in the prior protest did not give meaning to 38
U.S.C. § 8128(a)--a separate subsection of the VA Act,
which provides, in its entirely, as follows:
(a)
Contracting priority.--In procuring goods and services
pursuant to a contracting preference under this title or
any other provision of law, the Secretary [of the VA]
shall give priority to a small business concern owned
and controlled by veterans, if such business concern
also meets the requirements of that contracting
preference.
38
U.S.C. § 8128(a). Based on this subsection, the agency
argues that “if a SDVOSB/VOSB is not a FSS contract
holder, it cannot be viewed as meeting the same
requirements of that contracting preference, the FSS
program, and, therefore, is not entitled to any priority
preference.” AR at 9-10.
We disagree with the VA’s characterization of the FSS
program as a “contracting preference.” Instead, we read 38
U.S.C. § 8127(d) to require a preliminary determination
about whether there was a reasonable expectation that two
or more SDVOSB (or VOSB) concerns can meet the requirement
at a reasonable price. Once the agency makes this
determination, the agency then can determine whether to
apply another contracting preference or to proceed using
FSS procedures.
In sum, we find unreasonable, and inconsistent with the
statute, the agency’s failure to determine whether two or
more SDVOSB concerns can meet the requirement at a
reasonable price before using FSS procedures. (Aldevra,
B-406205, Mar 14, 2012) (pdf)
The VA
contends that Kingdomware has not been prejudiced by the
agency's corrective action because the protester had the
opportunity to submit a quotation in response to the
revised FSS solicitation and chose not to do so.Agency
Report at 2.The VA also argues that, because the protester
did not submit a quotation, it is not an interested party
to further challenge the procurement. Id. at 3.
As an initial matter, we disagree that Kingdomware is not
an interested party to challenge the agency's
actions.Under the Competition in Contracting Act of 1984,
31 U.S.C. sections 3551-3556 (2006) and our Bid Protest
Regulations, 4 C.F.R. sect. 21.0(a)(1) (2011), only an
"interested party" may protest a federal procurement.That
is, a protester must be an actual or prospective bidder or
offeror whose direct economic interest would be affected
by the award of a contract or the failure to award a
contract.Here, Kingdomware protested the terms of the RFQ,
arguing among other things that the VA had not reasonably
determined whether the procurement should be set aside for
SDVOSBs.Kingdomware also timely objected to the VA's
proposed corrective action, arguing that in accordance
with the 2006 VA Act the VA was required to perform market
research to determine whether an SDVOSB set-aside was
appropriate.Where, as here, the protester is challenging
the terms of the solicitation, and the remedy sought is
the opportunity to compete under a revised solicitation,
the protester is an interested party, even if it did not
submit a quotation or offer.See Courtney Contracting
Corp., B-242945, June 24, 1991, 91-1 CPD para. 593 at 4-5.
We also do not agree with the VA that Kingdomware has not
been prejudiced by the agency's actions.As noted above, in
Aldevra, supra, we found that the VA's decision to procure
items from the FSS without determining whether the
procurement should be set aside for SDVOSBs violated the
2006 VA Act.We also noted that the VA's regulations
implementing the 2006 VA Act provide in relevant part:
(a) . . . .the contracting officer shall set aside an
acquisition for competition restricted to SDVOSB
concerns upon a reasonable expectation that:
(1) Offers will be received from two or more eligible
SDVOSB concerns and;
(2) Award will be made at a reasonable price.
VA Acquisition Regulation, 48 C.F.R. sect. 819.7005(a)
(2010).Here, as in Aldevra, the VA has not conducted
market research to determine if there are two or more
eligible SDVOSBs capable of performing the agency's
requirements.
In sum, consistent with our decision in Aldvera, we
conclude that the 2006 VA Act requires that the agency
make a determination whether an acquisition should be set
aside for SDVOSB concerns prior to conducting a
procurement using FSS procedures. (Kingdomware
Technologies, B-405727, December 19, 2011) (pdf)
MICCI
argues that because it offered a lower price than Seawolf,
the [Department of Veterans Affairs] VA was required under
the class deviation to VAAR sect. 804.1102 to notify MICCI
of its status as the apparently successful offeror and
expedite the [VA's Center for Veterans Enterprise] CVE's
review of MICCI's application to be verified and listed in
the VIP database as an [service-disabled, veteran-owned
small business] SDVOSB concern.
The VA argues that MICCI is not an interested party to
pursue this protest because on September 28, 2011, the CVE
denied MICCI's application for inclusion in the [Vendor
Information Pages] VIP database. Agency Report, Tab 4, CVE
Letter to MICCI, Sept. 28, 2011, at 1.
Under the bid protest provisions of the Competition in
Contracting Act of 1984, 31 U.S.C. sections 3551-3556
(2006), only an "interested party" may protest a federal
procurement. That is, a protester must be an actual or
prospective bidder or offeror whose direct economic
interest would be affected by the award of a contract or
the failure to award a contract. Bid Protest Regulations,
4 C.F.R. sect. 21.0(a)(1) (2011). Determining whether a
party is interested involves consideration of a variety of
factors, including the nature of issues raised, the
benefit or relief sought by the protester, and the party's
status in relation to the procurement. Four Winds Servs.,
Inc., B-280714, Aug. 28, 1998, 98-2 CPD para. 57. A
protester is not an interested party where it would not be
in line for contract award were its protest to be
sustained. Id. Here, MICCI would not be in line for award
even if we were to sustain the protest because the CVE has
denied its application for inclusion in the VIP database
as an SDVOSB concern.
MICCI contends that the CVE erred in rejecting MICCI's
application, and that the protester remains an interested
party because it has filed a request for reconsideration
with the CVE and is awaiting the CVE's decision. Comments
at 4. Although MICCI has filed a request for
reconsideration, the determination that MICCI is not an
eligible SDVOSB concern remains in effect, and thus
provides no basis for us to consider the agency's actions.
See A1 Procurement, LLC, B-405535, Nov. 18, 2011; see also
S.A. Saber, B-249874, Dec. 10, 1992, 92-2 CPD para. 403
(holding that small business concern, which had been
determined to be other than small by the Small Business
Administration (SBA), was not an interested party to
challenge award of a small business set-aside contract,
notwithstanding a pending appeal with SBA).
The protest is dismissed. (MICCI
Imaging Construction Company, Inc., B-405654, November
28, 2011) (pdf)
Kingdomware
contends that the agency failed to determine whether this
acquisition was suitable for an SDVOSB set-aside and, as a
result, the agency improperly competed the requirement on
an "unrestricted" basis. Protest at 1, 6; Comments
at 4-5. In this regard, Kingdomware argues that the agency
failed to comply with FAR sect. 19.502-2(b), which
generally requires than an agency set aside acquisitions
with an anticipated dollar value of more than $150,000 for
small businesses where there is a reasonable expectation
of receiving fair market prices from at least two small
business concerns. In support of its position that the
solicitation should have been set aside for SDVOSBs,
Kingdomware also relies on FAR sect. 19.1405, which
generally provides that an agency may set aside
acquisitions for SDVOSBs when there is a reasonable
expectation that offers will be received from at least two
SDVOSBs and award will be made at a fair market price.
Protest at 1, 6; Comments at 4-5. Kingdomware asserts that
it provided the agency with information indicating that
numerous SDVOSBs could provide the required emergency
notification service. Protest at 5; Comments at 8, 10, 12.
The regulations that implement small business programs and
the GSA FSS program expressly anticipate and exclude FSS
purchases from the set-aside requirements in FAR part 19.
In particular, FAR sect. 8.404(a) and FAR sect.
38.101(e)--both of which pertain to FSS
purchasing--provide that FAR part 19 does not apply to
orders placed against FSS contracts. Similarly, FAR sect.
19.502-1(b), which pertains to small business set-aside
requirements, also provides that FAR part 19 set-aside
requirements do not apply to FSS purchases. In sum, the
FAR part 19 regulations on which Kingdomware's protest is
predicated do not impose a requirement on agencies to
first evaluate whether a solicitation should be set-aside
for small businesses--or SDVOSBs--before purchasing the
goods or services through the FSS program. Edmond Computer
Co.; Edmond Sci. Co., B-402863, B-402864, Aug. 25, 2010,
2010 CPD para. 200 at 2-3; Future Solutions, Inc.,
B-293194, Feb. 11, 2004, 2004 CPD para. 39 at 3.
Accordingly, it was not improper for the agency here not
to set this requirement aside for SDVOSBs, and
Kingdomware's arguments to the contrary provide no basis
on which to sustain the protest.
Kingdomware asserts that the solicitation is defective in
two other respects. First, Kingdomware objects to the
solicitation's reference to the MOBIS schedule. Protest at
6. Second, Kingdomware objects to the requirement that the
emergency notification service include a capability to
notify and receive responses through social media, such as
Instant Messenger, Facebook, and Twitter. Protest at 7.
Kingdomware contends that this requirement amounts to a
government endorsement of the use of social media by
federal employees during work, and that such a requirement
is unnecessary because emergency notifications and
responses "could [occur] directly through the emergency
notification solution." Id.
With respect to the solicitation's reference to MOBIS, the
agency responds that the reference was an error.
Contracting Officer's Statement para. 17. The agency,
however, maintains that the error did not prejudice
Kingdomware because the solicitation was sent only to
vendors that hold GSA Schedule 70 contracts--including
Kingdomware-- and because the agency received no vendor
questions regarding the reference. Id.; Memorandum of Law
at 4-5. With respect to the solicitation's social media
notification capability requirement, the agency responds
that the requirement reflects the agency's need to quickly
alert staff as to a potential emergency in a broad range
of formats. Contracting Officer's Statement para.15. The
social media format is necessary, the agency explains, in
the event that problems arise with other communication
formats, such as when cellular telephone service is
disrupted or overloaded. Id. paras. 15, 16. The agency
further explains that the social media notification
capability is useful for reaching employees when they are
not in the workplace. Id. para. 16.
