SBA Lacks Authority Over VA SDVOSB Protests

The SBA lacks authority to determine whether a company is an eligible service-disabled veteran-owned small business for purposes of a VA SDVOSB set-aside procurement.

In a recent decision, the SBA Office of Hearings and Appeals confirmed that the SBA lacks such authority, which is reserved solely for the VA’s Office of Small & Disadvantaged Business Utilization.

OHA’s decision in Size Appeal of In & Out Valet Company, SBA No. SIZ-5696 (2015) involved a VA RFQ for valet parking services.  The VA set aside the procurement entirely for SDVOSBs under NAICS code 812930 (Parking Lots and Garages).

After evaluating competitive proposals, the VA announced that Parking Veterans LLC was the apparent successful awardee.  In & Out Valet Company, an unsuccessful competitor, then filed a protest with the Contracting Officer.

In its protest, In & Out alleged that PV was affiliated with another company, and therefore not a small business.  In & Out also questioned whether PV was controlled by a service-disabled veteran or otherwise met the eligibility criteria to qualify as a SDVOSB.

The SBA Area Office evaluated the size allegation.  It concluded that PV was affiliated with another entity.  However, the aggregated receipts of PV and its affiliate were below the $38.5 million size standard for NAICS code 812930.  The SBA Area Office issued a size determination finding PV to be a small business for purposes of the procurement.

In & Out filed an appeal with OHA.  In & Out argued that the SBA Area Office failed to consider whether PV was controlled by a service-disabled veteran.  In & Out asked OHA to remand the case to the SBA Area Office for consideration of this matter, or alternatively rule that PV was not an eligible SDVOSB.

OHA wrote that “under current law any SDVO status protest arising out of a VA solicitation will be decided by the VA OSDBU.”  OHA explained that “in 2009, VA promulgated a regulation granting the Executive Director of VA’s OSDBU the authority and jurisdiction to decide any status protest regarding an SDVO SBC arising from a VA solicitation.”  Quoting an prior decision making the same point, OHA continued:

The regulation indicates that this process will remain in place until an agreement is reached between VA and SBA to allow SBA to decide these protests.  An agreement has yet to be executed, however, so VA OSDBU presently retains sole jurisdiction over SDVO status protests arising out of VA solicitations.  Accordingly, the Area Office did not err by not addressing [the apparent awardee’s] status as an SDVO SBC.

OHA held that, because no interagency agreement has been executed, “the issue of PV’s SDVO status rests solely with the VA OSDBU and is beyond the jurisdiction of SBA and OHA.”  OHA denied In & Out’s size appeal.

The In & Out Valet case confirms that, when it comes to VA procurements, the SBA lacks authority to determine whether an awardee qualifies as a SDVOSB.  And as for that interagency agreement?  Don’t hold your breath.  In a 2013 rulemaking, the VA wrote that it had “reconsidered reaching an interagency agreement with SBA to review and decide status protests, and subsequently determined that SDVOSB and VOSB protest adjudication shall remain within VA.”

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