In an August 20, 2015 ruling, the U.S. Government Accountability Office (GAO) found that the Department of Veterans Affairs (VA) conducted insufficient market research in connection with an acquisition and therefore had no grounds for denying set-aside status to the contract.

The VA issued an RFP on April 27, 2015, as a small business set-aside, requesting proposals to provide fire and life safety A/E services for Veterans Integrated Service Network (VISN) 20 region medical centers located in Washington, Oregon, Idaho, and Alaska.

Fire Risk Management, Inc. (FRM), of Bath, Maine, protested the bid based on the VA’s failure to set aside for service-disabled veteran-owned small business (SDVOSB) concerns.  FRM asserted that the VA’s decision not to set aside the acquisition for SDVOSBs was based on unreasonable market research.

In defending its decision, the VA stated its belief that it would not receive proposals from at least two responsible SDVOSB concerns that could meet the requirements in the RFP at a fair market price.  But the GAO disagreed, concluding that the VA’s determination that there was not a reasonable expectation that offers would be received from at least two SDVOSB firms that are capable of performing the required work was not supported by the record.

The GAO found that the VA’s contract record did not support the agency’s determination to limit its market research to firms only within the VISN 20 region.  The GAO took note of the fact that the VA’s contract specialist, in a database search specifically directed by the contracting officer, found more than 127 profiles of SDVOSB concerns nationwide “matching the criteria.”  The GAO concluded that had the agency expanded its market research beyond the VISN 20 region it would have discovered numerous SDVOSB A/E concerns doing fire protection work.

In its decision, the GAO recommend that the VA’s contracting officer conduct a proper market survey in accordance with the agency’s requirements for this procurement to ascertain whether there is a reasonable expectation that at least two or more responsible SDVOSB concerns will submit proposals at fair market prices.   The GAO also recommend that the VA reimburse the FRM for the reasonable costs of filing and pursuing the protest, including reasonable attorneys’ fees.  The protester’s certified claim for costs, detailing the time spent and the costs incurred, must be submitted to the VA within 60 days after receipt of the GAO’s decision.

The text of the GAO’s full decision can be found at: http://www.gao.gov/products/B-411552#mt=e-report.