Under the VA’s Rule of Two, the VA is required to set aside solicitations for veteran-owned businesses if there is a reasonable expectation of receiving offers from two or more such businesses capable of performing the required work at a fair and reasonable price. But how reasonable does the VA’s expectation have to be in a given procurement?
GAO recently reviewed the reasonableness of VA’s efforts and found them lacking.
A few months ago, GAO confirmed that where VA uses GPO as its buying agent, it still must to comply with the Rule of Two in 38 U.S.C. 8127(d) (see our blog post on the case ). After VA took corrective action, however, another bid protest was again filed, but this time in the Court of Federal Claims.
Surprisingly, there, the Court concluded differently, finding that GPO was not required to set aside the procurement for SDVOSBs or VOSBs, despite acting on VA’s behalf. In so doing, it has weakened the Rule of Two.
As recently as May, the Department of Veterans Affairs told a nonprofit helping to employ blind workers that it intended to renew its contract. The organization was shocked, therefore, when on July 30, the VA issued a notice of award to a service-disabled veteran-owned small business. To make matters worse, the nonprofit’s GAO protest of the award was promptly dismissed for being untimely.
GAO recently gave its blessing to a VA decision not to follow the Rule of Two, despite knowing several SDVOSBs would bid. The VA’s decision was based on the contracting officer’s opinion that prices would not be fair and reasonable based on an evaluation of prices and market research.
The decision is important for providing some clarification on what research a contracting officer must undertake to establish that prices will not be fair and reasonable for purposes of the Rule of Two.
It’s no secret that the VA has tried to find ways around the statutorily-mandated rule of two–i.e. VA must set aside procurements for VOSBS if it has a reasonable expectation that it will receive fair and reasonable offers from two or more veteran-owned small businesses.
Although the U.S. Supreme Court has already told VA, in Kingdomware, that it cannot circumvent the rule of two, VA apparently is still seeking ways to avoid it.