In what we regard as a somewhat unusual decision by the GAO, given its reluctance to interfere with matters of agency discretion, the GAO has concluded that the Air Force failed to make reasonable efforts to ascertain whether an acquisition was suitable for an SDVOSBC set-aside.  The GAO ruled that a procuring agency is required to make reasonable efforts to ascertain whether an acquisition is suitable for a set-aside for service-disabled veteran-owned small business concerns (SDVOSBC) before it can proceed with a small business set-aside. Under the circumstances presented in a decision issued on March 28, 2007, MCS Portable Restroom Service, B-299291, the GAO concluded that the Air Force failed to make reasonable efforts to ascertain whether this acquisition was suitable for an SDVOSBC set-aside and the protest was sustained.

The GAO reiterated that, generally, a procurement set-aside determination is a matter of business judgment within the contracting officer’s discretion, which “our Office will not disturb absent a showing that it was unreasonable.” The GAO further commented that although the use of any particular method of assessing the availability of firms for a set-aside is not required, measures such as prior procurement history, market surveys, and advice from the agency’s small business specialist may all constitute adequate grounds for a contracting officer’s decision to set aside, or not to set aside, a procurement. The assessment must be based on sufficient evidence so as to establish its reasonableness.

In an unusual departure from its standard practice, the GAO solicited and obtained the views of the Small Business Administration (SBA) regarding the propriety of the Air Force’s decisions to not set aside this acquisition for SDVOSBCs or make a sole-source award to an SDVOSBC. The SBA disagreed with the contracting officer’s actions and the GAO accorded substantial weight to the fact that the contracting officer’s determination had been reviewed by the SBA and found not to be reasonable.  In its response, the SBA recognized that only MCS, an SDVOSBC and the incumbent contractor, and the Florida SDVOSBC, which expressed interest in forming a joint venture, responded to the February 2006 e-mail survey; however, the SBA further asserted that the agency’s disregard of the Florida SDVOSBC’s expression of interest (which was based upon the assumption that the firm was no longer interested because it did not also respond to the “sources sought” notice) was unreasonable.  As the SBA pointed out, the firm’s lack of response to the “sources sought” notice may not evidence a lack of interest–the firm may not have seen the notice or it may have believed a response was unnecessary given that it had already expressed interest.