The VA, of All Agencies, Fails to Follow SDVOSB Set-Aside Rules

Phoenix Environmental Design Inc., a service disabled, veteran-owned small business (SDVOSB) protested to the GAO the failure by the Veterans Administration to set aside a procurement for SDVOSB concerns, as required by the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the VA Act).  Specifically, Phoenix protested the award to a non-SDVOSB concern, Golf Enviro Systems, Inc., of a contract for the supply of bagged fertilizer for the VA’s Santa Fe National Cemetery.

As the estimated value of the procurement was $4,382., the VA purchasing agent decided to follow FAR Part 13’s Simplified Acquisition Procedures.  She identified 16 SDVOSB concerns, none of which were located in New Mexico.  She contacted 3 of these concerns to request proposals.   Two vendors did not provide quotations.  The third offered a different type of fertilizer than that needed by the Santa Fe National Cemetery.  Phoenix had previously provided the desired type of fertilizer to other VA cemeteries, but was not contacted.  Upon failing to get an acceptable offer from any of the 3 SDVOSBs contacted, the purchasing agent purchased the desired fertilizer from Golf, believing that the VA had satisfied its set-aside requirements.

The GAO disagreed.  The GAO noted that the VA Act required a set-aside unless the agency reasonably believed that it could not get 2 or more offers from SDVOSBs at reasonable prices.  The VA never established, or even claimed, that it couldn’t get 2 or more SDVOSB offers.  Rather, the VA believed that by soliciting 3 SDVOSB vendors, it had no more responsibility to buy from an SDVOSB.

The GAO held that soliciting 3 or more vendors did satisfy the competition requirements of FAR Part 13, but that that did not excuse the VA from the mandatory requirement to conduct a set-aside procurement in accordance with the VA Act.  The purchasing agent’s contacting 3 SDVOSBs and failing to get an offer was not a rational basis to conclude that the VA could not get 2 or more SDVOSB offers from other vendors, especially in light of the fact that one vendor, Phoenix, had already provided the same kind of fertilizer to a different VA cemetery


PRACTICE TIP: The requirement for mandatory set-asides cannot be met (or avoided) by satisfying the FAR’s competition rules.  These are 2 separate requirements. 

Related Post

Asserting Duress in Signing a Modification

Asserting Duress in Signing a Modification

Sand Point Services, LLC brought two claims before the Armed Services Board of Contract Appeals, both involving modifications and asserting duress.  Sand Point Servs., LLC, ASBCA Nos. 61819, 61820, January 4, 2024.  The first modification for certain “punch list...