GAO BID PROTEST OVERVIEW

United States Government Accountability Office Washington, DC 20548 GAO BID PROTEST OVERVIEW Louis A. Chiarella Senior Attorney U.S. Government Accountability Office Updated October 2011

Bid Protest Statistics 1 for Fiscal Years 2006-2010 Cases Filed 2 2,299 (up 16%) FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 1,989 (up 20%) 1,652 (up 17%) 1,411 (up 6%) 1,326 (down 2%) Cases Closed 2,226 1,920 1,582 1,394 1,275 Merit (Sustain + Deny) Decisions 441 315 291 335 251 Number of Sustains 82 57 60 91 72 Sustain Rate 19% 18% 21% 27% 29% Effectiveness Rate 42% 45% 42% 38% 39% (reported) 3 ADR (cases used) 4 159 149 78 62 91 ADR Success Rate 5 80% 93% 78% 85% 96% 6 Hearings 10% (61 cases) 12% (65 cases) 6% (32 cases) 8% (41 cases) 11% (51 cases) 1 All entries in this chart are counted in terms of the docket numbers ( B numbers) assigned by our Office, not the number of procurements challenged. Where a protester files a supplemental protest or multiple parties protest the same procurement action, multiple iterations of the same B number are assigned (i.e.,.2,.3). Each of these numbers is deemed a separate protest for purposes of this chart. 2 Of the 2,299 cases filed in FY 2010, 194 are attributable to GAO s recently expanded bid protest jurisdiction over task orders (189 filings). These 189 filings represent 61% of the total increase in filings from FY 2009 to FY 2010 (310 filings). 3 Based on a protester obtaining some form of relief from the agency, as reported to GAO. 4 Alternative Dispute Resolution. 5 Percentage resolved without a formal GAO decision. 6 Percentage of fully developed decisions in which GAO conducted a hearing. Page 2

RECENT GAO DECISIONS I. EVALUATIONS AND SOURCE SELECTIONS Page 3 Relaxation of Requirements J2A2JV, LLC, B-401663.4, Apr. 19, 2010, 2010 CPD 102 (protest that awardee does not meet solicitation s definitive responsibility criterion requiring at least 5 years experience as a general contractor was sustained where record demonstrated that the general contractor did not have the requisite experience, and solicitation language may not reasonably be interpreted as permitting use of a subcontractor s experience to satisfy the requirement). Unstated Evaluation Criteria PMO P ship Joint Venture, B-403214; B-403214.2, Oct. 12, 2010, 2010 CPD 256 (protest was sustained where the problems found by Defense Contract Audit Agency (PMO-JV s cost proposal was determined to be inconsistent with the instruction in Federal Acquisition Regulation (FAR) 15.408, Table 15-2) were based upon FAR requirements that are only applicable when cost or pricing data is required. Because the RFP expressly provided that cost or pricing data was not required, and because the RFP did not otherwise indicate that the data should be presented in this format, the agency s evaluation of PMO-JV s cost proposal was unreasonable). Unequal Treatment AINS, Inc., B-400760.4; B-400760.5, Jan. 19, 2010, 2010 CPD 32; Mod. Denied, Dept. of Justice--Modification of Recommendation, B-400760.6, May 5, 2010, 2010 CPD 153 (protest sustained where a number of aspects of the agency s evaluation were not supported by the record and indicated an unequal treatment of the competing vendors). Brican, Inc., B-402602, June 17, 2010, 2010 CPD 141 (protest was sustained where the agency evaluated the awardee s and the protester s proposals unequally by crediting the awardee for the experience and past performance of a specialty subcontractor, but not similarly crediting the protester, which proposed the same subcontractor). Douglas County Fire Dist. #2, B-403228, Oct. 4, 2010, 2010 CPD 239 (agency unreasonably evaluated the protester s quotation with a fail rating for the geographic coverage factor for lack of a plan to cover the geographic area where the awardee s quotation did not include any more specific information than the protester s quotation, which was assigned a pass rating under the geographic coverage factor). CIGNA Govt. Servs., LLC, B-401062.2; B-401062.3, May 6, 2009, 2010 CPD (the agency s evaluation of the protester s proposal and source selection for one of the awards contemplated under the solicitation cannot be considered reasonable where the protester, in response to the same solicitation but for a different award, submitted another proposal that did not materially differ from the proposal at issue here; the proposal at issue here received less favorable ratings, and no attempt was made by the source selection board or the source selection authority during the simultaneous source selections to understand why the ratings differed).

