Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

A Final Rule governing Service Disabled Veteran-Owned small Business Concerns (“SDVOSB”) was published in the Federal Register on February 8, 2010. This law requires the Department of Veterans Affairs (“VA”) to verify ownership and control of veteran-owned small businesses, including service-disabled veteran-owned small businesses. The final rule also defines the eligibility requirements for businesses to obtain “verified'' status, explains examination procedures, and establishes records retention and review processes.

As reported by Jason Miller, the Executive Director of Federal News Radio in an article published in the SDVOSB Blog, Veteran-Owned and Service Disabled Veteran-Owned Small Businesses must have only one business in the federal contract set-aside program and work in that business full time. The article, entitled “VA Sets Rules for Set-Aside Program,” also emphasizes that “The net effect of this change is that a company that is closely held by veterans would qualify regardless of the size of the employee stock ownership program,” and “Alternatively, a firm that is not closely held by veterans will find it much more difficult to qualify for the Verification Program.”

Veteran-Owned and Service Disabled Veteran-Owned Small Businesses must re-certify annually to the VA that they meet the requirements to obtain set-aside contracts from agencies. The rule comes after the Government Accountability Office told the House Veterans Affairs Committee in December that the service-disabled veteran-owned business program is vulnerable to fraud and abuse. Anyone who seeks to use the services of a disabled veteran, or of an existing SDVOSB, to circumvent the letter and spirit of this program would be well advised to recognize that SDVOSB concerns are under close scrutiny because of the reported abuses.

Michael Payne is a Partner and is the Chairman of the firm's Federal Practice Group.
 

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By: Lane F. Kelman

In making an award on initial proposals, is a tradeoff only between the two (2) highest-rated, highest-priced proposals appropriate?  The GAO, in a recent decision,Coastal Environments, Inc., B-401889, dated December 18, 2009, provides important clarification.  The decision beckons closer scrutiny of awards by unsuccessful offerors.

In Coastal Environments, Inc., the RFP identified six (6) evaluation factors in descending order of importance: (1) personnel and company qualifications, (2) management capability, (3) technical excellence, (4) past performance, (5) small business participation, and (6) price; the RFP also identified several subfactors under the non-price evaluation factors. Award was to be made to the responsible offeror whose proposal was determined to represent the “best value” to the government, all factors considered.

Eight proposals were received and evaluated using the adjectival rating system.  The contracting officer, as the Source Selection Authority (‘SSA”), reviewed the evaluation findings and performed a price/technical tradeoff between the two most highly rated proposals; those of Ecological Communications Corporation (“ECC”) and another Offeror.  Those two proposals were also the highest priced proposals. The Source Selection Authority (“SSA”) ultimately selected ECC for award after concluding that “due to the highly specialized nature of the work…ECC’s technical superiority” justified paying an additional $2,984 to ECC.

Coastal, who was not part of the tradeoff process, filed a protest and alleged, among other issues, that the tradeoff process should not have been restricted to ECC and the other most highly rated offeror. Coastal’s proposal, while not as highly rated, was $17,434.44 lower in price than GCC’s proposal.  The GAO held that the SSA impermissibly limited the price/technical tradeoff analysis to a comparison of the two highest-rated, highest-priced proposals.  The SSA failed to conduct any qualitative assessment of the technical differences between the two (2) highest-rated, highest-priced proposals and any of the other technically acceptable proposals to determine whether either of these proposals contained features that would justify the payment of a price premium.

The GAO found that the two higher-rated, higher-priced proposals considered in the tradeoff both received overall adjectival ratings of “Good” and “Low Risk,” while Coastal’s proposal received the next lowest rating of “Acceptable” and “Low Risk,” but was priced approximately 20 percent lower. The GAO concluded that a proper tradeoff decision must, per Federal Acquisition Regulation § 15.308, provide a rational explanation of why a proposal’s evaluated technical superiority warrants paying a premium.  Here, the SSA did not identify what benefits in ECC’s proposal warranted paying a premium to ECC when compared to Coastal’s lower-priced proposal, which was found to be acceptable and low risk.

Lane F. Kelman is a Partner in the firm and a member of the Federal Contracting Practice Group

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