Procurement Technical Assistance Center

Set Aside Authority for VA - So What?

By James N. Phillips Jr., MPA, CFCM

 

 

Abstract

On June 20, 2007, the Public Law 109-461 became effective and as a result of this law, a change has occurred; yet change in and of itself will not alter the federal purchasing culture. It will take perseverance and vigilance by the SDVOSB/VOSB communities to bring to reality what was envisioned in the law.

Introduction

Back in December 2006, President Bush signed into law, P.L 109-461, the Veterans Benefits, Healthcare and Information Technology Act of 2006. Service Disabled Veteran Owned Small Businesses (SDVOSB) and Veteran Owned Small Businesses (VOSB) won a victory, yet the law only affects the purchasing habits of the Department of Veterans Affairs, not the full purchasing power of the federal government. Because the scope of the law is limited, the outreach by the SDVOSB/VOSB communities must be strong so that the VA’s buying culture can change. Also the scope of this article is limited to set aside considerations and decisions.

Again the mere stroke of a Presidential pen is not sufficient to change the buying habits of the Department of Veterans Affairs. To be successful the SDVOSB/VOSB communities must understand the impact of the law. In summary, the law does the following within the Department of Veterans Affairs:

What the law doesn’t do is:

Two Tests for a Set Aside Decision & Considerations

The new law allows VA contracting officers the ability to set aside purchases to SDVOSB/VOSB’s. The set aside conditions are: a) the contracting officer has a reasonable expectation that offers from two or more eligible SDVOSB/VOSB’s will be received, and b) the award can be made at a fair and reasonable price.

Reasonable Expectation Test

For a set aside decision to occur, the VA contracting officer must perform market research and decide whether or not there is sufficient competition in a socioeconomic category. What constitutes sufficient competition – two or more eligible within the category being considered (SDVOSB, VOSB, 8a/HUBZone, Small Business).

If the VA contracting officer determines that the procurement is to be set aside, they essentially say, based on my market research and analysis, I have found that there is a reasonable expectation that offers from two or more eligible SDVOSB/VOSB will be received and an award can be made at a fair and reasonable price. This statement is important because it reflects a key decision made by the contracting officer. The result is that if a set aside decision has been made AND only one eligible offer is received at a reasonable price, that offer is still deemed acceptable.

The law only requires that the contracting officer have a reasonable expectation of two or more eligible, so if only one eligible offer is received, that is fine for the purpose of an award of a purchase order or contract. The second test is the fair and reasonable price test.

Fair and Reasonable Price Test

In competitive acquisitions, the fair and reasonable test is usually considered to have been met so long as there are least three offers. FAR Part 15.404-1(b)(2) also allows means to meet the fair and reasonable test, such as:

Why is this important? In posturing yourself for success you need to aid the contracting officer, purchasing agent, or even the purchase card holder that your price is, in fact, fair and reasonable. Merely stating that your price is “Fair and Reasonable” is not enough, but providing other comparison data is beneficial in assisting the government buyer in their decision making.

Decisions Have Consequences

The contracting officer has the prerogative of to cancel and re-solicit a requirement based on their inability to make a price reasonableness determination, however if market research were performed correctly, an estimated price would have been included to support a decision to set aside in the first place. Vacating a set aside based solely on receiving only one eligible offer (at a fair and reasonable price) may be open to a protest.

Of course, any award to a business misrepresenting itself as a SDVOSB or VOSB, is open to protest. SDVOSB/VOSB should receive timely counseling regarding their alternatives should they contemplate a protest as there are definite time windows when protest will be allowed, refer to FAR 19.307.

Summary and Conclusion

The new law does not ensure anything for the SDVOSB/VOSB, however it expresses a genuine commitment by the nation to be faithful to those who have given much. Therefore it is vital that our SDVOSB/VOSB’s remain focused and vigilant to the opportunity posed. This law is new and needs to be exercised and strengthened, precedents set and decisions made. Our veteran small businesses must be advocates for each other and support competition amongst each other. Remember that a set aside decision first starts with “the contracting officer has a reasonable expectation that offers from two or more eligible SDVOSB/VOSB’s will be received”. Failing to meet this test will usually signal that a SDVOSB/VOSB set aside will not occur. A SDVOSB/VOSB’s have rights which may be exercised and should seek advice and counsel of a knowledgeable contracts manger when a problem occurs. For our veteran small business communities, the law is not the end, but only the beginning.

James N. Phillips Jr., MPA, CFCM is a service disabled veteran, the President of the Detroit Chapter, National Contract Management Association and a friend to Veteran Owned Small Businesses. Jim works at the National Center for Patient Safety of the Department of Veterans Affairs.