The VA has gotten beaten up pretty badly at the GAO lately.  The governmental watchdog agency continues to sustain protests (the most notable being filed by a company named Aldevra) on the basis that the VA’s practice of obtaining goods and services on the Federal Supply Schedule without first determining whether the procurements can be set aside for service-disabled veteran-owned small businesses or veteran-owned small businesses is illegal.

However, in a recent bid protest decision regarding the same issue, the GAO ruled in the VA’s favor—and its ruling could bring an end to the Aldevra saga (an end many SDVOSBs and VOSBs are likely to find very unsatisfactory), if the VA accepts the GAO’s lifeline.

The GAO Protest of Crosstown Courier Service, Inc., B-406336 (April 23, 2012), involved a VA FSS SDVOSB set-aside solicitation for the transportation of biological samples between VA medical centers.  MLS, which apparently is a SDVOSB, was the only offeror.  Rather than conducting a competition outside the FSS, the VA awarded the task order to MLS at a price of $9,990.  Crosstown Courier Service, Inc. filed a GAO bid protest, alleging that the award violated federal law because the VA had not conducted market research to determine whether the solicitation could be set aside for competition among two or more eligible SDVOSBs before making award under the FSS.

Although Crosstown’s argument was similar to the arguments successfully made in Aldevra, the GAO ruled in the VA’s favor.  It found that under applicable law, contracts beneath than the simplified acquisition threshold (currently $150,000), need not be competed among SDVOSBs, but can be awarded to a single SDVOSB using non-competitive procedures.  “The value of the requirement at issue here is $9,990, which is well below the simplified acquisition threshold,” the GAO wrote.  Accordingly, it found that the VA had authority to make the award to MLS without conducting a set-aside competition.

For SDVOSBs pursuing small-dollar contracts with the VA, the message of Crosstown Courier is clear: get on the FSS, or risk the VA sole-sourcing the contract to a SDVOSB competitor under the FSS.  But it is the second part of the Crosstown Courier decision that could bring a screeching halt to the Aldevra line of cases, depending on how the VA plays its cards.  Although it was not necessary to decide the case, the GAO wrote that the VA may legally set-aside a competition only for SDVOSB FSS holders, rather than the entire universe of SDVOSBs.

The GAO stated: “nothing in the statutory authority relied on by Crosstown . . . requires the VA to conduct its market research exclusively on the open market, as opposed to among FSS vendors.”  The GAO concluded that so long as the VA has a “reasonable expectation of receiving proposals or quotes from at least two” FSS SDVOSB (or VOSB) vendors, it can validly limit any competition to these subcategories of SDVOSBs or VOSBs.

For SDVOSBs and VOSBs without FSS schedules, the Crosstown Courier GAO protest decision could be very troubling.  If the VA takes the GAO’s lifeline and begins conducting market research among only FSS SDVOSBs or VOSBs, those without schedules will be left in the cold.  The question, of course, is whether the VA will accept the lifeline, or continue its puzzling policy of fighting tooth-and-nail to avoid any SDVOSB set-aside requirements under the FSS.

Only time will tell.  I’ll keep you posted.