The protester challenged the agency’s decision to set aside the procurement for SDVOSB’s. Among other arguments, the protester argued the agency’s Rule of Two analysis was facile. The protester complained the contracting officer had spent less than a day analyzing capability statements from offerors. But the court didn’t think this was a problem. The Rule of Two does not set a high bar for a set-aside determinations, and the law doesn’t prescribe a method or time period for analyzing capability statements.
Homeland Security Solutions, Inc. v. United States, COFC No. 22-659
Background
Since 2009, the Marines had contracted with Homeland Security Solutions to support the agency’s Civilian Law Enforcement Program. In January 2022, the Corps issued a Sources Sought Notice (SSN) to determine whether other contractors were capable of supporting the program. The Corps received five responses, including responses from two SDVOSBs and from Homeland, a large business.
After reviewing the capability statements, the contracting officer concluded at least two SDVOSBs were capable of performing the contract. The Corps decided to set the procurement aside for SDVOSBs. Homeland filed a protest with the Court of Federal Claims, challenging the set aside decision.
Analysis
Rule of Two
Under the FAR’s Rule of Two, a contracting officer shall set aside an acquisition for small businesses when there is a reasonable expectation that (1) offers will be obtained from at least two responsible small businesses, and (2) award will be made at fair market price. Homeland challenged the Corps’ determination under each prong.
Two Responsible Small Businesses
Homeland complained that the contracting officer had not properly considered whether the Corps would receive offers from two responsible small businesses. Homeland contended the Corps had improperly relied on 2016 market research and had only spent a less than one working day analyzing capability statements before determining that two SDVOSBs were capable of performing the requirement.
The court rejected Homeland’s argument. While the 2016 market research was mentioned in the record, there was no evidence the Corps had relied on this research in making the set-aside decision. Rather, the record showed, the CO had relied on 2022 market research. Also, while the CO spent less than a day analyzing capability statements, the court didn’t see this as a problem. The bar is not high to justify a set aside decision. The law does not require any particular method or period of time for making a set-aside decision.
Fair Market Price
When assessing a reasonable price under the Rule of Two, a full price analysis is not required. It is sufficient if the agency looks to potential offerors’ past experience in the marketplace. A history of success bolsters the expectation of a reasonable price. The Corps found that SDVOSBs had proposed reasonable prices based on their past experience. The court found this assessment rational.
Lack of Advance Planning
The FAR provides that contracting without full and open competition is not justified by a lack of advance planning by the agency. Homeland argued that the set-aside decision was the result of inadequate planning because the agency waited until 2022 to begin researching for the procurement.
The court, however, found that this FAR provision did not even apply. Homeland wrongly assumed that a set-aside was a noncompetitive procurement—i.e., contracting without full and open competition. But a set-aside is not a noncompetitive procurement. Instead, under the FAR, it is a full and open procurement after exclusion of sources.
NDAA Pilot Program
In the NDAA FY 2022, Congress authorized a pilot program through which DoD could award follow-on contracts to contractors wholly owned by an Employee Stock Ownership Plan (EPOP). Homeland argued it was owned by an ESOP and thus should have received the contract. The court, however, found that DoD had not yet completed the prerequisites for the pilot program’s implementation. Thus, he pilot program was not operative, so it wouldn’t apply to Homeland anyway.
Homeland is represented by Shomari B. Wade, Michael J. Gardner, Timothy M. McLister, and Christopher M. O’Brien of Greenberg Traurig. The government is represented by Sean K. Griffin, Douglas K. Mickle, Patricia M. McCarthy, and Brian M. Boynton of the Department of Justice as well as Amanda Belanger of the Marine Corps.
–Case summary by Craig LaChance, Senior Editor