Page 4 Agency Failed to Follow Evaluation Criteria One Largo Metro LLC; Metroview Development Holdings, LLC; King Farm Associates, LLC, B-404896 et al., June 20, 2011, 2011 CPD 128 (protest was sustained where the agency failed to consider both the variety and quantity of amenities offered under the access to amenities subfactor, as required by the solicitation). DRS ICAS, LLC, B-401852.4; B-401852.5, Sept. 8, 2010, 2011 CPD (protest challenging evaluation of the protester s technical proposal was sustained where the record showed that the agency assessed numerous weaknesses that lacked a reasonable basis). A1 Procurement, JVG, B-404618, Mar. 14, 2011, 2011 CPD 53 (in a negotiated procurement for a fixed-price contract, protest of the rejection of the protester s proposal on the basis of its low price was sustained, where the agency s evaluation of the protester s proposals was not reasonable or in accordance with the terms of the solicitation). Mission Essential Personnel, LLC, B-B-404218.2; B-404218.3, June 14, 2011, 2011 CPD 120 (protest of agency evaluation was sustained where the record reflects that the agency failed to consider one of the evaluation factors established by the terms of the solicitation). Unsupported Evaluation and Selection Decision Bruce Bancroft--Agency Tendor Official; Sam Rodriquez--Designated Employee Agent, B-400404.7 et al., Nov. 17, 2009, 2010 CPD 9 (protest challenging evaluation of agency tender in public-private competition under Office of Management and Budget Circular A-76 was sustained where the record established that the agency s evaluation of the private sector offeror s staffing plan was not adequately documented, and the protester was prejudiced by the error). Navistar Def., LLC; BAE Sys. Tactical Vehicle Sys. LP, B-401865 et al., Dec. 14, 2009, 2009 CPD 258 (protest challenging evaluation of protester s past performance was sustained where the agency could not produce a record that demonstrated the basis for the evaluation. Where an agency fails to document or retain evaluation materials, it bears the risk that there may not be adequate supporting rationale in the record for GAO to conclude that the agency had a reasonable basis for its source selection decision). C&B Constr., Inc., B-401988.2, Jan. 6, 2010, 2010 CPD 1 (protest challenging task order issued to higher-rated, but higher-priced, vendor was sustained where the contemporaneous evaluation record consisted of numerical scores assigned to each vendor s quotation, and lacked any information to show a basis for those scores, or a reasoned basis for any tradeoff judgments made in the source selection). Irving Burton Assoc., Inc., B-401983.3, Mar. 29, 2010, 2010 CPD 92 (protest challenging the agency s evaluation of the proposals of the awardee and the protester is sustained, where, in both instances, the record failed to demonstrate a reasonable basis for the evaluators findings). DRS ICAS, LLC, B-401852.4; B-401852.5, Sept. 8, 2010, 2010 CPD 261 (protest challenging evaluation of protester s technical proposal was sustained where the agency assessed numerous weaknesses not reasonably supported by the record. For example, certain agency concerns first

raised in a hearing on this protest were not reflected in the contemporaneous record, and had not been previously raised in the agency s earlier responses to the protest; since these additional concerns were first raised in the heat of the adversarial process and were inconsistent with the underlying record they were given little weight). Source Selection Did Not Consider Price System Eng. Intl., Inc., B-402754, July 20, 2010, 2010 CPD 167 (in a best value procurement for maintenance services, protest was sustained where the record showed that the agency performed a tradeoff between the two higher-rated, higher priced quotations, but did not consider, in its tradeoff decision, the lower prices submitted by other lower-rated vendors, whose quotations were nonetheless found to be technically acceptable). Mechanical Source Selection One Largo Metro LLC; Metroview Development Holdings, LLC; King Farm Associates, LLC, B-404896 et al., June 20, 2011, 2011 CPD 128 (protest was sustained where the head of the contracting activity did not meaningfully consider the evaluated differences in the offerors proposals in her selection decision, rather her source selection was based on a mechanical comparison of the offerors technical ratings). Evaluations Must Be Adequately Documented Resource Dimensions, LLC, B-404536, Feb. 24, 2011, 2011 CPD 50 (protest was sustained where the agency failed to provide adequate supporting rationale in the record for GAO to conclude that the agency had a reasonable basis for its evaluation of the protester s oral presentation because of unresolved discrepancies regarding the unrecorded portion of the oral presentation). Solicitation Requirement Exceeded Agency s Needs USA Jet Airlines, Inc., Active Aero Group, Inc., B-404666, Apr. 1, 2011, 2011 CPD 91 (protest of the agency requirement that offerors present evidence of certification under certain industry quality standards at the time of proposal submission, rather than at the time of award or performance, was sustained where the requirement exceeded the agency s reasonable needs). II. PRICE AND COST EVALUATIONS Price Realism I.M. Sys. Group, B-404583 et al., Feb. 25, 2011, 2011 CPD 64 (protest that challenged the award of indefinite-delivery/indefinite-quantity contracts was sustained where, although the solicitation provided that the agency would assess the realism of the offerors loaded rates, the agency did not assess the realism of the labor rates of the awardee or the protester). Page 5

Cost Realism MPRI, Division of L-3 Servs, Inc.; LINC Govt. Servs., B-402548 et al., June 4, 2010 (protest of cost realism evaluation was sustained where, although the agency reasonably determined that the protester had failed to adequately support its proposed substantial reduction in labor rates relative to those under its incumbent contract, the extent of the agency s resulting upward adjustment in the labor rates was unreasonable). Marine Hydraulics Intl., Inc., B-403386; B-403386.2, Nov. 3, 2010, 2010 CPD 255 (protest challenging the agency s cost realism evaluation was sustained, where the agency unreasonably made several upward adjustment to the protester s proposed cost that raised the protester s cost above the awardee s; but for the erroneous adjustments, protester s evaluated cost would have been low). III. DISCUSSIONS Discussions Must Be Meaningful AINS, Inc., B-400760.4; B-400760.5, Jan. 19, 2010, 2010 CPD 32; Mod. Denied, Dept. of Justice--Modication of Recommendation, B-400760.6, May 5, 2010, 2010 CPD 153 (agency failed to conduct meaningful discussions with protester when it did not reasonably advise the protester of the agency s real concern with the protester s quotation--that the evaluators considered its project schedule to be too short. We did not think that the agency s request for a new schedule reasonably conveyed to the protester that the evaluators viewed its proposed schedule as too aggressive; given that a period of over a year had elapsed between submission of the vendors initial quotations and submission of their final quotations, we think that vendors could reasonably have understood the request to be nothing more than a request for updated information). Ewing Constr. Co., Inc., B-401887.3; B-401887.4, Apr. 26, 2010, 2010 CPD 108 (agency conducted prejudicially misleading discussions with the protester. In taking corrective action in response to the protester s prior protest, the agency reevaluated an aspect of the protester s proposal as constituting a deficiency that rendered the proposal ineligible for award under the solicitation s stated evaluation scheme. While this aspect of the protester s proposal had been previously identified during discussions as a significant weakness that would result in the proposal being downgraded, it would not have rendered the proposal ineligible for award under the solicitation s stated evaluation scheme). CIGNA Govt. Servs., LLC, B-401062.2; B-401062.3, May 6, 2009, 2010 CPD (agency failed to conduct meaningful discussions where, after discussions had concluded, it determined that certain of the protester s proposed costs, which were set forth in the protester s initial and final revised proposals, were understated in comparison with those proposed by other offerors, and the agency adjusted the most probable cost estimates associated with the protester s costs upwards rather than reopening discussions to allow the protester an opportunity to address the issue). Page 6

