GAO: Agency Properly Found SDVOSB Ineligible Due to Issue With Corporate Name Change
Recent GAO protest provides cautionary reminder to service-disabled veteran-owned small businesses ("SDVOSB")––as well as other government contractors––on one of the issues that contractors need to consider when changing your company's name.
It's no secret that doing business with the Federal government involves a complex regime of rules and regulations. Indeed, to be successful, government contractors must understand Federal procurement not only from the capture and business development side but also from the legal and compliance side.
For example, one of the rules that contractors often first learn is that, under the Federal Acquisition Regulation ("FAR"), contractors must register their company in the System for Award Management ("SAM") database prior to submitting an offer to be eligible to compete for most government contracts. [1] Likewise, under Department of Veterans Affairs ("VA") procurements that are set-aside for SDVOSB/VOSB's, contractors also must also be listed in the Vendor Information Pages ("VIP") at the time of submission of offers/quotes (and at time of award) to be eligible for an award. [2] After all, the Government needs to know who it will be doing business with as the awardee will be in privity of contract with the Government.
Given that the FAR provides that contractors must be registered in SAM and the VAAR requires SDVOSB's to be registered in VIP prior to submitting their offer, what happens when a contractor undergoes a corporate rebranding initiative and changes its name just prior to, or during, the proposal process?
In Sanford Federal, Inc., B-417756 (September 12, 2019), a VA procurement set-aside for SDVOSB's, the contractor's hiccup with a solicitation requirement consistent with that VAAR provision unfortunately resulted in a missed contract opportunity.
Background
In June 2019, the VA published a request for proposals ("RFP") for temporary janitorial staffing services as a total set-aside for SDVOSB's. The RFP included VA Acquisition Regulation ("VAAR") § 852.219-10 Notice of Service-Disabled Veteran-Owned Small Business Set-Aside, which provides that offerors must not only be “verified for ownership and control” pursuant to the VA regulations but also verified in VA’s VIP database to be a SDVOSB as defined under VAAR § 852.219-10.
The RFP further provided that offerors must be listed in the VIP database at the time of proposal submission to be eligible for award, [3] which would be made to the lowest-priced technically acceptable and responsible offeror. Yet, as shown below, although the protester submitted the lowest priced proposal, the VA "could not verify that [the protester] was an SDVOSB, and considered its proposal ineligible for award."
What Happened?
Here, the protester was in the middle of the process of changing its corporate name. Like many SDVOSB's, the protester previously conducted business under a different name and had a CAGE code, DUNS number, and was registered in both the SAM and VIP databases. After selecting a new name, the protester filed the paperwork with the relevant state authority and then submitted an application to have its new name recognized in SAM. At that time, the protester also indicated that it had not yet submitted an application to update its VIP registration because, in order to do so, it first needed have an updated SAM profile. [4]
The protester submitted a proposal under its new name prior to the SAM update finalizing because it thought the request would be completed prior to the date on which proposals were due. Unfortunately, the process of updating its name in SAM was not completed by the proposal due date. The protester also did not have an updated VIP registration by the due date. As a result, despite offering the lowest price, the VA informed the protester that it was ineligible for award because its new name was not in the VIP database at the time of proposal submission.
Specifically, the VA determined that the protester "failed to comply with the solicitation requirement set forth in VAAR § 852.219-10 that offerors be listed as verified SDVOSBs in the VIP database, making its proposal ineligible for award." In addition, the VA also noted that there was no indication of any corporate relationship between the two businesses (e.g., "doing business as" or "formerly known as").
The protester argued, on the other hand, that it was listed in the VIP database (under its old name) prior to the proposal due date. The protester also argued that because it included its DUNS number and CAGE code (both under its old name) in its proposal, "the VA should have concluded that [it] was an eligible SDVOSB, and made award to it as the lowest-priced technically acceptable responsible offeror."
GAO denied the protest, stating that VA had acted properly in rejecting protester as ineligible for award because the protester's name was not in the VIP database. GAO also noted that the protester's proposal created uncertainty as to the identity of the offeror as its proposal did not reference the contractor's prior name or the name change and it did not explain why its DUNS number and CAGE code were registered to a different entity. To that end, GAO also determined that the "uncertainty rendered [the protester's] proposal technically unacceptable, as ambiguity regarding an offeror’s identity could result in there being no party bound to perform the obligations of an awarded contract."
In denying this protest, GAO discussed a couple of rules that bear repeating:
"Offerors bear responsibility for submitting well-written proposals, with adequately detailed information which clearly demonstrates compliance with the solicitation and allows a meaningful review by the procuring agency."
"The information readily available in a proposal, such as D&B numbers and CAGE codes, must reasonably establish that differently identified entities are in fact the same concern."
Takeaway
When changing the name of your company, contractors must remember that you will also need to update your SAM registration (and your VIP registration if applicable) to reflect the change. Remember, these actions could take some time to complete and you will first need to update SAM prior to updating your VIP registration. As a result, contractors should factor in possible delays to avoid having to explain the change in any upcoming proposal. Though it is possible that an agency may rightly "connect the dots" and accept an offeror's proposal despite the offeror not timely updating its SAM or VIP registrations prior to the proposal deadline because the proposal does not create uncertainty as to the identity of the offeror, it would be much safer avoid relying on agency deference and update your SAM and/or VIP registrations in a timely manner. While this protest is a "tough loss" for this SDVOSB, it underscores how critical it is for contractors to submit well-written proposals and timely update your SAM and VIP registrations when undergoing a corporate name change.
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[1] FAR § 4.1102(a) ("[o]fferors and quoters are required to be registered in SAM at the time an offer or quotation is submitted . . .").
[2] VAAR § 819.7001(a) ("SDVOSBs/VOSBs must have their ownership and control verified by VA and be listed in the Vendor Information Pages (VIP) at the time of submission of offers/quotes, and prior to award of any contracts.").
[3] Though not stated in the decision, this solicitation provision is consistent with VAAR § 819.7001(a).
[4] The footnote indicates that the protester did not submit an application to have its name change recognized in the VIP database and therefore, its new name was not updated in the VIP database at the time of proposal submission. See 38 C.F.R. § 74.2(f) ("[a]ll applicants for VIP Verification must be registered in SAM at http://www.sam.gov prior to application submission.").
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