Kingdomware in its comments on the agency report did not
rebut the agency's responses regarding the MOBIS reference
or the social media notification capability requirement.
Consequently, we consider these protest grounds to be
abandoned. Washington-Harris Group, B-401794,
B-401794.2, Nov. 16, 2009, 2009 CPD para. 230 at 5 n.3;
Strategic Res., Inc., B-287398, B-287398.2, June 18, 2001,
2001 CPD para. 131 at 10-11. (Kingdomware
Technologies, Inc., B-405533.2, November 10, 2011)
(pdf)
The
protester contends that the sole-source awards are
improper because the VA failed to consider other qualified
SDVOSBs for award. Protest (B-405492) at 1; Protest
(B-405493) at 1. The protester argues that the VA should
have set aside these procurements for SDVOSBs--and not
have awarded sole-source contracts--because two or more
SDVOSBs would have submitted offers for the work. Protest
(B‑405492) at 1; Protest (B-405493) at 1; Comments at 1.
Under the Veterans First Contracting Program, the VA has
authority to award contracts using other than full and
open competition (including set-aside procurements and
sole-source awards) in certain circumstances. See 38 U.S.C.
sect. 8127. With regard to setting aside procurements
exclusively for veteran-owned small businesses (VOSBs) or
SDVOSBs, 38 U.S.C. sect. 8127(d) states:
Except as provided in subsections (b) and (c), . . . a
contracting officer of the [VA] shall award contracts on
the basis of competition restricted to [VOSBs or SDVOSBs]
if the contracting officer has a reasonable expectation
that two or more [VOSBs or SDVOSBs] will submit offers
and that the award can be made at a fair and reasonable
price that offers best value to the United States."
38 U.S.C. sect. 8127(d) (emphasis added); see Buy Rite
Transport, B-403729, B-403768, Oct. 15, 2010, 2010 CPD
para. 245 at 3.
Subsection (c), referred to in the above provision,
provides the VA with authority to award sole-source
contracts to SDVOSBs when:
(1) such concern is determined to be a responsible
source with respect to performance of such contract
opportunity;
(2) the anticipated award price of the contract
(including options) will exceed the simplified
acquisition threshold . . . but will not exceed
$5,000,000; and
(3) in the estimation of the contracting officer, the
contract award can be made at a fair and reasonable
price that offers best value to the United States.
38 U.S.C. sect. 8127(c); see Apex Ltd., Inc., B-402163,
Jan. 21, 2010, 2010 CPD para. 35 at 2; In & Out Valet
Co., B-311141, April 3, 2008, 2008 CPD para. 71 at 3.
Subsection (b) provides that, for contracts with SDVOSBs
for amounts less than the simplified acquisition
threshold, the VA is also authorized to use noncompetitive
procedures. 38 U.S.C. sect. 8127(b).
Here, the VA awarded the sole-source contracts to FCX
pursuant to its authority under the Veterans First
Contracting Program. The protester's assertion that the VA
should have set aside the procurements for SDVOSBs is
without merit because the requirement to set aside certain
procurements only applies when the VA does not use its
sole-source authority under the Veterans First Contracting
Program. As emphasized above, the VA is required to set
aside certain procurements "[e]xcept as provided in
subsections (b) and (c) . . . ." 38 U.S.C. sect. 8127(d).
Subsections (b) and (c) are the VA's authority under the
Veterans First Contracting Program to award sole-source
contracts to SDVOSBs. See 38 U.S.C. sections 8127(b) and
(c). Therefore, because the VA used the authority provided
in 8127(b) and 8127(c) to award sole‑source contracts to
FCX, the VA was not required to set aside for SDVOSBs
these procurements.
The record here shows that the agency's decision to award
these sole-source contracts to FCX was in accord with the
statute authorizing the award of sole-source contracts to
SDVOSBs. See Apex Ltd., Inc., supra. Accordingly, we find
no basis to sustain the protests. (Crosstown
Courier Service, Inc., B-405492, B-405493, November 8,
2011) (pdf)
VA argues
that neither the VA Act, nor the VA's implementing
regulations, require the agency to consider SDVOSB and
VOSB set-asides prior to determining whether to purchase
goods or services through the [Federal Supply Schedule]
FSS program. AR, July 20, 2011, at 3; AR, Sept. 27, 2011,
at 2. The agency contends that it has the discretion to
determine whether to meet its requirements through the FSS
before procuring from other sources—such as SDVOSBs or
VOSBs. Id.
We see nothing in the [Veterans Benefits, Health Care, and
Information Technology Act of 2006] VA Act or the VAAR
that provides the agency with discretion to conduct a
procurement under FSS procedures without first determining
whether the acquisition should be set aside for SDVOSBs.
The provisions of both the VA Act and the VAAR are
unequivocal; the VA "shall" award contracts on the basis
of competition restricted to SDVOSBs where there is a
reasonable expectation that two or more SDVOSBs will
submit offers and award can be made at a fair and
reasonable price. Thus, contrary to the agency's position,
the VA Act requires, without limitation, that the agency
conduct its acquisitions using SDVOSB set asides where the
necessary conditions are present. 38 U.S.C. sect.
8127-8128.
Moreover, since the agency concedes that there are at
least two SDVOSBs capable of meeting its requirements
under solicitation RQ-1170, it must set this requirement
aside exclusively for SDVOSBs. Because the agency did not
conduct market research to determine if there are two or
more SDVOSB concerns capable of performing the
requirements under solicitation 179-0306, it must conduct
market research and, if it determines that there are two
or more firms capable of performing the requirements, it
must set this requirement aside exclusively for SDVOSB
concerns.
In our view, the discussion above disposes of the question
raised by this protest. The VA has argued, however—in
pleadings filed in response to this protest, and in
pleadings filed in several other protests currently
pending before our Office—that it addressed and resolved
the applicability of the VA Act to the FSS when it
promulgated the above-quoted provisions of the VAAR. AR,
July 20, 2011, at 6-7; AR, Sept. 27, 2011, at 3.
The comments on the agency's proposed regulations, and the
agency's responses in answer to those comments, were
published in the Federal Register, which included the
following exchange addressing the applicability of the VA
Act to FSS acquisitions:
Comment: VA received a comment stating that the
proposed rule was unclear whether it was intended to be
applicable to task and delivery orders under the Federal
Supply Schedule (FSS). The commenter indicated that
although GSA [General Services Administration] has
delegated to VA the authority to administer certain
schedules, the delegation does not extend to policy
implementation. The commenter recommended a revision
stating that SDVOSB and VOSB set-asides and sole source
provisions do not apply at the FSS order level.
Response: We disagree with the commenter and
reject the suggestion because this rule does not apply
to FSS task or delivery orders. VA does not believe a
change to the regulation is needed, and 48 CFR part 8
procedures in the FAR [Federal Acquisition Regulation]
will continue to apply to VA FSS task/delivery orders.
Further, VA will continue to follow GSA guidance
regarding applicability of 48 CFR part 19 of the FAR,
Small Business Programs, which states that set-asides do
not apply to FAR part 8 FSS acquisitions.
74 Fed. Reg. 64619 (Dec. 8, 2009). As stated above,
the VA contends that this commentary addressed and
resolved the applicability of the VA Act to FSS
acquisitions. The VA also contends that it reasonably
relied on the FAR in concluding that the VA Act does not
apply to FSS acquisitions.
As the VA correctly points out, FAR sect. 8.404 (a)
expressly provides that the requirements related to small
businesses in FAR part 19 are inapplicable to FSS
acquisitions with the exception of FAR sect. 19.202-1
(e)(1)(iii) (not relevant here). FAR part 19 includes
requirements relating to various small business programs.
Of relevance here, FAR subpart 19.14 includes provisions
relating to one program for the award of contracts to
SDVOSBs; this is the only subpart of FAR part 19 that
addresses set-asides for SDVOSBs. Subpart 19.14, however,
implements the requirements of the Veterans Benefit Act of
2003, which was codified at 15 U.S.C. sect. 657f (2006),
and applies government-wide. See FAR sect. 19.1402. The
2006 VA Act, which is codified at 38 U.S.C. sections 8127,
8128, applies only to VA procurements. See Angelica
Textile Servs., Inc. v. U.S., 95 Fed. Cl. 208, 222 (2010)
(noting that the VA is the only agency to which the
requirements of the Veterans Benefits Act of 2006 apply).
In addition—and in contrast to the 2006 VA Act at issue
here—the Veterans Benefit Act of 2003 provides, in
relevant part, that:
In accordance with this section, a contracting officer
may award contracts on the basis of competition
restricted to small business concerns owned and
controlled by service-disabled veterans if the
contracting officer has a reasonable expectation that
not less than 2 small business concerns owned and
controlled by service-disabled veterans will submit
offers and that award can be made at a fair market
price.
15 U.S.C. sect. 657f (b) (emphasis added).
Simply stated, the 2003 government-wide program is
separate and distinct from the VA-specific program created
by the VA Act of 2006. As a result, the FAR language
implementing the 2003 Act—and exempting the FSS program
(among other programs) from its requirements—has no
application to the statute at issue here. In addition, the
program created by the 2003 statute is permissive in
nature, insofar as it provides that contracting officers
"may" restrict competition to SDVOSBs in appropriate
circumstances. See, e.g., Mission Critical Solutions,
B-401057, May 4, 2009, 2009 CPD para. 93 at 3.
In light of these considerations, we conclude that the
exception in the FAR that permits agencies to award task
and delivery orders under the FSS without regard to
government-wide small business programs—including the
SDVOSB set-aside program created by the 2003 statute (and
implemented by FAR subpart 19.14)—does not govern, or
apply to, the SDVOSB set-aside program created by the
Veterans Benefits, Health Care, and Information Technology
Act of 2006.
