GAO's Sanction Against Latvian Connection and Its Principal

"Is it fair...?" You must be kidding to even ask that question, considering a  particular firm's and its principal's apparent "vexatious" conduct and abuse of the protest process, according to the GAO:

http://www.gao.gov/products/D14354#mt=e-report

see also: 

/blogs/small-gov-con/150-protests-and-counting-gao-suspends-frequent-protester

Joel:

My use of "fair" may have been a poor choice of a word but I am wondering if GAO's sanction can survive a court's scrutiny.  Read the decisions and opinions by GAO and the COFC in the cases from the two places I provided.  What is GAO's basis for a 1-year sentence?  Gut-feel?  Where is it in CICA or GAO's issued regulations?  Read 4 CFR 21.4.  Why is GAO so weak-kneed there and so tough now?

Think about it.

"Fair"? You bet it's fair to have an inherent right to fight to maintain the integrity of the system. 

I'm not a lawyer but it was always fun watching a certain Judge in the TV series "The Good Wife" blasting and sanctioning the lawyers for their various legal antics.

bob7947 said:

Joel:

My use of "fair" may have been a poor choice of a word but I am wondering if GAO's sanction can survive a court's scrutiny.

Think about it.

The matter would have to be pursued in U.S. district court, and I, too, question whether the GAO's action would withstand scrutiny. I think they have exceeded their powers under the statute.

Given the company's general disposition, I think we'll find out in due time.

The issue here is whether GAO has a legal basis to put a protester in a penalty box for an arbitrary period of time thereby depriving it of the right to protest a federal procurement. I don't think that they have that right.  As Steven Koprince points out in his latest blog entry, the penalized protester has had protests sustained by GAO. So, GAO has decided that for a period of 1 year, it would not even hear a valid protest it would sustain.  

If we do a find search on GAO's decision for the word frivolous, we won't find that word.  Do you wonder why?   One thing about _precedent attorney_s is that they have good memories.  In this case, it doesn't take much of a memory--even for GAO.  Let's go back to 2009 and read something GAO called:

Report to Congress on Bid Protests Involving Defense Procurements

Congress asked GAO about frivolous protests then and the value of handing out penalties.  Of course, at that time GAO was probably more interested in protecting its turf more than anything else.  Here is what GAO said about frivolous protests:

Quote

GAO's regulations and procedures currently provide GAO the ability to promptly close protests that do not merit further development. GAO does not need to determine that a protest is "frivolous" to promptly close it, and, in our view, making such a determination could add substantial costs to the protest process and have the unintended consequence of discouraging participation in federal contracting and, in turn, limiting competition.

GAO has enough reasons at 4 CFR 21.5 to close protests promptly and they do.  If they need more reasons, they can add them until hell freezes over..

What did GAO tell Congress about penalties against protesters in that report:

Quote

In our view, potential penalties--along with the additional litigation necessary to establish the sine qua non for the imposition of penalties, namely, bad faith--risk discouraging good-faith protests. In addition, protests bring an important element of transparency and accountability into the federal procurement system that otherwise might be unavailable. Protests also provide guidance to agencies in the form of publicly-available decisions interpreting procurement laws and regulations.

Finally, the imposition of penalties on protesters could result in a chilling effect on the participation of contractors in both the protest process and federal procurement as a whole.As the conference report accompanying CICA stated, the availability of a strong bid protest mechanism promotes competition in the procurement system by providing contractors a measure of confidence that concerns regarding potentially unfair treatment may be addressed in a neutral forum. Contractors, particularly small businesses, could conclude that the risk of being penalized for a good-faith protest--or the potential that they may have to litigate whether their protest was frivolous--outweighs the potential benefit in filing the protest. Contractors might also perceive the inclusion of penalties in GAO's statutory mandate as an indication that protests have become disfavored as a matter of policy. To the extent contractors believe that it is less likely that their legitimate concerns will be addressed, the result could be an increased distrust of the U.S. procurement system and reduced participation in the system--especially by small businesses.Either of these outcomes could reduce competition and impair the government's ability to obtain the best value in procuring goods and services.

With its sanction, GAO, in my view, justified why the U. S. Court of Federal Claims should hear bid protests.  

Let me add that I couldn't care less about the protester in the penalty box.  My only concern is that GAO exceeded its authority under the law--and I believe they did.  Not only did they exceed their authority, in my view, but they were inconsistent with what they said in the past.

