GAO: VA Rule of Two Doesn’t Apply if Pricing Isn’t Reasonable

GAO recently gave its blessing to a VA decision not to follow the Rule of Two, despite knowing several SDVOSBs would bid. The VA’s decision was based on the contracting officer’s opinion that prices would not be fair and reasonable based on an evaluation of prices and market research. The decision is important for providing some clarification on what research a contracting officer must undertake to establish that prices will not be fair and reasonable for purposes of the Rule of Two.

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VA SDVOSB Rule of Two: Court Provides Important Guidance for Protesters

A protester contending that the VA violated the “rule of two” by failing to set-aside a solicitation for SDVOSBs must present sufficient facts to indicate that the VA should have had a reasonable expectation of receiving two or more offers from SDVOSBs at fair and reasonable prices.

In a recent decision, the Court of Federal Claims dismissed a rule of two challenge because, according to the Court, the protester only identified one SDVOSB–itself–that was likely to submit an offer at a fair and reasonable price.

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VA Considering “Tiered Evaluations” To Address SDVOSB Price Concerns

The VA is considering using so-called “tiered evaluations” to address concerns that SDVOSBs and VOSBs may not always offer “fair and reasonable” pricing, even when two or more veteran-owned companies compete for a contract.

In a session yesterday at the National Veterans Small Business Engagement, a panel of VA acquisition leaders described the potential tiered evaluation process.  It’s hard to argue that the VA isn’t entitled to fair and reasonable pricing, but judging from the reaction in the room, some SDVOSBs and VOSBs may wonder whether tiered evaluations are an effort to circumvent Kingdomware.

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