What Constitutes Discussions PMO P ship Joint Venture, B-401973.3; B-401973.5, Jan. 14, 2010, 2010 CPD 29 (communicating with an offeror concerning its responsibility, that is, addressing agency concerns about the offeror s ability to perform, does not constitute discussions, so long as the offeror does not change its proposed cost or otherwise materially modify its proposal). Cahaba Safeguard Adm rs, LLC, B-401842.2, Jan. 25, 2010, 2010 CPD 39 (agency s exchanges with the offeror regarding its proposed mitigation strategy to address organizational conflicts of interests were not discussions such that the agency was required to reopen discussions with all offerors). C2C Solutions, Inc.; TrustSolutions, LLC, B-401106.6; B-401106.7, June 21, 2010, 2010 CPD 145 (where an agency, pursuant to FAR 9.504(e), conducts exchanges with an offeror regarding the offeror s plan to mitigate identified conflicts of interest, such exchanges do not constitute discussions and, as a consequence, do not trigger the requirement to hold discussions with other offerors). CIGNA Govt. Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD 230 (agency s communications with awardee regarding OCI mitigation strategies, following submission of final proposals, did not constitute discussions or require that discussions be conducted with other offerors). IV. PAST PERFORMANCE Past Performance Evaluations Must Be Consistent With Solicitation Shaw-Parsons Infrastructure Recovery Consultants, LLC; Vanguard Recovery Assistance, Joint Venture, B-401679.4 et al., Mar. 10, 2010, 2010 CPD 77 (an agency s past performance evaluation was unreasonable where the agency failed to give meaningful consideration to all the relevant past performance information it possessed. Here, the protest was sustained where the agency failed to consider past performance questionnaires it received regarding the protester s performance on its past performances references. Such information was too close at hand for the agency to ignore). Contrack Intl., Inc., B-401871.5 et al., May 24, 2010, 2010 CPD 126 (protest that the agency s evaluation of the awardee s past performance was unreasonable was sustained where the agency did not consider relevant adverse information, of which the agency was aware, for the awardee). CIGNA Govt. Servs., LLC, B-401062.2; B-401062.3, May 6, 2009, 2010 CPD (agency s consideration of the awardee s proposed subcontractor s past performance in its evaluation of the awardee s proposal under the solicitation s past performance factor was not reasonable where the solicitation provided for the consideration of the past performance of significant or critical subcontractors, and the record did not evidence that the subcontractor could properly be considered critical or significant ). Page 7

Past Performance Evaluations Must Include Close at Hand Information Northeast Military Sales, Inc., B-404153, Jan. 13, 2011, 2011 CPD 2 (an agency s assessment of awardee s past performance as exceptional was not reasonable where the agency failed to consider adverse past performance information of which it was aware). V. FEDERAL SUPPLY SCHEDULE (FSS) PURCHASE Non-FSS Products and Services May Not Be Purchased Using FSS Procedures American Sec. Programs, Inc., B-402069; B-402069.2, Jan. 15, 2010, 2010 CPD 2 (protest that vendor was ineligible to receive a task order under FSS procurement was sustained where certain services were outside the scope of the vendor s FSS contract). Rapiscan Sys., Inc., B-401773.2; B-401773.3, Mar. 15, 2010, 2010 CPD (where an agency announces its intention to order from an existing FSS contractor, all items quoted and ordered are required to be within the scope of the vendor s FSS contract. The sole exception to this requirement is for items that do not exceed the micro-purchase threshold of $3,000, since such items properly may be purchased outside the normal competition requirements in any case. Here solicitation limited competition to vendors holding FSS contract for required items, and successful vendor s FSS contract did not include all required items, therefore the protest was sustained. The micro-purchase exception was inapplicable because, while the non-fss items were priced at $0, the quotation stated that price of non-fss items was included in the FSS item prices). When Ordering Services Priced at Hourly Rates U.S. Information Techs. Corp., B-404357; B-404357.2, Feb. 2, 2011, 2011 CPD 74 ( in a procurement conducted pursuant to the FSS procedures, an agency, when ordering services priced at hourly rates and when a statement of work is included, was required to consider the level of effort and the mix of labor offered to perform a specific task being ordered and determine that the total price was reasonable). VI. ORGANIZATIONAL CONFLICTS OF INTEREST (OCI) Contracting Officer must address OCIs Cahaba Safeguard Adm rs, LLC, B-401842.2, Jan. 25, 2010, 2010 CPD 39 (protest was sustained where the agency failed to reasonably consider a plan proposed by the awardee to mitigate its impaired objectivity organizational conflicts of interest. Agency s exchanges with the offeror regarding its proposed mitigation strategy to address organizational conflicts of interests were not discussions such that the agency was required to reopen discussions with all offerors). Page 8