RECOMMENDATION
We recommend that the agency cancel solicitation RQ-1170
and re-solicit its requirements using a SDVOSB set-aside.
We recommend that the agency conduct a reasonable market
research regarding its requirements under solicitation
179-0306, and, that it cancel solicitation 179-0306 and
re-solicit its requirements using a SDVOSB set-aside if it
determines that there are two or more SDVOSB concerns
capable of performing the requirements. We also recommend
that the agency reimburse the protester the costs of
filing and pursuing the protests. 4 C.F.R. sect.
21.8(d)(1) (2011). (Aldevra,
B-405271; B-405524, October 11, 2011) (pdf)
The
protester argues that the VA improperly rejected its bid
because the contracting officer incorrectly determined
that FedCon was not listed in the VIP database, and
because the firm qualifies for an expedited verification
review of its VIP application under the class deviation.
Protest at 2; Comments at 2. The VA contends that FedCon
was not listed in the VIP database at the time of award,
and therefore FedCon does not qualify for an expedited
verification decision under the class deviation and is
ineligible for award. AR at 4-5.
As noted above, an SDVOSB firm must be listed in the VIP
database in order to receive a contract award in an SDVOSB
set-aside procurement. 38 U.S.C. sect. 8127(e). A firm
cannot be listed in the VIP database without the VA first
verifying the firm's SDVOSB status. 38 U.S.C. sect.
8127(f)(4). In connection with solicitations issued on or
after October 1, 2010 (such as the one here), the class
deviation permits an expedited review of firms that are
listed but not verified in the VIP database if those firms
are selected for award. Protest, encl. 1, VA Memorandum,
at 1-5; IFB at 10. Otherwise, the review of a firm's
SDVOSB status will be completed, "when practicable,"
within 60 days after receipt of a completed application
for verification. 38 C.F.R. sect. 74.11.
Here, FedCon does not assert that it was listed but not
verified in the database prior to enactment of the
pre-listing verification requirement in October 2010, such
that the firm would qualify for an expedited review of its
status if selected for award. Rather, FedCon asserts only
that it commenced the application process for verification
and listing on June 9, 2011.[7] FedCon did not complete
the verification application until August 15 (two months
after bid opening), and CVE is currently reviewing the
firm's status on a non-expedited basis. Agency Response to
GAO Questions, Sept. 1, 2011, at 3; Comments at 3. Given
that FedCon was not listed in the VIP database when it
submitted its application, the firm is not entitled to an
expedited review of its status. Instead, the firm is
statutorily precluded from being listed in the VIP
database until its SDVOSB status is verified. See 38 U.S.C.
sect. 8127(f)(4). Because the firm was not listed in the
database at the time of award, and is not entitled to an
expedited review of its SDVOSB status, the firm is
ineligible for award of the contract here. See 38 U.S.C.
sect. 8127(e).
The protest is denied. (FedCon
RKR JV LLC, B-405257, October 4, 2011) (pdf)
Further, the agency notes (and Pro South-Emcom does not
dispute) that, although one member of the Pro South-Emcom
joint venture (Pro South Construction LLC) was registered
as an SDVOSB on the VetBiz database, the joint venture
itself was not. Accordingly, the agency maintains that the
joint venture was not eligible for award. We agree.
The Veterans Benefits, Health Care, and Information
Technology Act of 2006, Pub. Law No. 109-461, provides the
VA with independent authority to restrict competition to
SDVOSB concerns under certain circumstances. 38 U.S.C.
sect. 8127(d). In this regard, 38 U.S.C. sect. 8127(e)
states that a small business concern may be awarded a
contract only if the small business concern and the
veteran owner of the small business concern are listed in
a database of veteran-owned small business (VOSB)
concerns, which the Act requires the Secretary of Veterans
Affairs to maintain. The Secretary is required to verify
that each small business concern listed in the database is
owned and controlled by veterans, and where a
service-connected disability is indicated, to verify the
service-disabled status of the veteran. 38 U.S.C. sect.
8127(f).
We have specifically held, with regard to facts virtually
identical to those presented here, that the requirements
for registration on the VetBiz database are applicable to
a joint venture offeror, and the fact that one member of
the joint venture is registered does not meet those
requirements. A-1 Procurement, JVG, B-404618.3, July 26,
2011, 2011 CPD para. __.
Here, while Pro South Construction Services, LLC, one of
the joint venturers, is an SDVOSB concern listed in the
VetBiz database, the record shows that the joint venture
offeror itself--Pro South-Emcon--is not. Accordingly, Pro
South-Emcom was not eligible for award under the terms of
the solicitations. Id. (Pro
South-Emcon, a Joint Venture, B-405267; B-405268,
August 18, 2011) (pdf)
Al JVG
protests that the VA's rejection of its proposal was
unreasonable because the contracting officer erroneously
concluded that the joint venture was not listed in the
VetBiz database. A1 JVG argues that, under VAAR sect.
819.7003(b) and (c), the joint venture could rely on the
VetBiz listing of the SDVOSB managing partner in the joint
venture.
As an initial matter, the VA contends, citing our decision
in TEC/WEST-TEC JV, B‑402573.3, July 30, 2010, 2010 CPD
para. 174, that GAO does not have jurisdiction to review
the contracting officer's determination that A1 JVG is
ineligible for award in this procurement. We agree that a
firm's status as an SDVOSB concern and the VA's
determination as to whether a firm should be included in
the VetBiz database are not within our bid protest
jurisdiction, as these have been given to VA to determine.
TEC/WEST-TEC JV, supra, at 2-3.
In TEC/WEST-TEC JV, the protester challenged the SDVOSB
status of the awardee. We concluded that GAO did not have
jurisdiction to resolve protests of a firm's SDVOSB status
under VA's Veterans First program because the Veterans
Benefits, Health Care, and Information Technology Act of
2006 requires that SDVOSB eligibility be determined on the
basis of a list maintained in a VA-controlled database
(i.e., known alternatively as the VetBiz or VIP database),
and that a firm's inclusion on the list is to be
determined and verified by the VA. See 38 U.S.C. sect.
8127(e) and (f).
The protest here, however, does not concern the agency's
determination regarding the inclusion of a firm in the
VetBiz database. Rather, A1 JVG protests the contracting
officer's decision that the joint venture was not listed
in the VetBiz database and is thus ineligible for award.
As with other contracting officer procurement decisions,
we will review whether that decision is reasonable and
consistent with applicable procurement laws and
regulations. See e.g., Eagle Home Med. Corp., B‑402387,
Mar. 29, 2010, 2010 CPD para. 82 at 4 n.4; see generally,
SPM Mfg. Corp., B‑228078.2, Apr. 18, 1988, 88-1 CPD para.
370 at 2-3 (GAO will review an agency's determination of a
small business's nonresponsibility where the Small
Business Administration concludes that the issue is not
subject to its review); Gutierrez-Palmenberg, Inc.,
B-255797.3, et al., Aug. 11, 1994, 94-2 CPD para. 158 at 8
(GAO will review competitive 8(a) procurements for
compliance with applicable procurement laws and
regulations). Moreover, as the regulations at issue here
represent the VA's implementation of a VA-specific
procurement statute, we are required to give deference to
an agency's reasonable interpretation of its regulations.
Singleton Enters.-GMT Mech., A Joint Venture, B-310552,
Jan. 10, 2008, 2008 CPD para. 16 at 3.
Here, we agree with the VA's conclusion that A1 JVG was
not eligible to receive award under the VA's regulations
implementing the Veterans Benefits, Health Care, and
Information Technology Act of 2006. Contrary to the
protester's arguments, VAAR sect. 819.7003(c)(1) does not
exempt a joint venture from the requirement that it must
be listed in the VetBiz database to be eligible for award.
Subsection (b) of VAAR sect. 819.7003 plainly provides
that, to be eligible for award under a VA veteran-owned
small business program set‑aside, an offeror must
represent that it is an SDVOSB or VOSB concern and is
listed in the VetBiz database. The offeror here is A1 JVG,
and A1 JVG--as opposed to A1 LLC--is not listed.
Subsection (c) of the regulation does not propose an
alternate method for offerors to be viewed as eligible for
award under this program. Instead, the subsection states
that a joint venture may be considered to be an SDVOSB or
VOSB concern for a procurement if one member of the joint
venture is an SDVOSB or VOSB and, as relevant here, the
SDVOSB or VOSB member of the joint venture is listed as
verified in the VetBiz database. See VAAR sect.
819.7003(c)(1). Satisfying the requirements in subsection
(c) allows a joint venture to be considered to be an
SDVOSB or VOSB offeror under subsection (b)(1). The joint
venture offeror must still satisfy the remaining
requirements of subsection (b), that is, as relevant here,
to be listed in the VetBiz database.
In sum, given that the joint venture is not listed in the
VetBiz database, which the VA has required in its
implementation of this program, the contracting officer
reasonably rejected A1 JVG's proposal as ineligible for
award. This is the extent of our limited review in this
matter. The question of whether A1 JVG will ultimately be
included on the list of contractors eligible for award is
a matter for the VA, not our Office. TEC/WEST-TEC JV,
supra.
The protest is denied. (A1
Procurement, JVG, B-404618.3, July 26, 2011) (pdf)
The
Veterans First Contracting Program, created by the
Veterans Benefits, Health Care, and Information Technology
Act of 2006, 38 U.S.C. sect. 8127, and implemented by
Veterans Affairs Acquisition Regulation (VAAR) sections
819.7004, 819.7005, provides the VA with independent
authority to set aside contracts for SDVOSB and VOSB
firms. See Apex Ltd., Inc., B-402163, Jan. 21, 2010, 2010
CPD para. 35 at 2. The Program provides that SDVOSB firms
receive first priority for VA contract awards, and that
VOSB firms receive second priority. 38 U.S.C. sect.
