Unverified SDVOSB JV Partner Couldn’t Protest VA Set-Aside Solicitation

A non-SDVOSB company couldn’t protest the terms of a VA SDVOSB set-aside solicitation, despite entering into a joint venture agreement with an SDVOSB–because the joint venture hadn’t started the process of becoming verified by the VA.

In a recent bid protest decision, GAO held that because neither the protester nor the joint venture was included in the VIP database, or likely to be included during the protest process, the protester wasn’t an “interested party” under the GAO’s bid protest regulations.

The GAO’s decision in Owl, Inc.; MLB Transportation, Inc., B-414962, B-414692 (Oct. 17, 2017) involved a VA solicitation for wheelchair van transport services for the beneficiaries of the Atlanta VA Medical Center.  The solicitation was issued as an SDVOSB set-aside.

Before the due date for proposals, two companies filed pre-award GAO protests.  Both companies argued that the solicitation’s scope of work was vague and that the pricing schedule was unfair, among other grounds of protest.

The VA moved to dismiss the protest filed by MLB Transportation, Inc.  The VA argued that MLB was not an interested party to pursue the protest because it was not a verified SDVOSB listed in the VIP database.

MLB conceded that it was not an SDVOSB, but stated that it had entered into a joint venture agreement with an SDVOSB to pursue the contract.  MLB acknowledged that the joint venture wasn’t listed in the VIP database, and “had not begun its VIP system application until after the time that it filed its protest.”

The GAO wrote that, under its bid protest regulations “[o]nly an ‘interested party’ may protest a federal procurement; a protester must be an actual or prospective bidder whose direct economic interest would be affected by the award of a contract or the failure to award a contract.”  In this case, GAO said, “[w]e agree with the agency that where neither MLB or its claimed joint venture are listed on the VIP website or likely to be approved to be listed on the VIP website during the protest process, the protester is not an interested party to pursue its protest.”

The GAO dismissed MLB’s protest.  (The second protest wasn’t dismissed, but was denied on the merits).

Interestingly, the GAO didn’t hold that a company must be listed in the VIP database to challenge the terms of an SDVOSB set-aside.  Instead, the GAO indicated that a company might be eligible to protest if it was “likely to be approved” during the course of the protest process.  In MLB’s case, then, the biggest problem may not have been that its joint venture was unverified, but that the joint venture hadn’t even started its application when the protest was filed.

It’s possible, of course, that MLB didn’t realize that joint ventures must be separately verified to win VA SDVOSB set-aside contracts.  In my experience, it’s rather common for contractors to assume that so long as the joint venture’s lead member is verified, the joint venture qualifies.  Not so.

As the GAO confirmed back in 2011, joint ventures must be separately verified in the VIP database.  And as MLB Transportation demonstrates, when the joint venture isn’t separately listed in VIP, and has yet to submit an application, the joint venture (and its non-SDVOSB member) are likely out of the running for a viable pre-award GAO protest.