C2C Solutions, Inc., B-401106.5, Jan. 25, 2010, 2010 CPD 38 (protest was sustained where agency failed to reasonably consider a plan proposed by the awardee to mitigate its impaired objectivity organizational conflicts of interest). CIGNA Govt. Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD 230 (contracting officer s determination that awardee s activities, and access to information, in connection with performing contracts related to implementation of agency s new accounting system, did not create organizational conflicts of interest was not unreasonable where the determination was based on consideration of awardee s responses to specific questions regarding its activities and access to information; consideration of input from agency personnel knowledgeable of, and responsible for, the new accounting system; and consideration of the contracting officer s own independent internet research). Waiver The Analysis Group, LLC, B-401726.3, Apr. 18, 2011, 2011 CPD 166 (protest that agency failed to give adequate consideration to awardee s potential organizational conflicts of interest [OCI] was denied, where the record showed that the agency extensively investigated the potential OCIs and, after completing its investigation and concluding that there was a remote possibility of an OCI, properly executed a waiver of the residual OCI). Corrective Action DRS ICAS, LLC, B-401852.4; B-401852.5, Sept. 8, 2010, 2011 CPD (protest was sustained where the agency incorrectly assumed that it was required to ignore the passage of time between the agency s initial evaluation and its post-corrective action reevaluation with regard to the evaluation of the protester s ongoing work and its relevance to the evaluation of system maturity and schedule risk factors). Biased Ground Rules OCI Energy Sys. Group, B-402324, Feb. 26, 2010, 2010 CPD 73 (protest challenging potential exclusion from competition on the basis of an OCI was denied where the agency reasonably concluded that the protester s preparation of a report that was used to prepare a statement of work for a competitive solicitation created a biased ground rules OCI). Unfair Access to Information OCI Ellwood Nat l Forge Co., B-402089.3, Oct. 22, 2010, 2010 CPD 250 (protest that competitor had an unfair access to information OCI was denied where record showed that the information at issue was obtained by a former employee and consultant of the protester; alleged dissemination of such information was a dispute among private parties that GAO would not consider, notwithstanding that the former employee may also have had a subsequent opportunity to obtain the same information through performance of government contract). Page 9

VII. PROTESTS Timeliness Page 10 Alleged Solicitation Improprieties Baldt Inc., B-402596.3, June 10, 2010, 2010 CPD 139 (Baldt s post-award protest was dismissed as untimely after it alleged that the agency should not have used the simplified acquisition procedures to procure the items at issue, and that, given the amount of the quotes, no award was possible under the solicitation. GAO concluded that Baldt knew, or should have known, prior to the time set for receipt of quotes, that its own quote would be priced more than eight times higher than the simplified acquisition threshold, and that any resulting contract would likely exceed the threshold. GAO held that, under the circumstances, Baldt was required to protest the agency s use of the simplified acquisition procedures prior to the closing time, rather than waiting till after award). Patent Ambiguity Harrington, Moran, Barksdale, Inc., B-401934.2; B-401934.3, Sept. 10, 2010, 2010 CPD 231 (protest that agency unreasonably determined that an offeror s revised proposal did not meet the solicitation s submittal requirement was dismissed as untimely; any conflict between the requirement as described in the agency s discussions letter and the solicitation requirement created a patent ambiguity that should have been filed prior to the submission deadline for revised proposals). Kiewit Louisiana Co., B-403736, Oct. 14, 2010, 2010 CPD 243 (the RFP was patently ambiguous as to whether discussions were contemplated where the solicitation failed to incorporate one of two mandatory clauses to indicate whether award was to be made with or without discussions. Any questions regarding the agency s obligation to conduct discussions had to be raised, if at all, prior to the closing time for receipt of initial proposals. Since Kiewit did not protest prior to the closing time, its assertion that the agency was required to engage in discussions was untimely, and we would not consider it). Filing Waterfront Technologies, Inc., B-403638.3, Feb. 22, 2011, 2011 CPD 49 (where initial protest at GAO was dismissed because a third party filed at the U.S. Court of Federal Claims [COFC], the re-filing of the protest at GAO 37 days after the conclusion of the COFC litigation was untimely; monitoring proceedings at the COFC through a commercial website that was not regularly updated instead of using the official COFC website (PACER), which provides realtime updates for all filings, did not satisfy the requirement for protesters to utilize the most expeditious information-gathering approach under the circumstances). Marine Hydraulics Int l., Inc., B-403386.3, May 5, 2011, 2011 CPD 98 (protest challenging the agency s decision not to consider the awardee s performance under certain contracts was untimely where the GAO in sustaining the protest against the initial source selection on other grounds, had previously found the agency s approach in this regard to be reasonable, and the protester did not timely request reconsideration).

