Link: GAO Decision
Protestor: Encompass Group, LLC
Agency: Department of Veterans Affairs
Disposition: Protest Denied.
Protest that solicitations for towels, washcloths, laundry bags and isolation gowns should not be set aside for service-disabled veteran-owned small business (SDVOSB) concerns because there are no SDVOSB concerns that actually manufacture or assemble textiles to the degree specified by the agency is denied, where agency found from market research two or more SDVOSB concerns that could provide the items manufactured by small businesses at fair market prices
General Counsel PC Highlight:
Encompass Group, LLC protested the terms of RFPs which were set aside for service-disabled, veteran-owned small businesses (SDVOSBs). Encompass, which is not an SDVOSB, argued that the requirements should not have been set aside as there are no SDVOSBs that could actually manufacture or assemble textiles in accordance with the solicitation requirements. Encompass also argued that the agency’s market survey did not adequately consider the application of the Buy American Act.
The GAO found that Encompass had not shown that the agency’s determination to set aside the procurement for SDVOSBs was not reasonable. It pointed out that the agency had conducted market research from which it had determined that there were sufficient SDVOSBs that appeared capable and interested in performing the requirements. The GAO disagreed with Encompass’s assertion that the agency was required to assess the technical acceptability and responsibility of the prospective offerors prior to making the set-aside. The GAO declined to consider the remaining arguments of Encompass, on the grounds that they were either challenges heard solely by the SBA or concerns for which Encompass was not an interested party, due to its non-SDVOSB status.
When determining whether to set aside a requirement for SDVOSBs, an agency is required to conduct market research to determine whether 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. As part of this market research, the agency is not required to make a thorough inquiry into the technical acceptability or responsibility of each firm. While a disappointed prospective offeror may wish to challenge a set-aside on the grounds of inadequate market research, it should remember that the required market research does not need to approach the depth of investigation that occurs during actual proposal evaluations.