Bid Protest Denied - Limitation on Subcontracting

The Department of Veterans Affairs issued an RFP (Request for Quotation) for courier services for the Boise VA Medical Center lab, pharmacy, and radiology departments. Six offerors submitted bids and ultimately, the VA awarded the contract to FG Management Group(FGMG). Crosstown Courier Service Inc (Crosstown), one of the other five bidders protested the award to FGMG alleging that FGMG was not in compliance with applicable limitations on subcontracting requirements.

Crosstown argued that FGMG had only one employee, was not a courier services company, and had no prior Government contracts for medical courier services of similar scope. Crosstown asserted therefore that FGMG's quotation "strongly evidences" the awardee's noncompliance with FAR 52.219-14, Limitation on Subcontracting. Beyond a general representation that FGMG would provide 51 percent of the labor, no other support was given that the subcontracting limitation would be met.

The GAO (aka Comptroller General) denied the protest. The GAO noted first off that the solicitation did not incorporate FAR 52.219-14. Limitation on Subcontracting but instead incorporated VAAR (VA Acquisition Regulation) 852.219.10 which prohibits payment of more than 50 percent of the amount paid by the Government to non service disabled veteran owned small businesses. That is an important distinction; 51 percent of the direct labor versus 50 percent of the total cost reimbursed by the Government.

An agency's judgment as to whether a small business offeror can comply with a limitation on subcontracting clause is generally a matter of responsibility and the contractor's actual compliance is a matter of contract administration. Neither issue is one that the GAO would consider. However, where a proposal, on its face, should lead an agency to the conclusion that an offeror has not agreed to comply with the subcontracting limitation, the matter is one of the proposal's acceptability, which the GAO may consider.

In this regard, Crosstown had no evidence that FGMG's quotation included an intention no to comply with the RFQ's subcontracting limitations. The VA also noted that nothing on the face of FGMG's quotation led it to conclude that it would not comply with the RFQ's subcontracting limitations and the GAO's review gave it no basis to question the VA's judgment.

You can read the entire decision here.