Link: GAO Decision
Agency: Department of Veterans Affairs
Disposition: Protest Sustained
The Veterans Benefits, Health Care, and Information Technology Act of 2006 requires the Department of Veterans Affairs to determine whether two or more service-disabled veteran-owned small business concerns can meet its requirement at a reasonable price before proceeding with a Federal Supply Schedule acquisition
General Counsel P.C. Highlight:
Aldevra protested the terms of a solicitation for an ice maker/dispenser for shipment to Sheridan, Wyoming. The solicitation was issued on an unrestricted basis to vendors holding FSS contracts. Aldevra argued 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 businesses (SDVOSBs). Aldevra had successfully raised the same issue in a prior protest, with the GAO holding that the VA did not have discretion to conduct a procurement through the FSS without first determining whether the acquisition should be set aside for SDVOSBs.
The GAO first disagreed with the agency’s assertion that Aldevra was not an interested party to protest this procurement because it does not hold an FSS contract. The GAO pointed out that the agency has not contended that there is a reasonable expectation that two or more SDVOSBs holding FSS contracts could meet the requirement, and that Aldevra is a verified SDVOSB that sells the item in question. The GAO then disagreed with the agency’s assertion that the requirement that it consider SDVOSBs before procuring through the FSS was qualified by the phrase “for purposes of meeting the goals under subsection (a).” The GAO noted that the agency has defended numerous protests on this issue without ever raising this argument before. The GAO found that the statute mandated that the VA “shall” conduct its procurements using a SDVOSB (or VOSB) set-aside when there is a reasonable expectation that two or more SDVOSBs (or VOSBs) can meet the requirement at a reasonable price; the phrase referred to by the VA was merely introductory language and not an exception to the mandate. The GAO disagreed with the agency’s assertion that the FSS program is a “contracting preference;” it found that the agency must make the SDVOSB set-aside determination first, before applying another contracting preference or proceeding with FSS procedures.
The VA is required to consider setting aside a procurement for SDVOSBs or VOSBs before conducting full and open competition or electing to procure through the FSS. SDVOSBs and VOSBs should maintain their status in the VIP database so as to qualify as an interested party should the VA fail to follow set-aside regulations.