Failure to State A Valid Basis of Protest ARINC Eng g Servs., LLC, B-403471.2, Nov. 5, 2010, 2010 CPD 270 (protest challenging a solicitation for Russian-made helicopters to be provided to the Afghanistan Air Force as a de facto sole source procurement because of the possible role of a Russian government entity was dismissed where it failed to state a valid basis for protest). Costs KGL Food Servs., WLL; Intermarkets Global-Costs, B-400660.7; B-400660.8, June 20, 2011, 2011 CPD 131 (costs are not recommended where issues concerning awardee s responsibility, lack of meaningful discussions, and protesters own technical evaluations are readily severable from successful price realism challenge based on different set of facts and legal theories). Must Document Cost Claims Baine Clark Co., Inc.--Costs, B-401172.4, June 7, 2010, 2010 CPD 135 (protester requesting reimbursement of protest costs must submit evidence sufficient to support its claim that those costs were incurred, reasonable and properly attributable to filing and pursuing the protest; claimed costs that improperly aggregated allowable costs with unallowable costs or relate to settlement negotiations are disallowed). Corrective Action Ewing Constr. Co., Inc., B-401887.3; B-401887.4, Apr. 26, 2010, 2010 CPD 108 (agency conducted prejudicially misleading discussions with the protester where, in taking corrective action in response to the protester s prior protest, the agency reevaluated an aspect of the protester s proposal as constituting a deficiency that a rendered the proposal ineligible for award under the solicitation s stated evaluation scheme, and while that aspect of the protester s proposal had been previously identified during discussions as a significant weakness, under the solicitation s stated evaluation scheme this would result in the proposal being downgraded, but not rendered ineligible for award). DRS ICAS, LLC, B-401852.4; B-401852.5, Sept. 8, 2010, 2010 CPD 261 (protest was sustained where the agency incorrectly assumed that it was required to ignore the passage of time between the agency s initial evaluation and its post-corrective action reevaluation with regard to the evaluation of the protester s ongoing work and its relevance to the evaluation of systems maturity and schedule risk factors). VIII. TASK AND DELIVERY ORDERS Task Order Jurisdiction Technatomy Corp., B-405130, June 14, 2011, 2011 CPD 107 (the GAO will not dismiss a protest concerning the issuance of a task order under the authority of Title of the U.S. Code, notwithstanding the sunset of 41 U.S.C. 4106(f) (2006 & Supp. IV 2010) (formerly codified at 41 U.S.C. 253j(e) (2006 & Supp. III 2009)). The sunset provision eliminated both a pre- Page 11

existing restriction on GAO s jurisdiction to hear protests concerning the issuance of task or delivery orders under multiple-award indefinite-delivery/indefinite-quantity contracts, and a temporary partial waiver of that restriction concerning task orders over $10 million. With the elimination of both the underlying restriction, and the partial waiver of that restriction, GAO s jurisdiction reverts to its original jurisdiction for its bid protest function-i.e., the jurisdiction set forth in the Competition in Contracting Act of 1984-under which GAO had jurisdiction to hear such protests). U.S. Bank, B-404169.3, Feb. 15, 2011, 2011 CPD 43 (for purposes of determining GAO jurisdiction over challenges to the award of a task and delivery order, the term value for a no cost task order for third party payment services for transportation service providers [TSP] includes the anticipated transaction fees that the contractor will recover from the TSPs during the term of the contract, including options. However, GAO has no jurisdiction where the anticipated transaction fees of the selected contractor are less than $10 million based on the estimated dollar volume of the total transactions under the order as stated in the solicitation and where the protest did not timely challenge the estimated dollar volume). Qwest Govt. Servs., Inc., B-404845, Mar. 25, 2011, 2011 CPD 79 (costs for equipment and services furnished by the government in connection with the performance of a task order are not considered when determining whether the value of the order exceeded the $10 million threshold to invoke task order protest jurisdiction). Appeal to Task Order Ombudsman UXB-KEMRON Remediation Servs., LLC, B-401017.4, Oct. 25, 2010, 2010 CPD 251 (protest contesting the agency s decision to issue a delivery order request for proposals to the unrestricted pool of contractors under an indefinite-delivery/indefinite-quantity contract rather than to the small business pool was dismissed as untimely where it was filed after the due date for receipt of proposals; protester s previous appeal of this matter to the agency Task Order Ombudsman did not constitute an agency-level protest and did not toll GAO s timeliness requirements). IX. OMB CIRCULAR A-76 Bruce Bancroft--Agency Tendor Official; Sam Rodriquez--Designated Employee Agent, B-400404.7 et al., Nov. 17, 2009, 2010 CPD 9 (protest challenging evaluation of agency tender in public-private competition under Office of Management and Budget Circular A-76 was sustained where the record established that the agency s evaluation of the private sector offeror s staffing plan was not adequately documented, and the protester was prejudiced by the error). John P. Santry--Designated Employee Agent, B-402827, Aug. 2, 2010, 2010 CPD 177 (the statutory requirements for public-private competition, codified at 10 U.S.C. 2461, regarding functions performed by the Department of Defense civilian employees do not apply to nonappropriated fund employees). Page 12

X. MISCELLANEOUS ISSUES Solicitation Cancellation JER 370 Third St., LLC, B-402025.2; B-402541, June 1, 2010, 2010 CPD 120 (protest of agency decision to cancel the solicitation and resolicit the requirement was sustained where the record failed to demonstrate a reasonable basis for the contracting officer s conclusion that competition under the original solicitation was inadequate). Solicitation Ambiguous CWTSato Travel, B-404479.2, Apr. 22, 2011, 2011 CPD 87 (protest that certain solicitation terms are ambiguous was sustained where the solicitation did not clearly communicate whether objectives were optional or required). Modification Beyond the Scope of the Original Contract DynCorp Intl. LLC, B-402349, Mar. 15, 2010, 2010 CPD 59 (protest that task order requests for proposals (TORP) were outside the scope of multiple-award indefinite-delivery/indefinitequantity contracts was sustained, where the ID/IQ contracts were limited to providing counter-narcoterrorism support services worldwide, and the TORPs sought mentoring, training, facilities, and logistics support services for the Ministry of the Interior and Afghan National Police in general law enforcement and counter-insurgency activities, which were not reasonably contemplated under the ID/IQ contracts). Emergent BioSolutions Inc., B-402576, June 8, 2010, 2010 CPD 136 (protest that modification of contract for advanced development, testing, and production of anthrax vaccine was outside of the scope of the original contract was denied where modification did not substantially alter the scope of work anticipated by the underlying solicitation. GAO recognized that additional latitude for modifying a contract may exist where the contract was for research and development work, noting that the scope of such contracts is often flexible because of unanticipated changes due to the lack of definitiveness of the government s requirements). Late Proposal SafeGuard Servs., LLC, B-404910, June 28, 2011, 2011 CPD 132 (agency improperly rejected the protester s final proposal revisions [FPR] as late due to the fact that a minor subcontractor submitted a late FPR, where the agency did not determine whether the protester s FPR was acceptable without considering the subcontractor s late FPR). Revival of Expired Proposal Ocean Servs., LLC, B-404690, Apr. 6, 2011, 2011 CPD 73 (protest that contracting agency improperly refused to allow the protester to revive its expired proposal was sustained where the revival would not prejudice the other offerors or the competitive system, given that the protester s proposal, the acceptance period for which expired on a Saturday, was revived by its extension of the acceptance period on the following Monday morning). Page 13

