Veteran-Owned Small Business Joint Venture Fights for Procurement

6.19.2009 - Posted in E&B Alerts - Government Contracts

This week the United States Court of Federal Claims denied a pre-award bid protest brought by Totolo/King, a Joint Venture ("Totolo") for a Department of Veterans Affairs ("DVA") solicitation for renovation work at the Harry S. Truman Veterans Memorial Hospital in Columbia, Missouri. The solicitation was issued on an unrestricted basis rather than as a set-aside for small business. Totolo had alleged, among other things, that the DVA failed to conduct meaningful market research to determine whether veteran-owned small businesses were available for the job.

The Court carefully examined Totolo's allegations and analyzed the DVA's obligation to encourage the participation of small business contractors in DVA contracting. Under the Veteran's Benefit Act of 2003, the Court found that DVA is required to set aside contracts exclusively for competition by veteran-owned businesses if (1) the Contracting Officer has a reasonable expectation that two or more veteran-owned businesses will make offers, and (2) the contract can be made at a fair and reasonable price. To meet this obligation, the DVA must conduct reasonable market research. The Court denied the protest upon finding that, where the DVA's pre-solicitation "sources sought notice" resulted in only one response by a veteran-owned business, the DVA's search of businesses registered on www.VetBiz.gov constituted reasonable market research.

Small businesses, including veteran-owned businesses, have in the past successfully challenged the adequacy of a government agency's market research under the Small Business Act. Although the contractor in this case was unsuccessful, the case illustrates the importance for all small businesses seeking work from federal agencies to properly register with such sites as www.VetBiz.gov and the Central Contractor Registration site at www.ccr.gov. All contractors should carefully examine solicitations and contract announcements to determine whether they are required to be set aside for award to small businesses. This case also illustrates that specialized review of agency set-aside decisions is available. Courts will carefully consider granting all appropriate relief, including enjoining improper solicitations and awards..

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