Air Force Solicitation Requires SDVOSB VetBiz Verification

VetBiz verification is only required for VA SDVOSB set-aside solicitations (and FAA SDVOSB set-asides), right?  Not in the eyes of one Air Force contracting officer, who apparently inserted a VetBiz verification requirement in a recent SDVOSB set-aside solicitation.

After being excluded from the competition, a contractor challenged the legality of the VetBiz requirement, and asked the SBA to declare it invalid.  Unfortunately for the protester, as the SBA Office of Hearings and Appeals held, the SBA lacks authority to rule on such a protest.

SBA OHA’s decision in SDVOSB Appeal of 347 Construction Group, SBA No. VET-232 (2013) involved an Air Force solicitation for the renovation and repair of heating and air conditioning systems.  The Air Force set the procurement aside for SDVOSBs.  Apparently, a provision in the solicitation required SDVOSBs to be verified with the VA’s VetBiz system in order to be eligible for award.

On September 21, 2012, the Contracting Officer announced that the contract had been awarded to Total Team Construction Services.  On the same day, the Contracting Officer informed 347 Construction Group that it had been excluded from the solicitation because it was not registered in the VetBiz database.

On September 27, 347 filed a protest with the Contracting Officer challenging its exclusion.  347 admitted that it was not registered in the VetBiz system, but argued that VetBiz registration was not necessary to qualify as a SDVOSB for the procurement.  347 asserted that if the Contracting Officer questioned 347′s SDVOSB status, it was required to forward the matter to the SBA for resolution.

After a “delay of several months,” the Contracting Officer forwarded 347′s protest to the SBA’s Office of Government Contracting.  Two weeks later, SBA OGC dismissed the protest.  SBA OGC explained that it had authority to decide a SDVOSB status protest only if the protester challenged the SDVOSB eligibility of the successful offeror.  In this case, however, 347 sought a review of its own SDVOSB eligibility, not that of the awardee.

347 filed an appeal with SBA OHA.  SBA OHA confirmed that 347 had filed its protest incorrectly.

347′s allegations “pertain to the Air Force’s conduct of the procurement, and therefore are in the nature of a bid protest,” SBA OHA wrote.  “Bid protest allegations must be raised at the U.S. Government Accountability Office (GAO) or similar forums, not at OHA .”

SBA OHA concluded, “[a]ccordingly, insofar as [347] seeks to challenge the Air Force’s decision to exclude [347] from the competition, [347] is pursuing this litigation in the wrong forum.”  SBA OHA denied 347′s appeal.

At its most basic, the 347 Construction Group decision stands for the principle that when a contractor challenges its own exclusion from the competition–even for reasons related to size or socioeconomic eligibility–the proper mechanism is likely a bid protest with the GAO (or Contracting Officer or Court of Federal Claims), not a protest with the SBA.

In this case, 347 not only should have filed a bid protest instead of a SBA protest, but should have filed that protest before the due date for proposals, rather than waiting until it was excluded from the competition.  This is because the general rule for bid protests is that deficiencies that are evident on the face of a solicitation must be protested before the proposal due date.  Because 347 waited until after award to protest, even had 347 filed in the right forum, its protest may well have been dismissed as an untimely challenge to the solicitation’s VetBiz requirement.

That brings me to the more interesting part of the 347 Construction Group case: the fact that the Air Force required VetBiz verification for SDVOSBs.  Was that legal?

At the very least, the provision was highly questionable.  In a SBA OHA decision issued last year, a disappointed offeror for an Army SDVOSB set-aside filed a SDVOSB eligibility protest, arguing that the successful awardee was not registered in VetBiz.  SBA OHA held that SBA OGC had properly dismissed the protest, writing:

“This procurement is an Army procurement and is thus under SBA’s SDVO SBC regulations. Under SBA’s regulations there is no requirement that a firm be included in VA’s VetBiz database.  A concern need not be listed in VetBiz in order to bid on procurements for Federal agencies other than the VA. 13 C.F.R. §§ 125.9, 125.10. Accordingly, an allegation that a firm is not listed on the VetBiz database is not valid grounds for a protest under SBA’s regulations.”

Was the Air Force’s insistence on VetBiz verification an outlier, or a sign of things to come?  If the latter, we can certainly expect the GAO and/or the Court of Federal Claims to weigh in on the question that the SBA lacked jurisdiction to decide.