Historically Underutilized Business Zones (HUBZone) B&B Medical Servs., Inc.; Rotech Healthcare, Inc., B-404241; B-404241.2, Jan. 19, 2011, 2011 CPD 24 (statutory non-manufacturer rule does not apply to procurements set aside for Historically Underutilized Business Zone small business concerns). Small Business Administration s (SBA s) Office of Hearings and Appeals (OHA) Eagle Home Med. Corp., B-402387, Mar. 29, 2010, 2010 CPD 82 (protest was sustained where agency failed to comply with the final decision of the SBA s OHA, in which the OHA reversed the North American Industry Classification System (NAICS) code assigned by the contracting officer and the contracting officer did not amend the solicitation to reflect the NAICS code that the OHA had determined was appropriate for this procurement, as required by applicable regulations). ONS21 Sec. Servs., B-403067, Sept. 16, 2010, 2010 CPD 218 (under small business set-aside, where award was made to an offeror determined to be a small business by the SBA area office in response to a size status protest, contracting agency was not required under applicable regulations to terminate the contract based on a subsequent reversal of the area office s size determination by SBA s Office of Hearing and Appeals). Service-Disabled Veteran Owned Small Business Concerns (SDVOSB) Aldevra, B-405271; B-405524, Oct. 11, 2011, 2011 CPD (protest was sustained where the Veterans Administration (VA) is required to conduct market research to determine if the procurements should be set aside for SDVOSB concerns before using the FSS. The Veterans Benefits, Health Care, and Information Technology Act of 2006-and implementing regulations require the VA to use such set-asides where the statutory prerequisites are met). Powerhouse Design Architects & Engineers, Ltd., B-403174 et al., Oct. 7, 2010, 2010 CPD 240 (protest that the Veterans Administration improperly failed to set aside architectengineering services procurements for SDVOSBCs were sustained, where the applicable statute--the Veterans Benefits, Health Care, and Information Technology Act of 2006--and implementing regulations, require such set asides where the statutory prerequisites were met). Agency Obligation to Use Reasonable Methods To Obtain Full and Open Competition Sikorsky Aircraft Corp., B-403471; B-403471.3, Nov. 5, 2010, 2010 CPD 271 (protest challenging the use of the public interest exception to full and open competition for acquisition of Russian-made helicopters for delivery to the Afghanistan Air Force was denied where the Acting Secretary of the Navy issued a determination that justified the restricted competition). Missouri Mach. & Eng. Co., B-403561, Nov. 18, 2010, 2010 CPD 276 (in a commercial item acquisition for the repair and overhaul of pumps, protest requiring vendors to be an original equipment manufacturer s authorized repair facility was sustained, where the agency did not show that the restriction on competition was necessary to meet its needs). Page 14

Brand Name Procurement California Indus. Facilities Resources, Inc., d/b/a CAMSS Shelters, B-403397.3, Mar. 21, 2011, 2011 CPD 71 (protest that solicitation was unduly restrictive because it required firms to submit proposals based solely on a brand name list of particular products was sustained where the solicitation did not include salient characteristics for the brand name products, and the agency had not taken the steps necessary to procure its requirements using other than full and open competition). NCS Technologies, Inc., B-403435, Nov. 8, 2010, 2010 CPD 281 (solicitation requirements that computers and monitors be from the same manufacturer and use Intel-based microprocessors was overly restrictive where the agency failed to demonstrate a reasonable basis for the requirements). Use of Public Interest Exception to Full and Open Competition Sikorsky Aircraft Corp., B-403471, B-403471.3, Nov. 5, 2010, 2010 CPD 271 (protest challenging use of the public interest exception to full and open competition for acquisition of Russian-made helicopters for delivery to the Afghanistan Air Force was denied where the Acting Secretary of the Navy issued a determination that clearly and convincingly justified the decision). Change in Requirement After Receipt of Proposals Diebold, Inc., B-404823, June 2, 2011, 2011 CPD 117 (protest was sustained where an agency made material modifications to the solicitation without requesting revised proposals from the other offerors). Invitation for Bids (IFBs) Hostetter, Keach & Cassada Constr., LLC, B-403329, Oct. 15, 2010, 2010 CPD 246 (protester s bid was responsive despite a discrepancy in the names of the bidder and the bid bond principal, where the record reflected that the bidder and the bid bond principal were the same entity so that it was certain that the surety would be liable to the government in the event that the bidder withdrew its bid or failed to execute a written contract or to furnish required performance and payment bonds). Page 15

United States Government Accountability Office Washington, DC 20548 Comptroller General of the United States Decision Matter of: Aldevra File: B-405271; B-405524 Date: October 11, 2011 Rodney Marshall, for the protester. Brian R. Reed, Esq., and Dennis J. Kulish, Esq., Department of Veterans Affairs, for the agency. Jacqueline Maeder, Esq., and Scott H. Riback, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest that Department of Veterans Affairs (VA) improperly used non-mandatory Federal Supply Schedule procedures to procure items, rather than using a set-aside for service-disabled veteran-owned small businesses, is sustained, where the applicable statute--the Veterans Benefits, Health Care, and Information Technology Act of 2006--and implementing regulations require the VA to use such set-asides where the statutory prerequisites are met. DECISION Aldevra, of Portage, Michigan, a service-disabled veteran-owned small business (SDVOSB) concern protests the terms of solicitation No. VA-69D-11-RQ-1170 (RQ- 1170), issued by the Department of Veterans Affairs (VA) for a tilting skillet/braising pan and one countertop electric griddle for the Federal Health Care Center in Chicago, Illinois. Aldevra also protests the terms of the VA s solicitation No. 693-11- 4-179-0306 (179-0306), issued to procure two griddles and one food slicer for the VA Medical Center in Wilkes-Barre, Pennsylvania. Aldevra asserts that the agency improperly failed to comply with applicable statutes and regulations to determine if these procurements should be set aside for such firms. We sustain the protests.

