B-400616, Major Contracting Services, Inc., November 20, 2008
Decision
Matter of: Major Contracting Services, Inc.
Barry
Jenkins for the protester.
Lt. Col. Vince Vanek, Department of the Army, and Kevin R. Harber, Esq., Small
Business Administration, for the agencies.
Nora K. Adkins, Esq., and James A. Spangenberg, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
Where an awardee was found to be
ineligible for service-disabled veteran-owned small business concern (SDVOSBC) status
by the Small Business Administration (SBA) and the SBA’s Office of Hearings and
Appeals based on a timely status protest filed after award under an SDVOSBC
set-aside, the agency was not required to terminate the contract under the
SBA’s applicable regulations.
DECISION
Major Contracting Services, Inc.
(MCS) of Colorado Springs, Colorado, protests the decision of the Army to
continue performance of a contract awarded to DAV Prime/Vantex Service Joint
Venture (DAV Prime JV) of Larue, Texas, under solicitation No. W911S2-08-T-3009
for portable chemical toilet services at
The request for quotations (RFQ) for portable chemical
toilet services for a base period and four 1-year options was posted to the
government point of entry, www.fedbizopps.org, on March 14, 2008. The RFQ was issued as a 100-percent set‑aside for SDVOSBCs. The procurement was conducted using simplified
acquisition procedures under Federal Acquisition Regulation (FAR) Part 13.5.[1] The evaluation factors to be considered were price
and past performance.
Three quotes were received in response to the RFQ,
including quotes from MCS and DAV Prime JV, both of which represented that they
were SDVOSBCs. On May 28, the agency
made award to DAV Prime JV; performance began June 1. MCS was notified of the contract award in
writing on June 2.[2]
On June 5, MCS submitted a protest to the contracting
officer alleging that DAV Prime JV was not a SDVOSBC and was thus ineligible
for award. The agency forwarded MCS’s
status protest to the SBA. MCS’s protest
was accepted by the SBA on June 19. The
SBA notified MCS and the agency on June 26 that it had received the timely
filed protest. Upon receiving the SBA’s
notice, the agency chose to allow DAV Prime JV to continue performance under
the protested contract.
The SBA Director of Government Contracting sustained MCS’s protest on July 15, finding that DAV Prime did not meet the eligibility requirements of a SDVOSBC, and therefore, the joint venture of DAV Prime and Vantex Service failed to qualify as a SDVOSBC. The SBA decision stated that both DAV Prime and DAV Prime JV were ineligible to receive an award under the current RFQ and both were prohibited from submitting offers on future SDVOSBC procurements. After receiving notice of the decision, MCS contacted the contracting officer to determine the status of the award given the SBA’s findings. The contract officer informed MCS on July 21 that he would not make any decision until DAV Prime JV “forego(s) appeal or an appeal decision is made.” AR, Tab 13, Email Correspondence.
On July 25, DAV Prime JV appealed the decision of the SBA
to the SBA’s OHA. The OHA denied DAV
Prime JV’s appeal on August 15. MCS
again contacted the contracting officer on September 8 to determine the status
of award and was informed on September 15 that the award was not and would not
be vacated. MCS filed the current
protest with our Office on September 19 seeking termination of DAV Prime JV’s
contract because the SBA found, and the OHA affirmed, that DAV Prime JV was not
an eligible SDVOSBC.
In 2003, Congress created, by amending the Small Business
Act, a procurement program for small business concerns owned and controlled by
service-disabled veterans. Veterans
Benefits Act of 2003, Pub. L. No. 108-183, 117 Stat. 2651, 2662 (2003), 15
U.S.C. sect. 657f (2006). Under this
authority, the SBA, and not our Office or the procuring agency, is the
designated authority for determining whether a firm is an eligible SDVOSBC, and
it has established procedures for interested parties to challenge a firm’s
status as a qualified SDVOSBC. Singleton
Enters.--GMT Mech., A Joint Venture, B-310552,
Many of MCS’s arguments concern the issue of whether DAV
Prime JV qualified as an SDVOSBC, which issue has been resolved by the SBA. Based on these arguments, MCS argues that the
contracting officer should have investigated and questioned the joint venture’s
representation that it was an SDVOSBC. However,
we find nothing that would have required the contracting officer to investigate
or question DAV Prime JV’s representation before making award.
MCS has also asserted that the Army should have terminated
the contract upon receiving the SBA’s and the OHA’s decisions finding DAV Prime
JV ineligible as an SDVOSBC joint venture.
The Army, on the other hand, argues that in accordance with the SBA’s
regulations it was not required to terminate the contract. The SBA, whose views we solicited, agrees
with the Army.
The SBA’s regulations regarding
SDVOSBC protests describes the effect of an SBA determination on SDVOSBC status
as follows:
Effect of determination. SBA’s determination is effective immediately and is final unless overturned by OHA on appeal. If SBA sustains the protest, and the contract has not yet been awarded, then the protested concern is ineligible for an SDVO SBC contract award. If a contract has already been awarded, and SBA sustains the protest, then the contracting officer cannot count the award as an award to an SDVO SBC and the concern cannot submit another offer as an SDVO SBC on a future SDVO SBC procurement unless it overcomes the reasons for the protest.
13 C.F.R. sect. 125.27(g).
The regulation thus explicitly differentiates between a determination’s
effect when issued before versus after award and, as we have previously found,
we think a fair reading of this regulation is that there is no requirement that
a contract be terminated if an awardee is found to be other than an SDVOSBC
after award was made. Veteran Enter.
Tech. Servs., LLC, B‑298201.2,
The protest is denied.
Gary L. Kepplinger
General Counsel
[1]
FAR subpart 13.5 authorizes the use of simplified procedures for the
acquisition of supplies and services in amounts greater than the simplified
acquisition threshold but not exceeding $5.5 million.
[2]
While MCS asserts that the Army failed to provide timely post-award notice as
provided by FAR sect. 15.503(b)(1), this procurement was conducted under FAR subpart
13.5, which does not specifically require a post-award notice of award.
[3]
Given that DAV Prime JV is not an SDVOSBC and thus should not have been awarded
the contract under this solicitation that was limited to SDVOSBCs, we think the
agency should consider whether it is appropriate to exercise the options under
that firm’s contract.