‘Tis the season and Aldevra is the case that keeps on giving.  Last we heard (October 11), GAO decided that the VA should have set aside one solicitation and done market research to determine whether there was a reasonable expectation that two or more SDVOSBs/VOSBs would submit a bid on the VA’s kitchen equipment requirement set forth in another solicitation before issuing soliciting task orders for same off of a non-mandatory FSS Schedule.  In a surprising move, the VA thereafter informed GAO that it would not follow its “recommendations.”  (Because of separation of powers issues, the GAO only issues recommendations and not rulings that must be followed like court rulings).  The VA did not provide any reason why it would not follow GAO’s decision.  The VA didn’t do much better in a hearing conducted by two House subcommittees on November 30.   During the hearing, VA representatives were repeatedly questioned regarding the reasoning behind its decision to ignore GAO’s recommendation.  The only real response was given by Tom Leney and he explained that following the law would make acquisitions far more expensive for the VA.

The VA apparently has reconsidered the wisdom of this approach.  Last week, the Service Disabled Veteran Owned Small Business Network, Inc, a nonprofit based in northern California, filed a lawsuit in the United States District Court for the Northern District of California challenging the VA’s decision to procure supplies from FSS contracts rather than conduct the market research demanded by the Veterans First Contracting Program.  In what appears to be a response to the interrogation it received before Congress and this case, on December 8, the VA sent a letter to the GAO informing it that the VA had decided to cancel the solicitations challenged successfully in the Aldevra protest decision.  Period.  Nothing else.

So what now?  In an article published by Bloomberg today, I am quoted as saying that the VA’s supposed “about face” is not a victory for SDVOSBS/VOSBs yet.   While the VA canceled the solicitations issued to FSS contract holders, the requirement is not back on the street.  A victory can be declared if and when the VA does the required market research under the Vets First Contracting Program and, hopefully, reissues the solicitations as a SDVOSB/VOSB set-asides.  Until then, one presumes that the VA stands by the position it took before GAO and Congress.

I think this is the argument that Tim Power, the attorney for the SDVOSB Network Inc. case, will take in the case.  While the VA may argue that the lawsuit is “moot” because the VA has canceled the solicitations, but there is an exception to this doctrine.  (Courts can only rule on cases or controversies in fact and won’t issue advisory opinion based on what could happen; so a case is moot if, in the case before the judge, the issue in question no longer exists).   If an issue is moot in a particular case but will likely recur again, a court may go ahead and render a decision.  But its not a black and white doctrine, so nothing is guaranteed.

I raised some ancillary issues with respect to Aldevra in my previous blog posts and I’ll raise them again.  One of my clients has a mandatory FSS contract and is a VOSB.  The VA is not ordering off the FSS contract and, instead, is going to the open market for the same items, buying the items from large businesses, at a higher cost than that for which the items are offered on the VOSB FSS contract.  There isn’t any position asserted by anyone or any entity that would justify this result.

And consider this: on November 2, 2011 an interim rule was issued modifying FAR Part 8, which contains the regulations governing GSA Schedule/FSS/MAS buys.  As you all may know, FAR Part 19 did not apply to FAR Part 8 (but the Vets First rules do according toAldevra).  The November rule modified FAR Part 8 to remove the FAR Part 19 exemption.  Under this rule, which was effective on November 2, an agency can now (1) set aside part or parts of a multiple-award contract for small business concerns or subcategories thereof; (2) set aside orders or BPAs placed against multiple-award contracts for small business concerns or sub category thereof; and (3) reserve one or more contract awards for small businesses or sub category thereof under full and open multiple-award procurements.  However, the new regulation says the agency “may, at their discretion” set aside a requirement; an agency is not required to set aside a requirement for small business if the “rule of two” is satisfied as required by FAR Part 19.

If you combine Aldevra with the new rule, doesn’t that mean that under the Veterans First Program that VA purchases off the schedule should be set aside for SDVOSBs/VOSBs?  What if you have a mandatory FSS schedule ?  As the rabbit said in Alice in Wonderland, the case just gets “curiouser and curiouser.”