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 CVE, Under New Rules, Closely Examining Franchise and Similar Agreements

Government contractors seeking to be certified through the Vets First Verification Program under the VA’s Center for Verification and Evaluation have to submit a number of documents. We’ve recently been hearing that CVE is taking a closer look at some of these documents, and this is in line with VA’s recent rule change expanding its list of required documents for verification.

Specifically, CVE will examine franchise agreements and similar documents like distributor agreements. Depending on the language in those agreements, this could lead to a denial of CVE verification. Because of that, we offer a reminder of CVE’s position on these types of agreements, which seems to still be quite strict in spite of regulatory changes implemented last fall.

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SDVOSB’s ESOP Caused Ineligibility, Says SBA OHA

A SDVOSB’s Employee Stock Ownership Plan caused the company to be ineligible under the SBA’s SDVOSB rules because the service-disabled veteran did not own 51% of the ESOP class of stock.

A recent SBA Office of Hearings and Appeals decision should serve as a cautionary tale to any SDVOSB contemplating establishing an ESOP–or any other ownership structure consisting of multiple classes of stock.

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SDVOSB Not Required To Inform Agency Of Veteran’s Death, Says Court

A SDVOSB was not required to inform a procuring agency that the service-disabled veteran owner had passed away following submission of the SDVOSB’s proposal, according to a recent decision of the U.S. Court of Federal Claims.

In NEIE, Inc. v. United States, No. 13-164 C (2013), the Court sharply criticized the U.S. Environmental Protection Agency for unjustifiably maintaining that the SDVOSB in question was required to inform the EPA of the veteran’s death, even though there is no such requirement in the regulations and the veteran’s death had no impact on the SDVOSB’s contract eligibility.

The NEIE case is not only a good reminder of when a SDVOSB must be eligible to receive a non-VA SDVOSB set-aside (typically, at the time of the initial priced offer), but a troubling example of an over-zealous procuring agency misinterpreting and misapplying the SDVOSB regulations to the detriment of an eligible SDVOSB.

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