GAO Bids a Curt Toodle-oo to Protester that Possessed Neither Interested-Party Status nor a Cognizable Legal Argument; Mountainside Medical Equipment, Inc., GAO B-419839

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Protest alleging that VA violated the “rule of two” is dismissed. GAO found that the protester had failed to acknowledge solicitation amendments and thus was ineligible for award. Because it was ineligible, the protester was not an interested party to protest. GAO further reasoned that the protester’s rule of two argument reflected a fundamental misunderstanding of the rule. The protester argued the agency had violated the rule because it had not received quotations from two capable SDVOSBs. But GAO reasoned the rule of two applies only to the initial set-aside decision, not to the offers actually received.

The Department of Veterans Affairs posted an RFQ seeking telephone switchboard operators. The procurement was set aside for service-disables veteran-owned small businesses. The RFQ stated that if the solicitation was amended, offerors had to submit a signed acknowledgement of the amendment.

The VA received quotations from four vendors, including Mountainside Medical Equipment. The VA, however, amended the solicitation twice, and Mountainside had not submitted signed acknowledgments of the amendments. Accordingly, the VA refused to consider Mountainside for award. The VA made award to another company, Magellan Solutions. Mountainside protested, alleging that the VA had violated the “rule of two” set forth in the Veterans Benefits, Health Care, and Information Technology Act of 2006.

Before addressing Mountainside’s protest argument, GAO reasoned that Mountainside was not an interested party. Only an interest party may protest a procurement. An interested party is an actual bidder whose direct economic interest would be affected by the award. Here, because the agency found Mountainside ineligible for award based on its failure to acknowledge amendments, it lacked the interest to proceed with the protest.

As to the rule of two argument, Mountainside argued that Magellan was not an SDVOSB and that other two SDVOSB’s that submitted proposals were not capable of performing the work at a fair and reasonable price. Thus, the VA had violated the rule of two.

GAO found that is argument reflected a fundamental misunderstanding of the rule of two. The rule requires an agency to set aside procurements for veteran-owned businesses when the contracting officer has a reasonable expectation that it will receive offers from two or more veteran-owned businesses at a fair and reasonable price. The rule applies to the VA’s decision to set-aside procurements before receiving quotations. Contrary to Mountainside’s argument, the rule does not apply to the quotations actually received.

Mountainside is represented by Dana B. Pashkoff, Jessica C. Abrahams, and Lauren N. Olmstead of Faegre Drinker Biddle & Reath LLP. The agency is represented by Kathleen Ellis and Steven Devine of the Department of Veterans Affairs. GAO attorneys Mercedes Wilson-Barthes and Christina Sklarew participated in the preparation of the decision.

GAO - Mountainside Medical Equipment