SDVOSB | The Contracting Education Academy

October 25, 2016 By cs

Does ‘Kingdomware’ apply to non-VA FSS orders?

The Supreme Court’s rationale in a recent decision might compel every agency to set aside any Federal Supply Schedule order (or any other order, for that matter) valued between $3,000 and $150,000.

Earlier this year, the United States Supreme Court issued its decision in Kingdomware Technologies v. United States. As we’ve noted, this case was a monumental win for veteran-owned small businesses — it requires the Department of Veterans Affairs to set-aside solicitations for SDVOSBs or VOSBs where two or more such offerors will submit a proposal at a fair and reasonable price, even if that solicitation is issued under the Federal Supply Schedule.

A recent GAO decision suggests, however, that Kingdomware’s impact could be felt beyond the world of VA procurements.

In Aldevra, B-411752.2—Reconsideration (Oct. 5, 2016), the protester relied on Kingdomware to challenge a prior GAO decision that an agency is not required to set-aside an FSS order for small businesses. At issue in the initial protest was an Army National Guard Bureau solicitation under the FSS, seeking an ice machine/water dispenser (valued at $4300). According to Aldevra, the Small Business Act required the solicitation to be set aside for small businesses.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/does-kingdomware-apply-to-non-va-fss-orders/

September 30, 2016 By cs

Owner of sham veteran-owned company sentenced for $100 million fraud

A Massachusetts man was sentenced last week in U.S. District Court in Boston in connection with recruiting veterans as figurehead owners of a construction company in order to receive specialized government contracts.

David Gorski, 51, was sentenced to 30 months in prison, one year of supervised release, and ordered to pay a fine of $1 million. In June 2016, Gorski was found guilty by a jury following a 12-day trial of conspiring to defraud the United States by impairing the lawful governmental function of the Department of Veterans Affairs, the General Services Administration, the Army, and the Navy in the implementation and administration of the Service Disabled Veteran Owned Small Business (SDVOSB) Program. He was also convicted of four counts of wire fraud.

The purpose of the SDVOSB program is to provide federal contracting assistance to service-disabled veterans who own small businesses by creating set-aside and sole-source acquisitions for such businesses.

In 2006, Gorski established a company, Legion Construction, Inc., after recruiting a disabled Korean War veteran to act as the company’s straw owner for the sole purpose of obtaining federal construction contracts set aside under the SDVOSB Program. When the veteran’s health deteriorated, Gorski added a second disabled veteran, Peter Ianuzzi, to serve as the figurehead owner of Legion. Legion acquired more than $113 million in federal contracts between 2006 and November 2010, after Gorski falsely represented to federal contracting officers that the company was owned and operated by service-disabled veterans.

In March 2010, a different SDVOSB registered a bid protest against Legion, alleging that Legion should not have been awarded a contract with the U.S. Department of Veterans Affairs at its medical center in White River Junction, VT. The company specifically challenged Legion’s SDVOSB status, noting that it appeared that Gorski, not one of the veterans, was the person running Legion.

After retaining the services of a large Boston law firm to assist him, Gorski filed an opposition to the bid protest that contained backdated documents containing false and misleading information. The Small Business Administration denied the bid protest based on Legion’s submission.

Gorski then began exploring ways to siphon money from Legion that would not appear as compensation exceeding the pay of the nominal veteran owner, Ianuzzi, in violation of federal regulations, including Ianuzzi “gifting” him $900,000 and establishing private bank accounts into which the company would deposit $2.5 million for Gorski’s benefit. Before the bank accounts could be opened, however, a federal grand jury issued subpoenas to Legion and several witnesses.

Source: https://www.justice.gov/usao-ma/pr/owner-sham-veteran-owned-company-sentenced-100-million-fraud

August 19, 2016 By cs

VA doesn’t waste time in implementing Supreme Court decision

The Veterans Affairs Department acted unusually quickly to comply with the U.S. Supreme Court’s “rule of two” decision in the Kingdomware case.

So much so that it both surprised observers and had them wondering if VA was acting too hastily.

VA issued new acquisition regulations July 25, just more than a month after the decision, which found VA’s interpretation of a law requiring the agency to set-aside all procurements if at least two veteran-owned small businesses are qualified was flawed. The nation’s highest court reversed the lower court’s decision on June 16 by an 8-0 vote, finding VA must use the “rule of two” for supply schedule contracts even if it has met its statutory contracting goals.

Keep reading this article at: http://federalnewsradio.com/reporters-notebook-jason-miller/2016/08/va-doesnt-waste-time-implementing-supreme-court-decision/

See the VA’s new rules here.

See the VA’s “decision tree” for following the Rule of Two here.

June 16, 2016 By cs

Supreme Court gives VA new marching orders

In a U.S. Supreme Court decision handed down today, the Department of Veterans Affairs (VA) was directed to change its contracting practices.

The Court’s June 16, 2016 ruling in Kingdomware Technologies, Inc. v. United States, No. 14-916 means that the VA can no longer chose to ignore a 2006 law that requires the VA to restrict contract competitions to veteran-owned small businesses (VOSBs) as long as there are at least two qualified VOSBs available to perform the work. This provision of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (“the Act”) is known as the “Rule of Two.”

The VA long argued that it had the discretion to not follow the “Rule of Two” when it placed orders against GSA Schedule contracts. But the Court found the following provision of the Act to be unambiguous:

… a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.

It is not yet known how quickly the VA will change is practices with respect to GSA Schedule orders. But the Court has made it clear that the Rule of Two is mandatory, not discretionary — and there’s no exception for GSA Schedule orders.

Read the Supreme Court decision here: http://www.supremecourt.gov/opinions/15pdf/14-916_6j37.pdf

August 27, 2015 By cs

GAO faults ‘unreasonable market research’ for failure to set aside contract for SDVOSBs

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.

The Supreme Court’s rationale in a recent decision might compel every agency to set aside any Federal Supply Schedule order (or any other order, for that matter) valued between $3,000 and $150,000.

A Massachusetts man was sentenced last week in U.S. District Court in Boston in connection with recruiting veterans as figurehead owners of a construction company in order to receive specialized government contracts.

The Veterans Affairs Department acted unusually quickly to comply with the U.S. Supreme Court’s “rule of two” decision in the Kingdomware case.

In a U.S. Supreme Court decision handed down today, the Department of Veterans Affairs (VA) was directed to change its contracting practices.

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.

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