8127(i); VAAR sect. 819.7004. Further, under the Program,
acquisitions must be set aside for SDVOSB firms if the VA
determines that there is a reasonable expectation that
offers will be received by at least two SDVOSB firms and
that award can be made at a fair and reasonable price. 38
U.S.C. sect. 8127(d); VAAR sect. 819.7005. Generally, a
procurement set-aside determination is a business judgment
within the contracting officer's discretion, which we will
not disturb absent a showing that it was unreasonable.
Eagle Home Med. Corp.--Costs, B-299821.3, Feb. 4, 2008,
2008 CPD para. 41 at 2. Here, Buy Rite does not show that
the VA unreasonably determined that it would receive
offers from two or more SDVOSB firms at fair and
reasonable prices.
The VA explains that, in preparation for the initial
solicitation, it conducted its initial search for SDVOSB
firms using the wrong search term, and found no SDVOSB
firms listed. AR at 2. The VA states that after Crosstown
Courier protested to our Office, the agency recognized its
error and conducted another search in its Vetbiz database
under the appropriate NAICS code, 492110, couriers and
express delivery services, and found over 100 SDVOSB firms
listed. Id. The VA reissued the requirements as SDVOSB
set-asides. Id. at 3. In addition, the contracting officer
points out that it had received four offers from SDVOSB
firms under the initial procurement. Id., Tab 14,
Memorandum to File, Aug. 9, 2010.
Buy Rite disputes many of the factual details of the VA's
statement of explanation about why it reissued the
requirements as SDVOSB set-asides. For example, Buy Rite
points out that the VA stated that their initial search
term was "taxi services" but the documentation it provided
concerning its searches does not include the term.
Comments at 2. Buy Rite is correct; the documentation
provided by the VA shows that the VA used the NAICS code
for taxi services in its search, not the actual words
"taxi services." Buy Rite also contends that the timing of
the various searches that the VA states that it performed
do not correspond with the documentation the VA provided
to support its explanation. Id. Again, Buy Rite is
correct. Nonetheless, even though the agency's
after-the-fact explanation contains factual inaccuracies,
we will not disturb a set-aside decision when subsequent
events justify the decision. See York Int'l Corp.,
B-244748, Sept. 30, 1991, 91-2 CPD para. 282 at 7.
Regardless of the precise date when the VA conducted its
search, the search results provided a reasonable basis for
the VA to conclude that it would receive at least two
offers from SDVOSB firms. In addition, we performed our
own search to confirm the accuracy of the VA's results.
Moreover, the receipt of four offers from SDVOSB firms in
response to the original RFP further confirms the VA's
decision to set aside the requirements.
Buy Rite also argues that the VA's determination is
unreasonable because no California-based SDVOSB firms meet
the RFP requirements. In this regard, Buy Rite appears to
argue that the VA should have limited its search to SDVOSB
firms located in California, as the VA did in its original
search. Comments at 3. However, Buy Rite has not
identified any provision in the solicitation or in any
statute or regulation--nor are we aware of any--that would
require such a limitation. Nor has Buy Rite explained why
a firm with an address outside of California would be
unable to perform these requirements. Moreover, the
question of whether a company--wherever located--is
capable of performing the contract is a matter of
responsibility, which we generally will not consider. 4
C.F.R. sect. 21.5(c) (2010); see Marinette Marine Corp.,
B‑400697, et al., Jan. 12, 2009, 2009 CPD para. 16 at 23.
In sum, we conclude that the VA's decision to set aside
these procurements for SDVOSB firms was reasonable,
considering its search of the Vetbiz database, and its
receipt of four offers from SDVOSB firms in response to
the prior solicitation, which was set aside for VOSB
firms. (Buy Rite Transport,
B-403729; B-403768, October 15, 2010) (pdf)
The [Department of Veterans Affairs] VA issued regulations
implementing the Act which, as relevant here, state as
follows:
(a) . . . Except as authorized by 813.106, 819.7007 and
819.7008, the contracting officer shall set aside an
acquisition for competition restricted to
[service-disabled veteran-owned small business] SDVOSB
concerns upon a reasonable expectation that
(1) Offers will be received from two or more eligible
SDVOSB concerns and;
(2) Award will be made at a reasonable price.
[Veterans Affairs Acquisition Regulation] VAAR, 48 C.F.R.
sect. 819.7005(a) (emphasis added).
We see nothing in the VA Act or the VA regulations that
exempts A/E procurements from the set-aside requirement.
The VAAR does specify three exceptions to the requirement
that contracting officers set aside acquisitions for
SDVOSB concerns, but the fact that a procurement is for
A/E services is not one of them. In fact, as discussed
below, the VA itself offers no defense of its position
based on the plain language of the Act or its regulations.
Further, the Brooks Act, which prescribes procedures for
conducting A/E procurements with a particular focus on how
price is to be considered, is silent with respect to
set-asides; nothing contained in it or its implementing
regulations (FAR subpart 36.6) suggests a reasonable basis
for asserting that A/E procurements are exempt from the
Act or the VA regulations.
The agency offers several defenses of its decision not to
set aside these requirements. We consider each of them in
turn.
The agency argues that its implementing regulation--the
VAAR provision quoted above--"did not otherwise modify or
supplement FAR Part 36.6 [on the conduct of A/E
procurements]," AR at 3, and that "set-asides are not
generally applicable to A-E services contracting." Id. We
see no relevance to the agency's accurate observation that
its regulations did not modify the FAR provisions
regarding A/E services procurements. The agency has
offered no rationale, and we are aware of none, for why
the fact that the VAAR did not modify FAR Part 36.6 would
render the VAAR inapplicable to A/E services procurements.
Moreover, while the agency asserts that set-asides are not
"generally applicable" to A/E services contracting, it
offers no legal foundation for this claim and, again, no
rationale for why--even if true--it necessarily follows
that the VA Act and the VAAR are inapplicable to A/E
services procurements.
In the course of promulgating its regulations, the agency
requested comments on them. Selected comments and agency
responses were published in the Federal Register,
including the following exchange that addresses the
applicability of the then-proposed regulations to A/E
services contracts. Because this exchange is the principal
basis for the VA's argument that the statutory set-aside
requirement does not apply to A/E procurements, we set it
out in full, as follows:
3. Applicability to Architect-Engineering (A/E) Services
Comment: Several commenters asked whether proposed
subpart 819.70 applies to the award of sole source VOSB
and SDVOSB contracts for A/E contracts.
Response: This rule does not apply to the procedures to
procure A/E services. Pursuant to the Brooks Act (Pub.
L. 92-582), A/E services cannot be awarded on a sole
source basis. The Brooks Act requires Federal agencies
to publicly announce all requirements for A/E services,
and to negotiate contracts for A/E services on the basis
of demonstrated competence and qualifications for the
type of professional services required at fair and
reasonable prices. The sole source authority in 38 U.S.C.
[sect.] 8127 does not override the Brooks Act because
under general principles of statutory interpretation the
specific governs over general language. In this
instance, A/E contracting statutes govern versus
contracting in general. However, since the Small
Business Competitiveness Demonstration Program in [FAR
subpart 19.10] includes A/E services as a designated
industry group (DIG), VA contracting officers may use
the provisions of 38 U.S.C. [sect.] 8127 and this rule
when procuring [designated industry group] requirements
[which include A/E services]. Section 19.1007(b)(2) of
the FAR, 48 C.F.R. [sect.] 19.1007(b)(2), establishes
that Section 8(a), Historically Underutilized Business
(HUB) Zone and SDVOSB set-asides, must be considered in
DIG acquisitions. However, using the provisions of 38
U.S.C. [sect.] 8127 and this rule, VA personnel may
change the order of priority to consider SDVOSB and VOSB
set-asides before Section 8(a) and HUB Zone set-asides
when procuring A/E services under the Small Business
Competitiveness Demonstration Program.
VA Acquisition Regulation: Supporting Veteran-Owned and
Service-Disabled Veteran-Owned Small Businesses, 74 Fed.
Reg. 64620 (Dec. 8, 2009).
The agency argues that this comment and response
interpreted A/E services procurements to be exempt from
the regulation's set-aside requirement and that the
agency's interpretation is due deference as the VA's
"specific interpretation included in the rulemaking
process." AR at 3.
We disagree with the agency that this comment and response
reasonably can be read to mean that the VA interpreted its
regulation to include an across-the-board exemption from
the statutory set-aside requirement for A/E services
procurements. The comment to which the VA was responding
concerned only the issue of sole-source awards of A/E
services contracts. Likewise, the agency's response
repeatedly addressed the issue of whether the proposed
regulation applied to the issuance of sole‑source A/E
services contracts. Far from indicating that the VA
regarded all A/E services procurements as exempt from the
regulation, the VA's response noted that "VA contracting
officers may use the provisions of 38 U.S.C. [sect.] 8127
and this rule when procuring [A/E services] requirements,"
referring to the very statute that imposes the set-aside
requirement. We see no reasonable basis on which to
conclude that this exchange in the Federal Register was
intended to, or in fact did, indicate that the VA
interpreted its proposed regulation to exempt A/E services
procurements from the SDVOSB set-aside requirement.
More important, even if the Federal Register comment and
response said what the agency claims, it would not, as the
agency asserts, warrant deference as an agency
interpretation of a statute arrived at through rule-making
or adjudication. In matters concerning the interpretation
of a statute, the first question is whether the statutory
language provides an unambiguous expression of the intent
of Congress. If it does, our analysis ends there, for the
unambiguous intent of Congress must be given effect.
Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 842-43 (1984); Mission Critical Solutions,
B-401057, May 4, 2009, 2009 CPD para. 93 at 6. Here, the
statutory requirement that certain VA acquisitions be set
aside for SDVOSB concerns is clear, and the agency has
offered no sufficient explanation of the need to consult
the Federal Register.
In any event, deference to the interpretation of an
administering agency is dependent on the circumstances.
Chevron, 467 U.S. at 843‑45; United States v. Mead Corp.,
533 U.S. 218, 227-37 (2001). Where an agency interprets an
ambiguous provision of the statute through a process of
rule-making or adjudication, unless the resulting
regulation or ruling is procedurally defective, arbitrary,
or capricious in substance, or manifestly contrary to the
statute, deference will be given to the agency's
interpretation. Mead, 533 U.S. at 227-31; Chevron, 467
U.S. at 843-44. However, where the agency's position
reflects an informal interpretation, Chevron deference is
not warranted; in these cases, the agency's interpretation
is "entitled to respect" only to the extent it has the
"power to persuade." Gonzales v. Oregon, 546 U.S. 243,
255‑56 (2006).
Here, the comment and response appear in the Federal
Register as part of the rule-making process, but the
response is merely that, a response to a comment. The
agency "interpretation" of the statute in question, 38
U.S.C. sect. 8127(d), is found in the regulation itself,
VAAR sect. 819.7005, which unambiguously requires VA
contracting officers to set aside an acquisition for
competition restricted to SDVOSB concerns upon a
reasonable expectation that competitive offers will be
received from two or more eligible SDVOSB concerns. VAAR
sect. 819.7005(a).
The agency argues that its Federal Register response was
intended to address an ambiguity between the Brooks Act
and the set-aside requirement in the VA Act, pointing to
the fact that the Brooks Act selection procedures require
discussions with at least three firms while the VA Act
contemplates set-asides when there is the expectation that
two or more firms are expected to submit competitive
offers. According to the VA, "an ambiguity existed as to
whether the set-aside and priority [under 38 U.S.C. sect.
8127] would apply to A&E contracting or the 'rule of
three' associated with the Brooks Act would apply." Agency
Comments, Sept. 21, 2010, at 8. As a result, the agency
argues, the VA Act and the VAAR cannot be read as
requiring the set-aside of A/E services procurements, and
its Federal Register response was intended to so indicate.
Contrary to the agency's position, the difference in the
statutes does not establish the incompatibility of the
Brooks Act with the VA Act or the VAAR, such that the VA
is precluded from setting aside A/E services procurements
for small businesses. While the award of a contract for
A/E services must be governed by the policy expressed in
the Brooks Act, the "zone of competition eligible for
award" may properly be limited by set-asides for
particular types of firms. Vector Eng'g, Inc., B‑193874,
Oct. 11, 1979, 79-2 CPD para. 247 at 7-8.
In sum, we conclude that the VA Act and the VAAR do not
exempt A/E services procurements from the statutory
requirement that VA set aside procurements for SDVOSB
concerns where the prerequisites set out in the Act are
met. Accordingly, we recommend that for each of the eight
requirements at issue here, the agency determine whether
there is a reasonable expectation that it would receive
offers from two or more eligible SDVOSB concerns and award
would be made at a reasonable price. For each requirement
where there is such an expectation, we recommend that the
VA solicit the requirement on the basis of a competition
restricted to SDVOSB concerns. We also recommend that
Powerhouse be reimbursed the costs of filing and pursuing
the protest, including reasonable attorneys' fees. 4 C.F.R.
sect. 21.8(d)(1) (2010). Powerhouse should submit its
certified claim for costs, detailing the time expended and
costs incurred, directly to the contracting agency within
60 days after receipt of this decision. Id. sect.
21.8(f)(1).
The protests are sustained. (Powerhouse
Design Architects & Engineers, Ltd., B-403174; B-403175;
B-403176; B-403177; B-403633; B-403647; B-403648;
B-403649, October 7, 2010) (pdf)
In the
instant protest, the VA and the intervenor argue that the
agency's actions here were fully in accord with the SBA's
February 1 decision decertifying CEI, and our Office's
decisions in Singleton I and Singleton II, which required
the VA to reject CEI's offer once the VA learned of the
SBA's February 1 decision decertifying CEI. They argue
that, unlike in Singleton I, the contracting officer in
this procurement did not make a determination on CEI's
SDVOSBC status, but rather, as in Singleton II, merely
followed an existing SBA determination of CEI's SDVOSBC
status that was in effect at the time the agency intended
to make award. Thus, the VA and the intervenor conclude
that the VA did not reject CEI's offer on the basis of any
VA determination, but on the basis of a standing SBA
decision that CEI was "ineligible to bid on or receive any
future SDVOSBC contracts." SBA Decision, Feb. 1, 2010, at
1.
In our view, this interpretation of the facts and relevant
regulations and decisions is consistent with the SBA's
position in the Singleton II protest. Specifically, we
think the result in Singleton II supports the VA's
conclusion that once the SBA determines that an offeror
does not qualify as an SDVOSBC, the applicable regulations
(13 C.F.R. sections 125.27 and 125.28) bar that offeror
from being considered on any other SDVOSBC procurement
until the determination is overturned on appeal to OHA, or
the SBA grants prospective recertification pursuant to 13
C.F.R sect. 125.27.
We solicited the views of the SBA in reference to CEI's
protest. In contrast to the SBA's previous advice on this
issue, the SBA now contends that the VA should have
considered CEI's offer and, if CEI were the apparently
successful offeror, referred the matter of CEI's SDVOSBC
status to the SBA for decision as an SDVOSBC status
protest. Regarding the Singleton II decision, the SBA
stated that although in that case it "acquiesced to a
procuring agency's rejection of an offer based on a
negative SDVO eligibility determination rendered in
connection with an SDVO representation made on a prior
procurement," in Singleton II "there was no reason to
believe that the protester might have been eligible in
connection with the procurement in question despite having
been found to be ineligible in connection with the prior
procurement." SBA Opinion, Apr. 23, 2010, at 3. In
addition the SBA now maintains that the contracting
officer in Singleton II should have referred the question
of Singleton's status to the SBA. The SBA also explains
that, because there was no reason to believe that
Singleton was an eligible SDVOSBC in that case, the
failure to refer to SBA was a "harmless error." SBA
Submission, May 7, 2010, at 3.
As required by the Small Business Act, as amended by the
Veterans Benefits Act, 15 U.S.C. sections 637(m)(5),
657f(d), the SBA has established procedures for interested
parties to challenge a firm's size or status as a
qualified SDVOSBC. 13 C.F.R. sections 125.24-125.28. The
SBA has long interpreted these regulations to mean that
questions concerning SDVOSBC status are not for resolution
by the procuring agency, but by the SBA. Singleton
Enters.--GMT Mech., A Joint Venture, B-310552, supra, at
3. The SBA now asserts that a standing SBA decision that
an offeror is "ineligible to bid on or receive any future
SDVOSBC contracts" in connection with a prior procurement
is not conclusive in a subsequent procurement, but merely
raises a question concerning the offeror's status that the
contracting officer must refer to the SBA for conclusive
resolution. We see nothing in the SBA's regulations (or
the FAR) which conflicts with, or would prevent the SBA
from taking, the position that notification of a
decertification decision does not make a firm
automatically ineligible for award, but instead requires
the contracting officer to file a status protest in
connection with a subsequent procurement.
We do not think that the facts in Singleton II can be
meaningfully distinguished from the present protest and,
as set forth below, we conclude that the SBA, in effect,
has changed its position on this issue. In its April 11,
2008, submission in Singleton II, the SBA concluded that a
standing decision of the SBA related to a prior
procurement was to be followed by the contracting agency
in a subsequent procurement. The SBA now takes the
position that even where there is an SBA decision in
effect on an offeror's lack of SDVOSBC status, the
contracting officer cannot reject a proposal from that
offeror in a subsequent procurement without again
referring the matter to the SBA.
Our Office gives deference to an agency's reasonable
interpretation of its regulations, and because the SBA is
the agency responsible for promulgating the regulations
regarding the SDVOSBC program, we give its interpretations
of its regulations great weight. Id. at 3. Thus, while the
SBA's position in the current protest runs contrary to its
interpretation of these regulations at the time of the
Singleton II protest, we cannot find unreasonable the
current interpretation of the regulations now asserted by
the SBA.
That said, we cannot conclude that the VA acted improperly
in connection with the procurement at issue here, given
that the agency acted in accordance with the SBA's
interpretation of its regulations in effect at the time it
made its decision to reject CEI's proposal. In this
regard, our decision in Singleton II, which reflected the
SBA's April 11, 2008 views on that protest, clearly
supports the agency's and intervenor's arguments here that
the SBA's February 1 decision decertifying CEI, still in
effect on February 23, represented a bar to CEI's
eligibility for award. In addition, we think the agency
reasonably rejected CEI's offer, without referring the
matter to the SBA. Accordingly, because CEI was not an
eligible offeror on February 23, the date the agency
intended to make award, CEI's protest of the rejection of
its offer is denied.
The protest is denied. (Combined
Effort, Inc., B-402573, June 4, 2010) (pdf)
The IFB was issued on November 25, 2009. Bids were opened
on December 30, and Corners was the apparent low bidder.
However, on January 25, 2010, when VA accessed its
database of SDVOSBs to determine whether Corners was an
eligible SDVOSB, it found that Corners was not listed.
Agency Report (AR) at 2. In this regard, VA maintains a
database of SDVOSBs that are eligible to receive contracts
under solicitations issued by VA as SDVOSB set-asides. 38
C.F.R. part 74 (2009). Eligible businesses are placed on
the list for 1 year, after which they must re-apply to be
included on the list again. 38 C.F.R. sect. 74.15. The
record shows that Corners was listed in the database on
January 16, 2009 for a period of 1 year. Corners was
removed from the database before January 25, 2010, when
the agency checked the database in anticipation of making
award under the IFB. AR at 2. Because Corners was not
listed, VA determined that Corners was not eligible for
award, and made award to the next low bidder.
