Comptroller General

United States Government Accountability Office

Washington, DC 20548 

of the United States

 

Decision 

Matter of: Major Contracting Services, Inc. 

File: B-400616 

Date: November 20, 2008 

Barry Jenkins for the protester. 

Lt. Col. Vince Vanek, Department of the Army, and Kevin R. Harber, Esq., Small 

Business Administration, for the agencies. 

Nora K. Adkins, Esq., and James A. Spangenberg, Esq., Office of the General 

Counsel, GAO, participated in the preparation of the decision. 

DIGEST 

Where an awardee was found to be ineligible for service-disabled veteran-owned 

small business concern (SDVOSBC) status by the Small Business Administration 

(SBA) and the SBA’s Office of Hearings and Appeals based on a timely status protest

filed after award under an SDVOSBC set-aside, the agency was not required to 

terminate the contract under the SBA’s applicable regulations. 

DECISION 

Major Contracting Services, Inc. (MCS) of Colorado Springs, Colorado, protests the 

decision of the Army to continue performance of a contract awarded to DAV 

Prime/Vantex Service Joint Venture (DAV Prime JV) of Larue, Texas, under 

solicitation No. W911S2-08-T-3009 for portable chemical toilet services at Fort Drum, 

New York, which was issued as a service-disabled, veteran-owned, small business 

concern (SDVOSBC) set-aside. MCS contends that the Army must terminate DAV 

Prime JV’s contract because the Small Business Administration (SBA) and the SBA 

Office of Hearings and Appeals (OHA) determined that DAV Prime JV was not an 

eligible SDVOSBC. 

We deny the protest.

The request for quotations (RFQ) for portable chemical toilet services for a base 

period and four 1-year options was posted to the government point of entry, 

www.fedbizopps.org, on March 14, 2008. The RFQ was issued as a 100-percent 

set-aside for SDVOSBCs. The procurement was conducted using simplified 
acquisition procedures under Federal Acquisition Regulation (FAR) Part 13.5.1

 The 

evaluation factors to be considered were price and past performance. 

Three quotes were received in response to the RFQ, including quotes from MCS and 

DAV Prime JV, both of which represented that they were SDVOSBCs. On May 28, the 

agency made award to DAV Prime JV; performance began June 1. MCS was notified 

of the contract award in writing on June 2.2

 

On June 5, MCS submitted a protest to the contracting officer alleging that DAV 

Prime JV was not a SDVOSBC and was thus ineligible for award. The agency 

forwarded MCS’s status protest to the SBA. MCS’s protest was accepted by the SBA 

on June 19. The SBA notified MCS and the agency on June 26 that it had received 

the timely filed protest. Upon receiving the SBA’s notice, the agency chose to allow 

DAV Prime JV to continue performance under the protested contract. 

The SBA Director of Government Contracting sustained MCS’s protest on July 15, 

finding that DAV Prime did not meet the eligibility requirements of a SDVOSBC, and 

therefore, the joint venture of DAV Prime and Vantex Service failed to qualify as a 

SDVOSBC. The SBA decision stated that both DAV Prime and DAV Prime JV were 

ineligible to receive an award under the current RFQ and both were prohibited from 

submitting offers on future SDVOSBC procurements. After receiving notice of the 

decision, MCS contacted the contracting officer to determine the status of the award 

given the SBA’s findings. The contract officer informed MCS on July 21 that he 

would not make any decision until DAV Prime JV “forego(s) appeal or an appeal 

decision is made.” AR, Tab 13, Email Correspondence. 

On July 25, DAV Prime JV appealed the decision of the SBA to the SBA’s OHA. The 

OHA denied DAV Prime JV’s appeal on August 15. MCS again contacted the 

contracting officer on September 8 to determine the status of award and was 

informed on September 15 that the award was not and would not be vacated. MCS 

filed the current protest with our Office on September 19 seeking termination of DAV

Prime JV’s contract because the SBA found, and the OHA affirmed, that DAV Prime 

JV was not an eligible SDVOSBC. 