BACKGROUND These procurements currently are being conducted pursuant to General Services Administration (GSA) Federal Supply Schedule (FSS) procedures and implementing regulations, set forth at Federal Acquisition Regulation (FAR) Subpart 8.4. In accordance with those regulations, the procurements were issued on an unrestricted basis to vendors holding FSS contracts under schedule 73. The sole issue in the protests is whether the VA is required to conduct market research to determine if the procurements should be set aside for SDVOSB concerns before using the FSS. The protester asserts that the agency s failure to do so, and to subsequently set aside the procurement, if appropriate, violated the Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. 8127-8128 (2006) (the 2006 VA Act). In relevant part, 38 U.S.C. 8127(d), provides as follows:... a contracting officer of [the VA] shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States. The statute also sets out an order of priority for the contracting preferences it establishes, providing that the first priority for contracts awarded pursuant to 38 U.S.C. 8127(d) shall be given to SDVOSB concerns, followed by veteran owned small businesses (VOSBs). 38 U.S.C. 8127(i). 1 The VA issued regulations implementing the 2006 Act which, as relevant here, state as follows: (a).... Except as authorized by 813.106, 819.7007 and 819.7008 2, the contracting officer shall set aside an acquisition for competition restricted to SDVOSB concerns upon a reasonable expectation that: 1 Although this decision addresses the priority of SDVOSB set asides as compared to the FSS, the discussion applies equally to VOSB set asides as compared to the FSS under the VA Act. 2 These references are to other provisions in the Veterans Administration Acquisition Regulation concerning the use of other than competitive procedures to enter into contracts with an SDVOSB or VOSB concern (48 C.F.R. 813.106), and procedures (continued...) Page 2 B-405271

(1) Offers will be received from two or more eligible SDVOSB concerns and; (2) Award will be made at a reasonable price. Veterans Administration Acquisition Regulation (VAAR), 48 C.F.R. 819.7005(a) (2010). The protester asserts, and the agency concedes, that there are at least two SDVOSBs capable of meeting the agency s requirements under solicitation RQ-1170. Agency Report (AR), July 20, 2011, at 2. The agency has not conceded that there are at least two SDVOSB concerns capable of meeting the agency s requirements under solicitation 179-0306. DISCUSSION VA argues that neither the VA Act, nor the VA s implementing regulations, require the agency to consider SDVOSB and VOSB set-asides prior to determining whether to purchase goods or services through the FSS program. AR, July 20, 2011, at 3; AR, Sept. 27, 2011, at 2. The agency contends that it has the discretion to determine whether to meet its requirements through the FSS before procuring from other sources such as SDVOSBs or VOSBs. Id. We see nothing in the VA Act or the VAAR that provides the agency with discretion to conduct a procurement under FSS procedures without first determining whether the acquisition should be set aside for SDVOSBs. The provisions of both the VA Act and the VAAR are unequivocal; the VA shall award contracts on the basis of competition restricted to SDVOSBs where there is a reasonable expectation that two or more SDVOSBs will submit offers and award can be made at a fair and reasonable price. 3 Thus, contrary to the agency s position, the VA Act requires, without limitation, that the agency conduct its acquisitions using SDVOSB set asides where the necessary conditions are present. 38 U.S.C. 8127-8128. Moreover, since the agency concedes that there are at least two SDVOSBs capable of meeting its requirements under solicitation RQ-1170, it must set this requirement aside exclusively for SDVOSBs. Because the agency did not conduct market (...continued) for the award of sole-source contracts to SDVOSB and VOSB concerns (48 C.F.R. 819.7007, 819.7008). 3 The VAAR does specify three exceptions to the requirement to set aside acquisitions for SDVOSB concerns (relating to other than competitive and solesource acquisition procedures), but electing to acquire goods and services under the FSS is not one of those exceptions. Page 3 B-405271

research to determine if there are two or more SDVOSB concerns capable of performing the requirements under solicitation 179-0306, it must conduct market research and, if it determines that there are two or more firms capable of performing the requirements, it must set this requirement aside exclusively for SDVOSB concerns. 4 In our view, the discussion above disposes of the question raised by this protest. The VA has argued, however in pleadings filed in response to this protest, and in pleadings filed in several other protests currently pending before our Office that it addressed and resolved the applicability of the VA Act to the FSS when it promulgated the above-quoted provisions of the VAAR. AR, July 20, 2011, at 6-7; AR, Sept. 27, 2011, at 3. The comments on the agency s proposed regulations, and the agency s responses in answer to those comments, were published in the Federal Register, which included the following exchange addressing the applicability of the VA Act to FSS acquisitions: Comment: VA received a comment stating that the proposed rule was unclear whether it was intended to be applicable to task and delivery orders under the Federal Supply Schedule (FSS). The commenter indicated that although GSA [General Services Administration] has delegated to VA the authority to administer certain schedules, the delegation does not extend to policy implementation. The commenter recommended a revision stating that SDVOSB and VOSB set-asides and sole source provisions do not apply at the FSS order level. Response: We disagree with the commenter and reject the suggestion because this rule does not apply to FSS task or delivery orders. VA 4 The VA also argues that FAR 8.002 identifies a priority list of sources, including, for example, agency inventories, excess from other agencies and mandatory FSS contracts. AR, July 20, 2011, at 5-6. The agency argues that it is inconceivable that it would have to procure its requirements from SDVOSBs in instances where it can meet its needs through these other sources. Id. at 6. We need not consider these other programs in deciding the instant case. The agency has specifically advised our Office that, to the extent its current requirements are available under the FSS, they are included on a non-mandatory schedule. See Murray-Benjamin Electric, Co., LP, B-298481, Sept. 7, 2006, 2006 CPD 129 at 3 (use of a non-mandatory FSS contract is voluntary on the part of the agency). Our decision today does not address the interrelationship of the VA Act to these other programs, and is limited to the interrelationship of VA Act s requirements to purchases from non-mandatory FSS sources. Page 4 B-405271