Corners maintains that it should be considered an eligible
SDVOSB, and that it therefore should have received the
award, because it was listed in the database on both the
date the IFB was issued and the date of bid opening.
The statute granting VA authority to set aside
procurements for SDVOSB concerns provides that "[a] small
business concern may be awarded a [SDVOSB set-aside]
contract . . . only if the small business concern . . .
[is] listed in the database of veteran‑owned businesses. .
. ." 38 U.S.C. sect. 8127(e) (2006). The VA regulation
implementing this statute similarly provides that, "all .
. . SDVOSBs must be listed in the . . . database . . . to
receive contract awards under VA's Veteran-owned Small
Business. . . [set-aside] program." VA Acquisition
Regulation (VAAR) sect. 804.1102. VA asserts that, based
on this language, a small business concern is eligible for
award under a VA SDVOSB set-aside only if it is listed in
the database on the date of award; thus, even though
Corners was listed in the database at the time of bid
opening, it was ineligible for award because it was no
longer listed at the time of award.
We will uphold an agency's reasonable interpretation of a
statute that it is responsible for implementing. Blue Rock
Structures, Inc., B-293134, Feb. 6, 2004, 2004 CPD para.
63 at 8. VA's interpretation here is reasonable. While the
statute and regulation do not expressly provide that small
businesses must be "listed in the database" at the time of
award, neither do they provide that listing is to be at
the time of solicitation issuance or bid opening. We think
the relevant language supports VA's interpretation, since
it relates to a concern's status for purposes of receiving
an award, suggesting that status at the time of award is
contemplated. Moreover, this interpretation is consistent
with the underlying purpose of SDVOSB set-asides--i.e.,
providing contracting opportunities to eligible SDVOSBs,
see 38 U.S.C. sect. 8127(a)‑-and we think VA reasonably
could determine that this purpose is best served, and that
an eligible SDVOSB concern will actually perform the
contract, if it satisfies the prerequisite to receiving
award (listing) at the time award is made. Accordingly,
there is no basis for us to question VA's determination
that Corners, which was not listed in the database on the
date of award, was ineligible for award. Compare CMS Info.
Servs., Inc., B-290541, Aug. 7, 2002, 2002 CPD para. 132
at 2 (where request for quotations under Federal Supply
Schedule was limited to small business concerns, agency
reasonably required recertification of small business
status to ensure that order would be issued to concern
that currently qualifies as small business). (See
VA Regulation.) (Corners
Construction, B-402465, April 23, 2010) (pdf)
The FAR
provisions cited by the protester are inapplicable to the
award challenged here. FAR Subpart 19.14 applies to the
Service-Disabled Veteran-Owned Small Business Procurement
Program, created by the Veterans Benefit Act of 2003, 15
U.S.C. sect. 657f (2006), and administered by the Small
Business Administration. The award here was made pursuant
to the Veterans First Contracting Program, created by the
Veterans Benefits, Health Care, and Information Technology
Act of 2006, 38 U.S.C. sect. 8127, and administered by the
VA. The Veterans First Contracting Program provides the VA
with independent authority to make sole-source contract
awards to SDVOSBs and veteran-owned small business firms.
See In and Out Valet Co., B-311141, Apr. 3, 2008, 2008 CPD
para. 71 at 3. Specifically, 38 U.S.C. sect. 8127(c)
states:
(c) Sole Source Contracts for Contracts Above Simplified
Acquisition Threshold.—
For purposes of meeting the goals under subsection (a),
and in accordance with this section, a contracting
officer of the Department [of Veterans Affairs] may
award a contract to a small business concern owned and
controlled by veterans using procedures other than
competitive procedures if—
(1) such concern is determined to be a responsible
source with respect to performance of such contract
opportunity;
(2) the anticipated award price of the contract
(including options) will exceed the simplified
acquisition threshold (as defined in section 4 of the
Office of Federal Procurement Policy Act (41 U.S.C.
403)) but will not exceed $5,000,000; and
(3) in the estimation of the contracting officer, the
contract award can be made at a fair and reasonable
price that offers best value to the United States.[2]
The Veterans First Contracting Program also includes a
statement of priority for VA contract awards, which
grants first priority to sole-source or set-aside
contracts for SDVOSB firms, second priority to
sole-source or set-aside contracts for veteran-owned
small business firms, and lower priority for all other
categories of small business firms. 38 U.S.C. sect.
8127(i).
In connection with its assertion that FAR Subpart 19.14
applies to the award here, Apex Limited argues that VA
Information Letter 049-07-08, June 19, 2007, which
provides guidance to VA contracting officers concerning
the award of contracts to SDVOSBs and veteran-owned small
business firms, states that "FAR Subpart 19.14 is still an
existing authority." Protest at 2. However, in this
argument Apex Limited selectively quotes from a portion of
the Information Letter applicable to SDVOSB set-asides,
and not to SDVOSB sole-source awards. In full, the quoted
passage states, "While FAR Subpart 19.14 is still an
existing authority, . . . [VA] contracting officers
performing SDVOSB set asides must exclusively use the
authority of 38 U.S.C. 8127." VA Information Letter
049-07-08, June 19, 2007, Attachment 1, at 2. Further, the
Information Letter makes clear that VA contracting
officers are authorized to make sole-source contract
awards to SDVOSB firms under 38 U.S.C. 8127(c). Id.
In sum, the provisions of FAR Subpart 19.14 do not apply
to the acquisition here and thus provide no basis for our
Office to object to the award, which, the record shows,
was properly made pursuant to the VA's statutory authority
under the Veterans First Contracting Program. (Apex
Limited, Inc., B-402163,January 21, 2010) (pdf)
WHG raises
two primary arguments: (1) that the Army unreasonably
interpreted the RFP as not requiring SDVOSB prime
contractors to perform more than 50 percent of the
contract requirements, and therefore improperly credited
Skyline as being an SDVOSB offeror; and (2) that even
under the agency’s own interpretation of the solicitation,
Skyline should not have received credit as an SDVOSB
offeror. For the reasons discussed below, we disagree.
First, WHG argues that the agency’s interpretation of the
SDVOSB evaluation factor was unreasonable. As discussed
above, the RFP stated that the agency would give favorable
evaluation consideration to an SDVOSB offeror, and that an
offeror’s status was one of the two most important
evaluation factors. The protester does not dispute that
Skyline, on its own, is an SDVOSB concern, as defined
under Small Business Administration regulations. Instead,
WHG argues that Skyline should not be eligible to receive
credit as an SDVOSB under this procurement because, in the
protester’s view, the solicitation and applicable FAR
provisions state that SDVOSB contractors must perform more
than 50 percent of the contract requirements in order to
receive credit as an SDVOSB.
As a preliminary matter, WHG does not specifically state
what statutory or regulatory provision it believes was
violated in giving the SDVOSB evaluation credit to
Skyline. However, the protester presumably refers to FAR
part 19.14, which governs awards under the SDVOSB program.
The FAR states that when an agency makes an SDVOSB
sole-source award, or restricts a competition to SDVOSB
offerors, the solicitation must include the clause at FAR
sect. 52.219-27, Notice of Total Service-Disabled
Veteran-Owned Small Business Set-Aside. FAR sections
19.1405, 19.1406. This clause requires an SDVOSB offeror--in
a set-aside or sole-source procurement--to agree to
perform, for service contracts, “at least 50 percent of
the cost of personnel for contract performance.” FAR sect.
52.219-27(c)(1).
There is no dispute in this record that Skyline will
perform less than 50 percent of the contract requirements.
Instead, the Army contends, and we agree, that the SDVOSB
set-aside clause at FAR sect. 52.219-27 was not included
in this solicitation, was not required to be included
here, and has no application to this procurement. This RFP
expressly states that this procurement was neither an
SDVOSB set-aside nor an SDVOSB sole-source award. RFP,
Evaluation Criteria, sect. 4.1. We conclude, therefore,
that the requirement for an SDVOSB contractor to perform
at least 50 percent of the personnel costs in a service
contract does not apply to this procurement.
WHG also argues that the Army’s interpretation of the
solicitation was unreasonable because the RFP stated that
an SDVOSB joint venture partner, but not an SDVOSB prime
contractor, must perform more than 50 percent of the
contract requirements in order to receive SDVOSB
evaluation credit. The protester contends that there was
no reasonable basis to distinguish between these two types
of offerors and that the agency should have read the
solicitation “as a whole” and applied the restriction to
both offerors. As discussed above, however, the
solicitation explicitly stated that these two categories
of business arrangements would be treated differently in
the evaluation. See RFP amend. 3, at 6. To the extent that
the protester believes these solicitation provisions were
improper or inconsistent with the FAR requirements for
SDVOSBs, it cannot now timely challenge them, as such a
challenge must be raised prior to the time for submission
of proposals. Bid Protest Regulations, 4 C.F.R. sect.
21.2(a)(1); Continental Staffing, Inc., B-299054, Jan. 29,
2007, 2007 CPD para. 18 at 4-5.
Second, WHG argues that, even if the Army’s interpretation
of the solicitation is reasonable, Skyline should not have
received the SDVOSB credit because Skyline should not have
been considered the prime contractor under its proposal.
In this regard, the protester argues that a teaming
agreement between Skyline and Sterling indicates that
Sterling, rather than Skyline, is the prime contractor. We
disagree.
