Government Contracts Monitor

The Ongoing Dispute between the GAO and the VA over Set-Asides and the Limitations of the GAO’s Authority

September 7, 2012

The GAO and the Department of Veterans Affairs (VA) have been at loggerheads since last October over whether the Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. §§ 8127-8128 (2006), (the VA Act) requires set asides for service-disabled veteran-owned small business (SDVOSB) in Federal Supply Schedule (FSS) procurements.  This longstanding dispute highlights the limitations of having a protest sustained at the GAO, which does not have the legal authority to order an agency to follow its recommendation.  Thus, if an agency has a fundamental disagreement with the GAO, as the VA does over its interpretation of the VA Act, the agency may choose to ignore the GAO’s decision provided that it notifies Congress and the GAO of that choice. While agencies routinely follow the GAO’s recommendations, when they do not, it becomes necessary to take the issue to a court that can order the agency to comply. 

That is precisely the route taken by one SDVOSB protestor tired of obtaining pyrrhic victories over the VA at the GAO when it filed its protest in the Court of Federal Claims.  Kingdomware Technologies, Inc. v. United States, No. 12-173 (Fed. Cl. filed Mar. 15, 2012).  As with the numerous GAO protests, the issue in Kingdomware Technologies is whether the VA Act and its implementing regulations require the VA to set aside FSS procurements for SDVOSB (or VOSBs) when there are two or more such companies that could meet the requirements of the solicitation at a reasonable price.  The GAO has held on multiple occasions that it does, most recently in Aldevra, B-406774 et al., (Comp. Gen. Aug. 21, 2012). 

The Kingdomware Technologies case was nearly thrown out on procedural grounds for mistakes in the original complaint which was filed without the assistance of counsel (which is rarely if ever a good idea).  Fortunately for everyone following the underlying dispute, the court allowed the newly retained counsel for the protestor to amend the complaint. Oral argument on the merits has now been scheduled for November 14, 2012, so this long running dispute between the GAO and the VA may soon be over.  Stay tuned.

 

Jeffry Cook is the attorney responsible for the content of this article.