does not believe a change to the regulation is needed, and 48 CFR part 8 procedures in the FAR [Federal Acquisition Regulation] will continue to apply to VA FSS task/delivery orders. Further, VA will continue to follow GSA guidance regarding applicability of 48 CFR part 19 of the FAR, Small Business Programs, which states that set-asides do not apply to FAR part 8 FSS acquisitions. 74 Fed. Reg. 64619 (Dec. 8, 2009). 5 As stated above, the VA contends that this commentary addressed and resolved the applicability of the VA Act to FSS acquisitions. The VA also contends that it reasonably relied on the FAR in concluding that the VA Act does not apply to FSS acquisitions. 6 As the VA correctly points out, FAR 8.404 (a) expressly provides that the requirements related to small businesses in FAR part 19 are inapplicable to FSS acquisitions with the exception of FAR 19.202-1 (e)(1)(iii) (not relevant here). 7 FAR part 19 includes requirements relating to various small business programs. Of relevance here, FAR subpart 19.14 includes provisions relating to one program for the award of contracts to SDVOSBs; this is the only subpart of FAR part 19 that addresses set-asides for SDVOSBs. Subpart 19.14, however, implements the requirements of the Veterans Benefit Act of 2003, which was codified at 15 U.S.C. 657f (2006), and applies government-wide. See FAR 19.1402. The 2006 VA Act, which is codified at 38 U.S.C. 8127, 8128, applies only to VA procurements. See Angelica Textile Servs., Inc. v. U.S., 95 Fed. Cl. 208, 222 (2010) (noting that the VA is the only agency to which the requirements of the Veterans Benefits Act of 2006 apply). In addition and in contrast to the 2006 VA Act at issue here the Veterans Benefit Act of 2003 provides, in relevant part, that: 5 A second comment/response, to which VA does not cite, also was published in the Federal Register, stating, among other things, that the proposed rule should apply to FSS orders since VA purchases approximately 60 percent of its goods and services through the FSS. 74 Fed. Reg. 64619 (Dec. 8, 2009). The VA s response to this comment reiterated the agency s position that FSS contracts are governed by policy developed by GSA, which has determined that set-asides do not apply to FSS orders. Id. 6 We solicited the views of GSA in connection with the protest docketed as B-405271. GSA deferred to VA because the case involves interpretation of a statute that applies only to VA. 7 FAR 8.404(a) also provides that the requirements of FAR parts 13, 14 and 15 are inapplicable to FSS procurements. Page 5 B-405271

In accordance with this section, a contracting officer may award contracts on the basis of competition restricted to small business concerns owned and controlled by service-disabled veterans if the contracting officer has a reasonable expectation that not less than 2 small business concerns owned and controlled by service-disabled veterans will submit offers and that award can be made at a fair market price. 15 U.S.C. 657f (b) (emphasis added). Simply stated, the 2003 government-wide program is separate and distinct from the VA-specific program created by the VA Act of 2006. As a result, the FAR language implementing the 2003 Act and exempting the FSS program (among other programs 8 ) from its requirements has no application to the statute at issue here. In addition, the program created by the 2003 statute is permissive in nature, insofar as it provides that contracting officers may restrict competition to SDVOSBs in appropriate circumstances. See, e.g., Mission Critical Solutions, B-401057, May 4, 2009, 2009 CPD 93 at 3. In light of these considerations, we conclude that the exception in the FAR that permits agencies to award task and delivery orders under the FSS without regard to government-wide small business programs including the SDVOSB set-aside program created by the 2003 statute (and implemented by FAR subpart 19.14) does not govern, or apply to, the SDVOSB set-aside program created by the Veterans Benefits, Health Care, and Information Technology Act of 2006. 9 RECOMMENDATION We recommend that the agency cancel solicitation RQ-1170 and re-solicit its requirements using a SDVOSB set-aside. We recommend that the agency conduct a reasonable market research regarding its requirements under solicitation 179-0306, 8 The exemption of the FSS from the requirements of the 2003 Act is set forth at FAR 19.1404(c). Other exempted procurement programs include Federal Prison Industries, Inc. ( 19.1404(a)(1)), Javits-Wagner O Day Act non-profit agencies for the blind or severely disabled ( 19.1404(a)(2)), orders under indefinite delivery contracts ( 19.1404(b)), and requirements performed under the Small Business Administration s 8(a) set-aside program ( 19.1404 (d)). 9 We also note that the 2003 statute does not create a set-aside program for VOSBs (as opposed to SDVOSBs), whereas the 2006 statute does. Thus, even if we were to agree with VA concerning the exemption for set asides when making FSS purchases, that exemption would not extend to the VOSB set asides that are also contemplated under the 2006 statute. Page 6 B-405271