Skyline’s proposal stated that the company was an SDVOSB,
and included a February 26, 2009, letter from the
Department of Veterans Affairs (VA) stating that the
company had been certified as an SDVOSB. AR, Tab 9,
Skyline Proposal, at 1. Skyline’s proposal also stated the
following in the executive summary of its proposal
regarding the relationship between the two entities:
As a [SDVOSB] providing excellent program management,
logistics, and IT services support to the government for
nearly a decade, Skyline will serve as the prime
contractor. As the subcontractor partner, Sterling
Medical furnishes well over 2,000 ([full-time
equivalent]) qualified contract healthcare providers on
behalf of federal agencies at more than 100 government
facilities in the United States and 12 overseas nations.
AR, Tab 9, Skyline Proposal, at iv.
The CO explains that she found that Skyline was an SDVOSB
by reviewing the offeror’s self-certification and letter
from the VA in its proposal. Supp. CO Statement at 1. In
addition the CO reviewed the following information to
verify Skyline’s SDVOSB status: the GSA schedule contract
listed in Skyline’s proposal; Skyline’s Central Contractor
Registration entry; and Skyline’s representations and
certifications in the Online Representations and
Certifications Application website. Id. at 1-2; AR, Tab
14, SSD, at 7. With regard to the relationship between
Skyline and Sterling, the CO reviewed the executive
summary information quoted above, and concluded that the
proposal clearly identified Skyline as the prime
contractor, and Sterling as the subcontractor. Id. at 2.
Based on these analyses, the CO concluded that Skyline
merited evaluation credit as an SDVOSB.
With regard to WHG’s argument, the Army provided in its
report on the protest a copy of a “Master Teaming
Agreement” between Sterling and Skyline. The teaming
agreement sets forth an arrangement whereby Skyline may
perform work under Sterling’s FSS contract 621-I. The
“Objective” for the agreement is as follows: “This
Agreement is for the purpose of establishing the
cooperative relationship of the Parties and for
facilitating the utilization of Skyline under Sterling
Medical’s [GSA] Schedule, in order to further the
interests of both Team Members.” AR, Tab 9A, Teaming
Agreement, at 1. WHG argues that the teaming agreement
shows that Skyline will be Sterling’s subcontractor on the
contract, based on the following statements:
(D) Sterling Medical desires to appoint Skyline as a
dealer under its [GSA] schedule.
(E) In order to facilitate Skyline’s participation as a
small business and as [an] SDVOSB Sterling Medical
desires to also utilize Skyline as mutually agreeable as
a subcontractor under its schedule.
Id.
In reviewing a protest of an agency’s evaluation of
proposals, our Office will examine the record to determine
whether the agency’s judgment was reasonable and
consistent with the stated evaluation criteria and
applicable procurement statutes and regulations. See
Shumaker Trucking & Excavating Contractors, Inc.,
B-290732, Sept. 25, 2002, 2002 CPD para. 169 at 3. A
protester’s mere disagreement with the agency’s judgment
in its evaluation of offerors’ proposals does not
establish that the evaluation was unreasonable. C.
Lawrence Constr. Co., Inc., B-287066, Mar. 30, 2001, 2001
CPD para. 70 at 4.
Here, the protester does not dispute that the agency did
not have the teaming agreement during the course of the
procurement, nor does the protester argue that the teaming
agreement was required to be provided as part of Skyline’s
proposal. The agreement simply was not part of the
agency’s evaluation and selection decisions.
In any event, we also disagree with WHG’s view that the
teaming agreement shows that Skyline will act as
Sterling’s subcontractor for this procurement. The stated
purpose of the teaming agreement is to allow Skyline to
utilize Sterling’s GSA schedule contract. To the extent
that the teaming agreement states that Skyline will be a
subcontractor to Sterling, we think it is only within the
context of Sterling’s FSS contract. In this regard, the
teaming agreement does not mention any specific
solicitations or contracts, but instead provides for a
general arrangement wherein Skyline may perform work under
Sterling’s schedule contract. Moreover, this approach was
sanctioned by the RFP, which stated that a prime
contractor could utilize a subcontractor’s FSS contract in
performing the contract, provided that “all services
provided must be within the scope of the team’s respective
schedules.” RFP amend. 3, at 6.
In sum, we think that the Army reasonably concluded that,
under the terms of its proposal, Skyline was the prime
contractor for this procurement, and was therefore
entitled under the terms of the RFP to receive credit as
an SDVOSB offeror. (Washington-Harris
Group, B-401794; B-401794.2, November 16, 2009)
(pdf)
On June 5, MCS submitted a protest to the contracting
officer alleging that DAV Prime JV was not a SDVOSBC and
was thus ineligible for award. The agency forwarded MCS’s
status protest to the SBA. MCS’s protest was accepted by
the SBA on June 19. The SBA notified MCS and the agency on
June 26 that it had received the timely filed protest.
Upon receiving the SBA’s notice, the agency chose to allow
DAV Prime JV to continue performance under the protested
contract.
The SBA Director of Government Contracting sustained MCS’s
protest on July 15, finding that DAV Prime did not meet
the eligibility requirements of a SDVOSBC, and therefore,
the joint venture of DAV Prime and Vantex Service failed
to qualify as a SDVOSBC. The SBA decision stated that both
DAV Prime and DAV Prime JV were ineligible to receive an
award under the current RFQ and both were prohibited from
submitting offers on future SDVOSBC procurements. After
receiving notice of the decision, MCS contacted the
contracting officer to determine the status of the award
given the SBA’s findings. The contract officer informed
MCS on July 21 that he would not make any decision until
DAV Prime JV “forego(s) appeal or an appeal decision is
made.” AR, Tab 13, Email Correspondence.
On July 25, DAV Prime JV appealed the decision of the SBA
to the SBA’s OHA. The OHA denied DAV Prime JV’s appeal on
August 15. MCS again contacted the contracting officer on
September 8 to determine the status of award and was
informed on September 15 that the award was not and would
not be vacated. MCS filed the current protest with our
Office on September 19 seeking termination of DAV Prime
JV’s contract because the SBA found, and the OHA affirmed,
that DAV Prime JV was not an eligible SDVOSBC.
In 2003, Congress created, by amending the Small Business
Act, a procurement program for small business concerns
owned and controlled by service-disabled veterans.
Veterans Benefits Act of 2003, Pub. L. No. 108-183, 117
Stat. 2651, 2662 (2003), 15 U.S.C. sect. 657f (2006).
Under this authority, the SBA, and not our Office or the
procuring agency, is the designated authority for
determining whether a firm is an eligible SDVOSBC, and it
has established procedures for interested parties to
challenge a firm’s status as a qualified SDVOSBC.
Singleton Enters.--GMT Mech., A Joint Venture, B-310552,
Jan. 10, 2008, 2008 CPD para. 16 at 3; see 15 U.S.C.
sections 632(q), 657b; 13 C.F.R. sections 125.25, 125.27
(2008); FAR sections 19.307, 19.1403.
Many of MCS’s arguments concern the issue of whether DAV
Prime JV qualified as an SDVOSBC, which issue has been
resolved by the SBA. Based on these arguments, MCS argues
that the contracting officer should have investigated and
questioned the joint venture’s representation that it was
an SDVOSBC. However, we find nothing that would have
required the contracting officer to investigate or
question DAV Prime JV’s representation before making
award.
MCS has also asserted that the Army should have terminated
the contract upon receiving the SBA’s and the OHA’s
decisions finding DAV Prime JV ineligible as an SDVOSBC
joint venture. The Army, on the other hand, argues that in
accordance with the SBA’s regulations it was not required
to terminate the contract. The SBA, whose views we
solicited, agrees with the Army.
The SBA’s regulations regarding SDVOSBC protests describes
the effect of an SBA determination on SDVOSBC status as
follows:
Effect of determination. SBA’s
determination is effective immediately and is final
unless overturned by OHA on appeal. If SBA sustains the
protest, and the contract has not yet been awarded, then
the protested concern is ineligible for an SDVO SBC
contract award. If a contract has already been awarded,
and SBA sustains the protest, then the contracting
officer cannot count the award as an award to an SDVO
SBC and the concern cannot submit another offer as an
SDVO SBC on a future SDVO SBC procurement unless it
overcomes the reasons for the protest.
13 C.F.R. sect. 125.27(g). The regulation
thus explicitly differentiates between a determination’s
effect when issued before versus after award and, as we
have previously found, we think a fair reading of this
regulation is that there is no requirement that a contract
be terminated if an awardee is found to be other than an
SDVOSBC after award was made. Veteran Enter. Tech. Servs.,
LLC, B‑298201.2, July 13, 2006, 2006 CPD para. 108 at 3.
Indeed, the SBA states that its regulations “do not, under
any circumstances, require a procuring activity to
terminate or even suspend an award made to an entity that
is subsequently determined to not be SDVO SBC eligible,”
although the Army “may certainly be subject to moral
suasion” to do so. SBA Report at 3. (Major
Contracting Services, Inc., B-400616, November 20,
2008) (pdf)
DAV Prime, Inc., a service-disabled
veteran-owned small business concern (SDVOSBC) protests
the terms of solicitation No. AG-024B-S-07-0005, issued by
the Department of Agriculture, U.S. Forest Service, for
portable latrines. DAV argues that this work should have
been reserved for SDVOSB companies. It contends a
set-aside is required because the agency has violated the
Small Business Act, as amended by sect. 36 of the Veterans
Benefits Act of 2003, Pub. L. No. 108-183, 117 Stat. 2651,
2662 (2003), 15 U.S.C. sect. 657f (Supp. IV 2004), by
failing to meet its stated goal of awarding 3 percent of
its annual contracts to SDVOSBCs, and by failing to
conduct a market survey to determine whether an SDVOSBC
set-aside is appropriate. Protest at 2; Response to Motion
to Dismiss at 1. We dismiss the protest because it
does not establish a valid basis for challenging the
agency’s action.
