It’s Over: GAO Waves White Flag On Aldevra SDVOSB Cases

Well, that was fast.

A little more than two weeks after the U.S. Court of Federal Claims held that the VA need not consider service-disabled veteran-owned small business set-asides before procuring goods and services using the Federal Supply Schedule, the GAO has ended its long-running dispute with the VA over the same issue.

The GAO’s decision, in a case also involving Kingdomware Technologies, puts a sudden end to a series of GAO cases (known by many as the Aldevra cases) holding that the VA has been acting contrary to the law by failing to consider SDVOSB set-asides before using the Schedule.

The GAO’s decision in Kingdomware Technologies–Reconsideration, B-407232.2 (Dec. 13, 2012) involved a VA task order award to LiveProcess, Inc. under that firm’s Schedule contract.  The initial task order was issued in August 2011.  In August 2012, the VA exercised an option, extending LiveProcess’s contract.

On August 27, 2012, Kingdomware filed a GAO bid protest.  Kingdomware alleged that the initial task order award, as well as the option award, violated the Veterans Benefits, Health Care, and Information Technology Act of 2006 because the VA had not considered a SDVOSB set-aside before awarding the task order.  Kingdomware pointed out that the initial task order award had not been publicly posted, preventing Kingdomware from learning about the award–and challenging it–in 2011.

At the time of Kingdomware’s August 2012 protest, the GAO was regularly sustaining protests like Kingdomware’s, under precedent first established in Aldevra, B-405271, B-405524 (Oct. 11, 2011).  Nevertheless, the GAO dismissed Kingdomware’s protest, holding that because more than a year had passed since the underlying task order was issued, “no useful purpose is served by our considering a protest of the action.”

Kingdomware filed a request for reconsideration, asking the GAO to think again about its decision dismissing the protest.  However, before the GAO issued its decision on reconsideration, the Court of Federal Claims had its say.

On November 27, 2012, Judge Nancy Firestone issued her ruling in Kingdomware Technologies, Inc. v. United States, No. 12-173C (Nov. 27, 2012).  Judge Firestone supported the VA’s position, holding that the VA need not consider SDVOSB set-asides before using the Federal Supply Schedule.

The GAO wrote that Judge Firestone’s decision, coupled with the VA’s continued refusal to follow the GAO’s Aldevra-style recommendations, made it pointless for the GAO to continue hearing protests like the one filed by Kingdomware.  The GAO wrote:

“While this Office has set forth its view of the 2006 VA Act in Aldevra and its progeny, as well as in testimony before the Congress, the VA has elected not to follow our recommendations. In addition, the court has reached a different conclusion about the meaning of the 2006 VA Act.  Although our Office is not bound by the court’s decisions, its decision in Kingdomware, together with the VA’s position on the meaning of this statute, effectively means that protesters who continue to pursue these arguments will be unable to obtain meaningful relief.  Consequently, under these circumstances, we will no longer consider protests based only on the argument that the VA must consider setting aside procurements for SDVOSBs (or VOSBs) before conducting an unrestricted procurement under the FSS.”

The GAO dismissed Kingdomware’s protest.

The GAO’s decision in Kingdomware Technologies marks a sudden (but, in the wake of the Court’s decision, not unexpected) end to the Aldevra line of cases.  For SDVOSBs, the decision is dispiriting, but the bottom line is that the GAO is correct: without the Court on its side, the GAO has no power to make the VA abide by its rulings.  Unless things change, there is no substantive purpose to be served by SDVOSBs continuing to file such GAO bid protests.

For SDVOSBs, the good news is that the GAO has not changed its position on the merits.  The GAO continues to believe that the VA is acting contrary to the 2006 VA Act by failing to consider SDVOSB set-asides before using the Schedule.  As the battle moves to its next stage (presumably, either an appeal to the U.S. Court of Appeals for the Federal Circuit or a request for Congressional action), SDVOSBs should not forget that the GAO may yet be an important ally in one day requiring the VA to truly put “Veterans First.”

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