GAO: No Set Aside Required Where Offerors’ Prices Too High

An agency was justified in canceling a small business set-aside solicitation–and reissuing the solicitation on an unrestricted basis–where the agency determined that the prices offered by small businesses were too high.

In a recent bid protest decision, the GAO confirmed that while the FAR’s “rule of two” set-aside requirement provides a powerful and important preference for small businesses, it doesn’t require an agency to pay more than fair market value for products or services.

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Kingdomware Doesn’t Affect SBA Size Protest Timeliness, Says SBA OHA

The Supreme Court’s now-famous Kingdomware decision doesn’t affect the timeliness of SBA size protests of GSA Schedule orders.

In a recent decision, the SBA Office of Hearings and Appeals rejected the notion–based in part on Kingdomware–that an GSA Schedule order is a “contract” for purposes of the SBA’s size protest timeliness rules.  Instead, OHA held, the SBA’s existing rules clearly distinguish between contracts and orders, and often effectively do not permit size protests of individual orders.

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SBA Insists That Small Business Rule Of Two Applies To Some FSS Orders

Earlier this year, we wrote about an interesting issue brewing in federal contracting: whether the logic behind the Supreme Court’s June 2016 decision in Kingdomware Technologies means that the Small Business Act’s rule of two is mandatory for acquisitions under Federal Supply Schedules. In other words, does the Small Business Act require agencies to set aside orders under the FSS when two or more small business are likely to submit competitive offers?

The SBA believes that the rule of two (see FAR 19.502-2) is mandatory for such orders. GAO has disagreed, saying instead that the Small Business Jobs Act of 2010 and the exclusion of FSS contracts from the application of FAR Part 19 (see FAR 8.405-5(a)(1)(i)) make the small business rule of two discretionary for these orders.

This conflict—GAO believing the Small Business Act’s rule of two is discretionary for orders placed under multiple-award contracts; SBA believing it is mandatory—has existed for several years. But now the SBA is using the Supreme Court’s recent decision to bolster its case: according to a recent SBA internal memorandum, Kingdomware requires the small business rule of two to be given mandatory effect, at least with respect to orders valued between $3,500 and $150,000.

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Does Kingdomware Apply To Non-VA FSS Orders?

Earlier this year, the United States Supreme Court issued its decision in Kingdomware Technologies v. United States. As we’ve noted, this case was a monumental win for veteran-owned small businesses—it requires the Department of Veterans Affairs to set-aside solicitations for SDVOSBs or VOSBs where two or more such offerors will submit a proposal at a fair and reasonable price, even if that solicitation is issued under the Federal Supply Schedule.

A recent GAO decision suggests, however, that Kingdomware’s impact could be felt beyond the world of VA procurements. Indeed, the Supreme Court’s rationale in Kingdomware might compel every agency to set aside any FSS order (or any other order, for that matter) valued between $3,000 and $150,000.

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Set-Aside Decision Need Not Consider Compliance with Limitation on Subcontracting

Before deciding whether to set-aside a solicitation for small businesses under FAR 19.502-2, should the contracting officer first determine whether those small business will be able to provide the needed services while, at the same time, complying with the limitation on subcontracting?

No, according to a recent GAO bid protest decision. Instead, an agency’s determination whether a small business will comply with the limitation on subcontracting should be made as part of its award decision (following the evaluation of proposals), not during its initial set-aside determination.

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SmallGovCon Week In Review June 20-24, 2016

It’s hard to top last week’s government contracting news, which included the major SDVOSB Supreme Court victory in Kingdomware.  But with the Fourth of July just a week and a half away, there is still plenty going on in the world of government contracts law.

In this week’s SmallGovCon Week in Review, an SDVOSB’s owner speaks out about his important GAO bid protest win, suspensions and debarments of government contractors dropped in 2015, major changes are coming to the GSA Schedule, HUBZone contract awards decline, and much more.

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VA Will “Immediately Comply” With Kingdomware Decision

The VA will “immediately comply with the Court’s decision” in Kingdomware Technologies, Inc. v. United States, according to a top VA official.

In written testimony offered in advance of a Senate committee hearing tomorrow, the Executive Director of the VA’s Office of Small and Disadvantaged Business Utilization tells Congress that the VA will work to implement the Kingdomware decision, including by improving its market research processes.

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