Section 36 of the Veterans Benefits Act of 2003 provides:
In accordance with this section, a
contracting officer may award contracts on the basis of
competition restricted to [SDVOSBCs] if the contracting
officer has a reasonable expectation that not less than
2 [SDVOSBCs] will submit offers and that the award can
be made at a fair market price. 15 U.S.C. sect. 657f(b).
In our view, the language of the Act is
clearly discretionary. As such, it permits, but does not
require, a contracting officer to restrict competition to
SDVOSBCs if certain conditions are satisfied. (DAV
Prime, Inc., B-311420, May 1, 2008) (pdf)
As discussed in Singleton Enters. -- GMT
Mech., A Joint Venture, supra, at 4, Federal Acquisition
Regulation sect. 19.307(h) and 13 C.F.R. sect. 125.24(b)
provide for the SBA’s resolution of questions of SDVOSBC
status and for an agency procedure to protest a firm’s
SDVOSBC status to the SBA. Consistent with the SBA’s
regulations, 13 C.F.R. sect. 125.27(g) and 125.28 (2007),
the SBA’s February 20 determination that Singleton-GMT JV
is not an SDVOSBC expressly stated that the determination
was effective “immediately” and was “final” unless
overturned on appeal or unless relief was granted under 13
C.F.R. sect. 125.27(g) (e.g., a change in ownership to
satisfy the SDVOSBC definition), and that because of this
determination the joint venture was ineligible to bid on
or receive any SDVOSBC contract awards. VA Dismissal
Request, exh. 4, SBA’s SDVOSBC Determination. According to
the SBA, given that the OHA has affirmed the SBA’s
determination, before Singleton-GMT JV can bid on or
receive SDVOSBC contracts, the joint venture must request
that SBA grant it relief under 13 C.F.R. sect. 125.27(g),
and prove that it merits such relief by documenting the
actions it has taken to address those problems with its
eligibility that were identified by SBA. If the SBA agrees
that the firm qualifies as an SDVOSBC, then the agency
will grant relief under 13 C.F.R. sect. 125.25(g) and
issue a new determination letter to the firm stating that
it qualifies as an SDVOSBC and that it is eligible to bid
on and receive SDVOSBC contracts. To date Singleton-GMT JV
has not requested, and SBA has not granted, relief from
that decision under 13 C.F.R. sect. 125.27(g).
Singleton-GMT JV also contends that the OHA decision
affirming the SBA’s determination that the joint venture
is not an SDVOSBC was not yet final but, under 13 C.F.R.
sect. 227(a), was only the OHA’s initial decision and
could not be final for 30 days. Thus, the protester
contends, the VA cannot rely upon the SBA’s and OHA’s
determinations to reject Singleton-GMT JV’s bid. However,
as noted by the SBA, OHA’s rulings on appeal are effective
immediately, and are final, unless or until the judge
chooses to reconsider the ruling; in fact the OHA’s
decision states that “[t]his is the final decision of the
Small Business Administration.” VA Submission (Mar. 27,
2007), attach., SBA OHA Decision (Mar. 27, 2007) at 8.
Because the SBA’s February 20 determination that
Singleton-GMT JV was not an SDVOSBC has remained in force
and effect, the VA properly rejected Singleton-GMT JV’s
bid. (Singleton
Enterprises- GMT Mechanical, A Joint Venture,
B-311343, April 23, 2008) (pdf)
The
protester essentially objects to the sole-source award to
VPM primarily because VPM had been previously determined
by the SBA to be other than a small business concern. The
protester argues that the agency erred in contracting with
VPM on a sole-source basis without taking into
consideration the favorable performance it provided on the
incumbent contract. The protester also points to the VA’s
hiring of VPM’s former project manager to assist with the
performance transition from VPM to In and Out, and
maintains that this employee contributed to the
protester’s performance problems and influenced the
agency’s decision to contract with VPM on a sole-source
basis. The agency asserts that it was within its
authority to award the contract to VPM on a sole-source
basis. We agree. The VA’s statutory authority to make
sole-source awards to SDVOSBs is set forth at 38 U.S.C.
sect. 8127, Pub. L. No. 109-461, 120 Stat. 3431, 3432
(2006). This authority allows the VA to award to an SDVOSB
on a sole-source basis when:
(1) such concern is determined to be a responsible
source with respect to performance of such contract
opportunity;
(2) the anticipated award price of the contract
(including options) will exceed the simplified
acquisition threshold (as defined in section 4 of the
Office of Federal Procurement Policy Act (41 U.S.C. 403)
but will not exceed $5,000,000; and
(3) in the estimation of the contracting officer, the
contract award can be made at a fair and reasonable
price that offers best value to the United States.
As explained above, VPM was re-certified as a small
business concern by the SBA on October 4, 2007. Agency
Report (AR) Tab 4, SBA Size Determination. In addition,
the agency reports that VPM is currently registered as an
SDVOSB. AR, Tab 8, Sole Source Justification, at 3. In
accordance with the statute, the CO determined that VPM
was a responsible source, that the anticipated award price
plus options was more than the simplified acquisition
threshold but less than $5,000,000, and that award would
be made at a fair and reasonable price. AR, Tab 1, CO’s
Statement at 2 and 3. Moreover, the agency disagrees with
In and Out’s favorable assessment of its past performance;
in fact, the CO’s decision to use this authority was also
based expressly on the fact that the agency was not
satisfied with the protester’s performance. Id.
Based on our review, we think the record shows that in
making her decision to award a sole-source contract to VPM,
the CO’s decision was in accord with the statute
authorizing the award of sole-source contracts to SDVOSBs.
Despite In and Out’s desire to compete for this
contract--given its similar status as an SDVOSB--we see no
requirement, under this statute and under these
circumstances, for even a limited competition. (In
and Out Valet Co., B-311141, April 3, 2008) (pdf)
Under the SDVOSBC procurement program, a
contracting officer may restrict competition to SDVOSBCs
if he or she has a reasonable expectation that not fewer
than two such firms will submit offers and that the award
can be made at a fair market price. 15 U.S.C. sect.
657f(b) (Supp. IV 2004); Federal Acquisition Regulation
(FAR) sect. 19.1405(a), (b). Prior to proceeding with a
small business set-aside, a procuring agency is required
to make reasonable efforts to ascertain whether an SDVOSBC
set-aside is appropriate. MCS Portable Restroom Serv.,
B‑299291, Mar. 28, 2007, 2007 CPD para. 55 at 5. Although
the use of any particular method of assessing the
availability of firms for a set-aside is not required,
measures such as prior procurement history, market
surveys, and advice from the agency’s small business
specialist may all constitute adequate grounds for a
contracting officer’s decision to set aside, or not to set
aside, a procurement. National Linen Serv., B-285458, Aug.
22, 2000, 2000 CPD para. 138 at 2. Generally, our Office
regards such a determination as a matter of business
judgment that we will not disturb absent a clear showing
that it has been abused. Id.
IBV asserts that the contracting
officer did not make a reasonable effort to ascertain
whether an SDVOSBC set-aside was suitable. This argument
is without merit. While the record shows that at least two
SDVOSBC firms were available and interested in competing
on this requirement, this is only the first of two
considerations that go into a set-aside decision. In
addition, the contracting officer must have a reasonable
expectation that award will be made at a fair market
price. 15 U.S.C. sect. 657f(b); FAR sect. 19.1405(a), (b).
Here, as noted above, the contracting officer did not set
the requirement aside because she did not expect to
receive fair market prices from SDVOSBCs, and there is
nothing in the record to demonstrate that her expectations
were unreasonable. In this regard, while IBV disagrees
with her decision, it has not provided any evidence that
it and at least one other SDVOSBC would or could have
provided fair market prices. IBV’s mere disagreement with
the agency’s assessment does not demonstrate that the
agency’s judgment was unreasonable. Bahan Dennis Inc.,
B-249496.3, Mar. 3, 1994, 94-1 CPD para. 184 at 5.
Moreover, even if we agreed with IBV that the set-aside
determination was not adequately supported at the time it
was made, we would not object to the determination under
the circumstances here. In this regard, while the agency
received multiple proposals from SDVOSBCs, the contracting
officer’s concern that they would not propose fair market
pricing was confirmed by the pricing of those proposals;
all of the SDVOSBC proposals received were priced at more
than double the independent government estimate, and all
exceeded the RFP’s estimated price range. Further, IBV’s
price was the highest of all proposals received, including
those of the other SDVOSBCs, and was more than double the
prices of the three lowest‑priced non-SDVOSBC small
business proposals. Agency Report at 30. Under these
circumstances, the agency’s set-aside decision was
reasonable. See The Atlantic Co. of Am., Inc., B‑293974,
July 1, 2004, 2004 CPD para. 182 at 2 (GAO will consider
proposals actually received in determining whether
set-aside decision was reasonable (HUBZone set-aside));
York Int’l Corp., B‑244748, Sept. 30, 1991, 91‑2 CPD para.
282 at 7 (small business set-aside); Litton Electron
Devices, B‑225012, Feb. 13, 1987, 87-1 CPD para. 164 at
2-3 (small business set-aside). We reach the same
conclusion with regard to IBV’s assertion that the agency
should have considered awarding it a contract on a
sole-source basis. While an agency may make a sole-source
award to an SDVOSBC, four conditions must be met: only one
SDVOSBC can satisfy the requirement; where, as here, the
requirement falls under a nonmanufacturing NAICS code, the
anticipated award price will not exceed $3 million; the
SDVOSBC has been determined responsible with respect to
performance; and award can be made at a fair and
reasonable price. FAR sect. 19.406. Three of the four
provisions are not met here. The record shows that there
are multiple SDVOSBCs available to compete; the
anticipated award exceeds the $3 million limit; and, as
discussed above, award could not be made to an SDVOSBC at
a fair market price. Accordingly, the contracting officer
reasonably did not consider IBV for a sole-source award.
(IBV,
Ltd., B-311244, February 21, 2008) (pdf) |