A procuring agency reasonably required all members of a SDVOSB set-aside GSA Contractor Team Arrangement to possess a certain Federal Supply Schedule contract and Special Item Number.

In a recent bid protest decision, the GAO held that restricting CTAs to holders of a certain Schedule and SIN was appropriate because all of the supplies to be procured fell within the identified Schedule and SIN.

The GAO’s decision in Veterans Healthcare Supply Solutions, Inc., B-409888 (Sept. 5, 2014) involved a VA procurement for vital signs monitors and accessories.  The VA issued the RFQ as a SDVOSB set-aside to holders of GSA Schedule contracts.  The RFQ specified that all of the supplies being procured must be under Schedule 65 II A (Medical Equipment and Supplies) and SIN A-50A (Vital Signs Monitors).

The RFQ stated that GSA Contractor Team Arrangements could be used to submit quotations.  However, the RFQ specified that each member of the CTA was required to have a Schedule contract under Schedule 65 II A and SIN A-50A.

Veterans Healthcare Supply Solutions filed a pre-award protest with the GAO.  VHSS contended that the terms of the solicitation were unduly restrictive of competition.  VHSS contended that there was no valid reason for the RFQ to restrict CTAs to only those entities that had both the Schedule contract and SIN in question.  VHSS stated that it did not have the SIN in question, but intended to team with CAS Medical, which possessed the appropriate SIN.

The GAO wrote that a GSA CTA is “a written agreement between two or more schedule contractors to work together to meet an agency’s requirements and to maximize a vendor’s competitiveness.”  The GAO pointed out that a GSA Schedule CTA differs from a traditional prime/subcontractor teaming arrangement in that each team member has privity of contract with the government and each team member must have a GSA Schedule contract.  The GSA also submitted comments, confirming that all members of a GSA CTA are considered prime contractors.

The GAO noted that VHSS, under its proposed GSA CTA, would not provide any of the required supplies from its own GSA Schedule contract.  Instead, VHSS planned to provide its SDVOSB certification, while CAS Medical (which was not a SDVOSB) would provide all of the supplies.  The GAO continued:

Quite simply, VHSS’s purported CTA with CAS Medical was for the purpose of allowing it to receive FSS orders for supplies not on its FSS contract, while allowing CAS Medical to participate in a procurement for which it, as a non‑SDVOSB concern, was not eligible. We agree with the VA and GSA that such an arrangement is inconsistent with both the rules for conducting FSS procurements and the purpose for setting aside such procurements for SDVOSBs.

The GAO denied VHSS’s protest.

Interestingly, the GAO also indicated–but did not directly hold–that VHSS’s proposed CTA might be improper because CAS Medical was not a SDVOSB.  In a footnote, the GAO cited GAO guidance stating that “[a]ll members of the CTA must be small (or whatever sub-set the order is set-aside for) for the CTA to be eligible for that order.”)  I’ll keep my eyes peeled to see whether the GAO directly addresses this issue in a future case.

The Veterans Healthcare Supply Solutions case illustrates one of the key ways in which a GSA CTA differs from a traditional prime/subcontractor teaming arrangement.  As the decision demonstrates, because all members of a GSA CTA are prime contractors, the procuring agency may require all CTA members to possess a certain Schedule contract and SIN–and the restriction will be upheld so long as it is reasonable in the context of the procurement.