COFC order denying a protest is affirmed. On appeal, the government argued the protester lacked standing to protest because its bid exceeded the agency funding for the contract. The Federal Circuit, however, declined to hold that a protester whose bid exceeds agency funding necessarily lacks standing to protest. The court opined that an offeror could conceivably propose a price in excess of funding but still have a substantial chance of receiving award. Although the protester had standing, the court rejected the protester’s substantive arguments, finding that the agency had not abused its discretion in declining to set aside the procurement for small businesses.
The Department of Veterans published a solicitation seeking shredding and pill-bottle destruction. The VA issued the solicitation using GSA’s Federal Supply Schedule program. The solicitation included a small business set aside using a tiered order of precedence. All business could submit proposals, but the VA would first evaluate proposals from service-disabled veteran-owned businesses, then veteran-owned business, small businesses, and finally all other businesses.
Three offerors submitted bids. One, Land Shark Shredding, was an SDVOSB. The other was a small business, and the third was a large business. The VA awarded the contract to the small business. Land Shark filed a protest with the Court of Federal Claims, arguing that the contract was an SDVOSB set aside and thus should have been awarded to Land Shark. The trial court ruled against Land Shark, and the company appealed to the Federal Circuit.
On appeal, the government argued that Land Shark lacked standing to bring a protest. The government argued that Land Shark’s bid, which was five times higher than the government estimate, exceeded the VA’s designated funding for the contract. As a result, the government argued, Land Shark did not have a substantial chance of winning the contract.
The court, however, declined to establish a bright line rule that a bid in excess of the agency’s allocation negates standing to protest. The court opined that simply exceeding an agency’s funding for the contract was not enough to preclude standing. A contractor who bids above an agency allocation may nevertheless maintain a substantial chance of receiving the contract. Land Shark had standing to protest despite its high bid.
As to the substantive protest arguments, Land Shark contended that the Rule of Two was satisfied in this case—that is, two or more SDVOSB were capable of performing the contract at a reasonable price—so the VA should have set aide the contract only for SDvOSBs. But the court disagreed. The contracting officer had initially identified three SDVOSBs that could potentially bid on the solicitation. In an effort to learn more about those SDVOSBs, the contracting officer published a request for information. Only Land Shark responded. Consequently, the contracting officer chose to use a tiered evaluation. The court found that the VA had not abused its discretion.
Land Shark also claimed that its prices were fair and reasonable because they were published on the Federal Supply Schedule and thus GSA had already determined that is prices were reasonableness. Therefore, Land Shark concluded, as an SDVOSB who had proposed a reasonable price, it should have been awarded the contract.
The court, however, reasoned that the contracting officer was not required to defer to the Federal Supply Schedule in making a reasonableness determination. The regulation Land Shark cited as creating a presumption of reasonableness states that ordering activities are not required to make a separate reasonableness determination. But this did not preclude the contracting officer from performing a reasonableness analysis. Again, the court could not find that the agency abused its discretion.
Land Shark is represented by Joseph Anthony Whitcomb and Joel L. Hamner of Whitcomb, Selinsky, PC. The government is represented by Sean Lynden Kind, Jeffrey B. Clark, Robert Edward Kirschman, Jr., and Douglas K. Mickle of the Department of Justice as well as Natica Chapman Neely of the Department of Veterans Affairs.
