The GAO has sustained a second protest based upon FedBid’s suspension of a contractor from its system.

For the second time in less than one week, the GAO held that the contractor’s suspension from FedBid–and resulting inability to bid on a contract–was improper because the matter was not referred to the SBA under the SBA’s Certificate of Competency procedures.

The GAO’s decision in Latvian Connection, LLC, B-410981 (April 6, 2015) involved a Department of the Interior RFQ for the fabrication and installation of mobile shelving system components.  The procurement was conducted through FedBid’s electronic reverse auction system.

Latvian Connection, LLC, wished to compete for the award.  However, in July 2014, FedBid suspended Latvian Connection’s FedBid user account.  The FedBid suspension notice stated, in part: “System and Business Integrity: Latvian Connection has taken actions to repeatedly and purposely interfere with FedBid’s business relationships.”

Since Latvian Connection’s FedBid account was suspended, it was unable to compete for the procurement.  Latvian Connection filed a GAO protest.  It argued, in part, that its exclusion from the competition was a negative responsibility determination, which should have been referred to the SBA.

The GAO agreed.  The GAO noted that it had recently sustained Latvian Connection’s similar protest arising under a State Department contract.  The GAO reached the same conclusion in this case, writing:

We conclude that the DOI, through its agent, FedBid, precluded Latvian Connection, a small business, from competing for, and potentially being awarded, a contract on the basis of the firm’s integrity, without referring the matter to the SBA.  This amounted to a determination of nonresponsibility, which the agency should have referred to the SBA for a COC determination.  Therefore, we sustain the protest on this basis.

I will confess that I feel a little bit sorry for the Department of the Interior.  After all, the DOI presumably did not intend to exclude Latvian Connection from the procurement (and may not have even known about the exclusion).  Despite that, the DOI gets stuck with a “sustain” decision.

But my sympathy for the DOI only goes so far, because I think that the GAO got it right in this case (and the previous Latvian Connection decision).  In my view, a private company like FedBid has no business excluding anyone from competing for federal contracts.  If FedBid thought that Latvian Connection deserved to be excluded from contracting, FedBid should have referred the matter to the appropriate agency suspension and debarment officials.  By preventing Latvian Connection from using its system, FedBid essentially suspended or debarred Latvian Connection from an entire category of government contracts, without affording Latvian Connection any of the protections required by the FAR.

By sustaining Latvian Connection’s protests, the GAO is sending a strong message to the government and FedBid alike: only the government has the right to exclude a contractor from federal contracting, and only when the appropriate protections (including the SBA’s COC processes) are followed.  Here’s hoping that this message is received loud and clear.