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In and Out Valet Company, B-411019; April 15, 2015
Link: GAO Opinion
Agency: Department of Veterans Affairs
Disposition: Protest denied.
Keywords: SDVOSB Set Aside; Discretion of Contracting Officer
General Counsel P.C. Highlight: An agency’s decision not to set aside a RFQ for service-disabled veteran-owned small businesses (“SDVOSBs”) will stand as long as the contracting officer’s evaluation of available sources was reasonably made. Broad discretion is given to the contracting officer in selecting the sources for its market research and making a determination of the availability of firms that not only meet the requirements but can also perform at a price that is fair and reasonable.
In and Out Valet Company (“IOVC”) protested the decision of the Department of Veteran Affairs (VA) not to set aside a procurement for SDVOSBs.
The VA issued an RFQ set aside for small businesses, seeking proposals to provide fast, efficient, and professional valet parking services to alleviate the congestion and delays in the limited parking areas for the VA Puget Sound Health Care System facilities in Seattle, Washington. Because this RFQ was not set aside for SDVOSBs, IOVC filed a protest.
IOVC contended that prior to issuing the RFQ, the VA failed to perform sufficient market research to ascertain the interest and capability of SDVOSBs to perform the RFQ. According to IOVC, there were 46 SDVOSBs registered nationwide with the ability to perform the requirements, and four SDVOSBs that were performing those requirements at the time. Therefore, IOVC asserted that the VA abused its discretion by failing to set aside the RFQ for SDVOSBs.
Under the Veterans Benefits, Health Care, and Information Technology Act of 2006 and the VA’s own implementing regulations, the VA is required to set aside RFQs for SDVOSBs when it determines that there is a reasonable expectation that offers will be received from at least two SDVOSBs and that the award can be made at a fair and reasonable price. The determination as to whether there is a reasonable expectation is a matter of informed business judgment within the contracting officer’s discretion and will not be disturbed absent a showing that the judgment was unreasonable.
The GAO concluded that the VA’s preliminary market research and the resulting set aside for small businesses were reasonable. Prior to issuing the RFQ, the VA conducted market research through a vendor information database and an evaluation of the firms’ websites to identify SDVOSBs or veteran-owned small businesses (“VOSBs”) with the North American Industry Classification System (NAICS) code for parking lots and garages and to identify which businesses could provide valet parking services. The VA found only two companies in the State of Washington with the classification code and neither appeared to provide valet parking services. The VA then expanded its search to nearby states and identified only 12 SDVOSBs and VOSBs with the classification code and only one that provided valet parking services. The VA further expanded its search without a geographic restriction and located 46 SDVOSBs and VOSBs with the classification code, with only six providing valet parking services. Based upon this research and an evaluation of the geographical locations of the six identified firms, the VA concluded that it did not have a reasonable expectation that it would receive offers from two or more SDVOSB firms that would be capable of performing the work at a fair and reasonable price.
The GAO found that the VA’s decision to focus on the geographical location of the SDVOSBs was reasonable. Although IOVC showed that there were other databases that it contends should have been searched, the GAO concluded that IOVC did not show that the VA’s actions were unreasonable in light of the discretion afforded to contracting officers.
In addition, in making its decision the VA also considered the facts surrounding the last time the requirement was completed. At that time, the requirement was set aside for SDVOSBs. The company which was selected ceased performing after one week. The award then went to the SDVOSB next in line, which informed the VA that it was unable to perform the requirements. The VA was then forced to issue a sole source award to the incumbent contractor until a new RFQ could be issued.
In light of this, the GAO concluded that the VA reasonably determined that there was no reasonable expectation that offers would be received from at least two SDVOSBs that could fulfill the requirements for a fair and reasonable price.
The protest was denied.
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