7 thoughts on “Air Force Solicitation Requires SDVOSB VetBiz Verification

  1. I have seen this requirement before, and I do not understand how this can be legal, given that the FAR does not require VetBiz certification, nor does the SBA for SDVOSB certification. This is a requirement for the VA only, yet I believe this trend will continue until someone stands up and brings this to the attention of the proper entity to rule on this seemingly illegal requirement. Regrettably, 347 had the opportunity and blew it.

    Firstly, it drives me crazy when small businesses don’t understand fundamental contracting actives like filing deadlines to file a protest, but it goes to a bigger issue of feeding the beast of perception by some in government and large primes that small businesses lack the general education of being government contractors.

    This requirement was also a great example of what pre-award protests are for, since this requirement should have never made it into the final solicitation to begin with. This requirement is unduly restrictive to competition, and SBA allows self-certification. Those are the facts, and the Air Force should not have been held accountable for changing the goal posts and the rules.

    More importantly, why on Earth did 347 “protest” to the SBA? Again, they lacked the knowledge they needed to take the proper corrective actions. You can read all about it in FAR Subpart 15.5, Preaward, Award, and Postaward Notifications, Protests, and Mistakes. However, a simple Google search on “protesting a federal contract” would include dozens of sites that would have helped guide 347.

    I certainly understand the intent of the Air Force in wanting to ensure legitimate SDVOSB companies win their contracts, but this is not how it should be done. The current process at the VA in certifying veteran and service-disabled companies is challenging, with a 50% rejection rate, a myriad of bureaucracy and landmines, and an ocean of paperwork to prove legitimacy that makes one think the contractors that are working for VA are being paid by the page.

    This is an unfortunate issue, and one that I hope gets corrected by standardized processes for all socioeconomic designations to be properly certified by the SBA, much like the 8(a) program. However, I do not think the VA program I working. The VA should instead work on their backlog of claims for our veterans, not getting into a program they have no business being in to begin with. That is what the SBA should be doing.

    • Jaime,

      Thank you for the thorough and well-thought comment. I agree with your take. It seems to me that it is should not be legal for non-VA agencies to require VA verification. These agencies fall under the SBA’s program, which expressly does not require verification. Allowing other agencies to cherry-pick solicitations in which VA verification is required blurs the lines between the programs. In addition, given the time it can take to apply and be verified, it might not be possible for a self-certified SDVOSB to be verified between the time the solicitation is released and the deadline for proposals.

      I do think that the FAA is a unique case, in two respects. First, unlike other procuring agencies, the FAA is exempt from the Small Business Act and is not part of the SBA’s program. Second, the SBA put the VA verification requirement in its regulations, which puts prospective offerors on notice that verification is required to do business with the FAA as a SDVOSB. I would be curious to see what happened if the legality of the FAA’s arrangement was challenged, but I think it could be upheld while at the same time denying the ability of other agencies, like the Air Force in this case, to require verification.

      Steve

  2. This is scary to me. Our two year deadline is 7/31/2013. We received notification from CVE. In the letter, we were advised that we would have to start from scratch because they did not have our documentation on file. When we applied, we did suppy all requested documentation. The letter also states that if nothing had changed, all we would have to do is to submit a certification to that. We cannot get a clarification from CVE as to this contradiction and time is running short. Very discouraging.

  3. In the case of 347 Construction Group is there any mechanism for counter claim on the part of Total Team Construction Services, questioning the SDVOSB status of 347 Construction? It is my understanding that any SDVOSB status questions are evaluated by the VA not the SBA. If 347 Construction did not meet the standard for CVE certification it is possible they would not be found a legitamate SDVOSB if evaluated by the VA. Then the question of exclusion would be mute.

  4. Steven,
    I’m a program mgr for a self-certified SDVOSB, and this whole thing concerns me. I and fellow SB program managers have always believed that it is wrong for a non-VA and non-FAA contracting office to require CVE verification. Is this no longer the case? Thank you.

    • Alan,

      Thank you for reading and reaching out. I believe that it is wrong for non-VA, non-FAA COs to require CVE verification. If one does so, the solicitation should be protested before the due date and I think the protester would have a good chance of prevailing. If no one protests, however, then the requirement stays in the solicitation, even if it is wrong.

      Please let me know if you see any COs requiring this as it is something that should be addressed. Thanks again for reading.

      Steve

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