VA SDVOSB Protests: VA OSDBU Has Sole Jurisdiction

SDVOSB protests relating to VA set-aside procurements may only be decided by the VA Office of Small and Disadvantaged Business Utilization.  In a recent decision, the SBA Office of Hearings and Appeals confirmed that the SBA currently lacks jurisdiction to decide SDVOSB protests under VA set-aside procurements.

SBA OHA’s decision in Size Appeal of HAL-PE Associates Engineering Services, Inc., SBA No. SIZ-5391 (Aug. 15, 2012), involved a VA SDVOSB set-aside procurement for construction and related services at the VA Medical Center in Cincinnati.  After evaluating proposals, the VA announced that Legends Construction, LLC was the winner.

HAL-PE Associates Engineering Services, Inc. filed a protest with the SBA.  HAL-PE’s protest alleged that Legends was not a small business under the procurement’s $14 million size standard due to affiliation with another firm, Schrudde & Zimmerman, Inc.  In addition, HAL-PE protested Legends’ status as an eligible SDVOSB, arguing that a non-veteran controlled the company.

The SBA Area Office denied HAL-PE’s protest.  It found that Legends was not affiliated with Schrudde & Zimmerman under any of the theories advanced by HAL-PE.  The Area Office’s size determination did not address HAL-PE’s allegations that Legends was not an eligible SDVOSB.

HAL-PE filed a size appeal with SBA OHA.  HAL-PE’s size appeal contended that the SBA Area Office had improperly failed to evaluate the portion of HAL-PE’s protest dealing with Legends’ SDVOSB status.

SBA OHA held that the SBA Area Office had correctly refused to address the SDVOSB allegations.  “[U]nder current law, any SDVOSB status protest arising out of a VA solicitation will be decided by the VA OSDBU,” SBA OHA wrote.  SBA OHA explained that the VA OSDBU’s authority stemmed from a 2009 regulation, and that “this process will remain in effect until an agreement is reached between VA and SBA to allow SBA to evaluate these protests.”  Because no such agreement has yet been reached, “VA OSDBU presently retains sole jurisdiction over SDVO status protests arising out of VA solicitations.”  SBA OHA dismissed HAL-PE’s size appeal.

The HAL-PE decision is a good reminder that for VA SDVOSB set-aside procurements, SDVOSB protests may only be determined by the VA–not the SBA.  Unless and until the SBA and VA reach an administrative agreement to transfer this authority to the SBA (and I wouldn’t hold my breath), the VA OSDBU has the final say over SDVOSB eligibility for any VA set-aside procurement.

Finally, I should note that although HAL-PE’s SBA size appeal was fruitless, HAL-PE may have won the war anyway.  According to SBA OHA’s decision, HAL-PE had also filed a SDVOSB eligibility protest with the VA OSDBU–and the VA OSDBU determined that Legends was not an eligible SDVOSB for the VA Medical Center work in Cincinnati.  Given this result, it is not clear why HAL-PE proceeded with its SBA OHA appeal, but in any event, it appears that HAL-PE achieved the result it sought.

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