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Latvian Connection, LLC, B-410981, April 6, 2015
Link: GAO Opinion
Agency: Department of the Interior, U.S. Geological Survey
Disposition: Protest sustained.
Keywords: Business Integrity: Negative responsibility determination
General Counsel P.C. Highlight: An agency cannot exclude a small business from competition for perceived lack of business integrity without referring the matter to the Small Business Administration for a determination first.
Latvian Connection, LLC (“Latvian”) protested its exclusion from competition under a request for quotations (“RFQ”) issued by the Department of the Interior, U.S. Geological Survey (USGS), for the fabrication and installation of mechanical assist mobile shelving system components.
The solicitation was set aside for small businesses and was conducted through FedBid, a commercial online procurement services provider, using its reverse auction platform. In order to participate in the bidding, a prospective vendor was required to have a valid FedBid account. Prior to the RFQ release date, FedBid unilaterally suspended Latvian’s FedBid account, based in part on its determination of the firm’s lack of “System and Business Integrity.” This suspension precluded Latvian from competing for the USGS RFQ.
Latvian, a small business, argued that its exclusion from the bidding process constituted either a negative responsibility determination which should have been referred to the Small Business Administration (“SBA”) for disposition, or an improper de facto disbarment.
As a preliminary matter, USGS argued that because Latvian was currently suspended from competing, it was not an interested party, and therefore could not protest the procurement. The GAO found that Latvian established its status as an interested party. The GAO stated that (1) the suspension could not be the basis for a determination that Latvian was an uninterested party given that the suspension is the action which was being challenged, and if the challenge was upheld, Latvian could have been a potential vendor; and (2) Latvian indicated that if it were allowed to compete, it would team with two specific small businesses and with a service-disabled veteran-owned small business (SDVOSB) construction company.
The GAO determined that under the Small Business Act, an agency may not preclude a small business from being awarded a contract for reasons involving issues such as integrity without referring the matter to the SBA for a final disposition. FedBid acted as an agent for USGS, and in that capacity made a determination that Latvian lacked integrity in its business practices without seeking input from SBA.
USGS did not follow the correct process and GAO sustained the protest in favor of Latvian.
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