A question often arises as to whether in service-disabled veteran owned business SDVOSB set aside contracts the federal government can restrict market research to a local geographic area. These are tough issues to address in bid protest litigation.
The first thing that potential bidders must realize as a Veteran Owned Small Business is that if there is concern about the terms of the solicitation, then they should consider filing a bid protest that challenges the terms of the solicitation (pre-award protest).
In one case, the Veterans Administration published an SDVOSB small business set aside RFP where it limited market research to the local area. Its primary concern was that it wanted the contractor to perform the contract in its own facilities. GAO found that the VA’s market research was insufficient to conclude that the agency could receive proposals from at least two responsible SDVOSB concerns (Rule of Two) that could meet the requirements in the solicitation at a fair market price. GAO then decided that the agency’s decision not to set aside the solicitation for SDVOSB small businesses was unreasonable.
SDVOSB Meaning Definition – What is SDVOSB?
To qualify for the Sdvosb disabled veterans’ small business program, your company must:
- Be a small business
- Be at least 51% owned and controlled by one or more service-disabled veterans
- Have one or more service-disabled veterans manage day-to-day operations and also make long-term decisions
- Eligible veterans must have a service-connected disability
Who is a Service Disabled Veteran? What does Having Service-Connected Disability mean?
The terms veteran and service-disabled veteran are defined in 38 U.S.C. 101(2) and (16) respectively, the Department of Veterans Affairs, United States Code. A”veteran” means a person who served on active duty. military, naval, or air service. That person was also discharged or released under honorable conditions. “Service-connected” means, with respect to disability or death, that such the person’s disability was incurred in the line of duty in the active military, naval, or air service. See information about Service Disabled Veteran Owned Small Business SDVOSB Fraud.
Service Disabled Veteran Business SDVOSB FAR Market Research Requirements
An SDVOSB small business filed a GAO protest challenging the VA’s decision to limit market research under the FAR and VA-associated regulations to the local area. The GAO applied the rule for SDVOSB small business set-asides which states that under the VA Acquisition Regulation, 48 CFR 819.7004, 819.7005, the VA was required to set aside acquisitions for service disabled veteran-owned businesses 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 USC 8127 (d); 48 CFR 819.7005. See additional FAR information about total small business set aside decisions.
Although the contracting officer has great discretion in deciding whether there is a reasonable expectation that the government will receive bids from two or more small businesses, the decision must still be reasonable. See the rule of two and more information on how to bid on government contracts.
FAR SDVOSB small business set aside procedures.
Under FAR 19.1405, when conducting market research that is limited to a local area, government contracting agencies must still consider the possibility of receiving offers from bidders outside of the geographic area (there could be a constitutional problem also). Many companies can still consider acquiring facilities to perform the contract. See information about CVE SDVOSB Protests.
VA and FAR SDVOSB small business set aside regulations suggest that to set aside an acquisition for competition restricted to service-disabled veteran-owned small business concerns, the contracting officer must have a reasonable expectation that (1) Offers will be received from two or more service-disabled veteran-owned small business concerns; and (2) Award will be made at a fair market price. See How A Small Business Won Their GAO Protest of Berry Amendment Restrictive Solicitation Requirements
If the contracting officer receives only one acceptable offer from a service-disabled veteran-owned small business concern in response to a set-aside, the contracting officer should make an award to that concern ( see information on similarly situated small businesses). Under FAR 19.1405, if the CO receives no acceptable bids from service-disabled-veteran-owned small business concerns, the service-disabled veteran-owned set-aside shall be withdrawn and the procurement, if still valid, set aside for small business concerns. See SBA Affiliation Rules – Important New Government Contract Small Business Guidance
The Agency must show this level of consideration in its planning documents or run the risk of losing in a bid protest.
SDVOSB small business set-asides should also focus on providing a fair opportunity. For companies filing bid protests about the government’s market research or restrictive solicitations might also consider providing proof that it can obtain the local facilities and maintain the level of presence needed to perform the work.
Otherwise, it may run the risk of not winning the protest due to failure to meet the interested party requirement.
For help filing a bid protest challenging the government’s market research that restricts Set-asides for SDVOSB companies under FAR 19.1405, call our bid protest lawyers at 1-866-601-5518 for a FREE INITIAL CONSULTATION.