In 2003, Congress created, by amending the Small Business Act, a procurement 

program for small business concerns owned and controlled by service-disabled 

veterans. Veterans Benefits Act of 2003, Pub. L. No. 108-183, 117 Stat. 2651, 2662 

 1

 FAR subpart 13.5 authorizes the use of simplified procedures for the acquisition of

supplies and services in amounts greater than the simplified acquisition threshold 

but not exceeding $5.5 million. 

2

 While MCS asserts that the Army failed to provide timely post-award notice as 

provided by FAR § 15.503(b)(1), this procurement was conducted under FAR 

subpart 13.5, which does not specifically require a post-award notice of award. 

Page 2 B-400616 
(2003), 15 U.S.C. § 657f (2006). Under this authority, the SBA, and not our Office or 

the procuring agency, is the designated authority for determining whether a firm is 

an eligible SDVOSBC, and it has established procedures for interested parties to

challenge a firm’s status as a qualified SDVOSBC. Singleton Enters.--GMT Mech., A 

Joint Venture, B-310552, Jan. 10, 2008, 2008 CPD ¶ 16 at 3; see 15 U.S.C. §§ 632(q), 

657b; 13 C.F.R. §§ 125.25, 125.27 (2008); FAR §§ 19.307, 19.1403. 

Many of MCS’s arguments concern the issue of whether DAV Prime JV qualified as 

an SDVOSBC, which issue has been resolved by the SBA. Based on these arguments, 

MCS argues that the contracting officer should have investigated and questioned the 

joint venture’s representation that it was an SDVOSBC. However, we find nothing 

that would have required the contracting officer to investigate or question DAV 

Prime JV’s representation before making award. 

MCS has also asserted that the Army should have terminated the contract upon 

receiving the SBA’s and the OHA’s decisions finding DAV Prime JV ineligible as an 

SDVOSBC joint venture. The Army, on the other hand, argues that in accordance 

with the SBA’s regulations it was not required to terminate the contract. The SBA, 

whose views we solicited, agrees with the Army. 

The SBA’s regulations regarding SDVOSBC protests describes the effect of an SBA 

determination on SDVOSBC status as follows: 

Effect of determination. SBA’s determination is effective 

immediately and is final unless overturned by OHA on appeal. If

SBA sustains the protest, and the contract has not yet been 

awarded, then the protested concern is ineligible for an SDVO SBC 

contract award. If a contract has already been awarded, and SBA 

sustains the protest, then the contracting officer cannot count the 

award as an award to an SDVO SBC and the concern cannot submit

another offer as an SDVO SBC on a future SDVO SBC procurement

unless it overcomes the reasons for the protest. 

13 C.F.R. § 125.27(g). The regulation thus explicitly differentiates between a 

determination’s effect when issued before versus after award and, as we have 

previously found, we think a fair reading of this regulation is that there is no 

requirement that a contract be terminated if an awardee is found to be other than an

SDVOSBC after award was made. Veteran Enter. Tech. Servs., LLC, B-298201.2, 

July 13, 2006, 2006 CPD ¶ 108 at 3. Indeed, the SBA states that its regulations “do 

not, under any circumstances, require a procuring activity to terminate or even 

suspend an award made to an entity that is subsequently determined to not be SDVO 

Page 3 B-400616 
SBC eligible,” although the Army “may certainly be subject to moral suasion” to do 

so.

 3 SBA Report at 3. 

The protest is denied. 

Gary L. Kepplinger 

General Counsel 

 3

 Given that DAV Prime JV is not an SDVOSBC and thus should not have been 

awarded the contract under this solicitation that was limited to SDVOSBCs, we think 

the agency should consider whether it is appropriate to exercise the options under 

that firm’s contract. 

Page 4 B-400616