I've been editing my entry for a period of time and believe that is unfair for members.  I won't do it further.  

If you read the report GAO submitted to Congress, you will see their explanation for not calling a frivolous protest frivolous.  They wouldn't call Daffy, Donald, or the insurance company's bird a duck either.

bob7947 said:

I've been editing my entry for a period of time and believe that is unfair for members.  I won't do it further.  

If you read the report GAO submitted to Congress, you will see their explanation for not calling a frivolous protest frivolous.  They wouldn't call Daffy, Donald, or the insurance company's bird a duck either.

They do call Latvian Connection's pattern of protesting "vexatious", which is a word I was happy to read the definition of.

On 8/23/2016 at 7:20 AM, bob7947 said:

If we do a find search on GAO's decision for the word frivolous, we won't find that word.  Do you wonder why?

Bob, you are spot-on. GAO might regret its statements from the 2009 report. The 2009 report specifically mentioned that the process of determining a protest to be "frivolous" (as filed or as argued) would have to be extensive and time-consuming to protect due process-- so extensive and time-consuming that GAO said they didn't have the resources or inclination to exercise such a power. Years later, GAO encounters hundreds of protests from the same source and bans this source for one year for being "vexatious." A CTRL+F search for "frivolous" was also the first thing PepeTheFrog did when reading the latest GAO decision. The silence is deafening.

Go to the statute, people. Forget reports. Start with the law, 31 U.S.C. §§ 3551 - 3557, and ask whether what the GAO has done is consistent with the law and the discretion that it has thereunder.

It is one thing to dismiss a particular protest. It is another thing entirely to refuse to comply with the statutory mandate of 31 USC § 3552(a):

Quote

A protest concerning an alleged violation of a procurement statute or regulation shall be decided by the Comptroller General if filed in accordance with this subchapter.

See also 31 USC 3554(a)(1):

Quote

Except as provided under paragraph (2) of this subsection, the Comptroller General shall issue a final decision concerning a protest within 100 days after the date the protest is submitted to the Comptroller General.

See 31 USC 3554(a)(4):

Quote

The Comptroller General may dismiss a protest that the Comptroller General determines is frivolous or which, on its face, does not state a valid basis for protest.

Where does the statute say that GAO can ban a particular firm from protesting for a year? Where does it say that it can effectively dismiss a protest without first looking at it and determining that it's groundless or frivolous?

If you conclude that the statute permits the GAO to do what it did, then go to the GAO's bid protest regulations. The GAO followed the APA rulemaking process when it promulgated its regulations. See e.g., 49 FR 36386, September 17, 1984. Where does the GAO's regulation say that it can ban a firm for a year? Is GAO's decision consistent with those regulations? If not, and assuming that the statute permits, can GAO effectively make a new rule without first going through the rulemaking process?

What GAO has done is announced, in advance of a receipt of a protest, that it will refuse to do for a particular firm what the law and its regulations seemingly require it to do. It has cited no express provision of statute or regulation that empowers it to refuse to even consider any protest from a particular firm for a year. If I were Latvian, I'd drag GAO off to a U.S. district court and ask the court to order GAO to do its job.

Latvian is a nuisance, but government organizations must, absolutely, obey the law. That's what the GAO would demand of any agency facing a bid protest.

Is there any law or case law that allows a Board of Appeals to sanction a firm for a pattern of "vexacious" appeals or behavior (according to GAO)? What gives Latvian the right to appeal contract awards that are already performed years ago, for instance?

I don't care about what Latvian can or cannot do by right. That is for GAO to decide on a case by case basis. All I care about is whether the GAO is acting within its authority. Is its decision consistent with what the law requires it to do?

joel hoffman said:

What gives Latvian the right to appeal contract awards that are already performed years ago, for instance ?

It seems Latvian often argued that agencies did not properly publicize contract actions so Latvian's protest should be considered timely. With exceptions, protests must be filed not later than 10 days after the protester knew or should have known the basis of protest (whichever is earlier), pursuant to GAO requirements.

Vern Edwards said:

I don't care about what Latvian can or cannot do by right. That is for GAO to decide on a case by case basis. All I care about is whether the GAO is acting within its authority. Is its decision consistent with what the law requires it to do?

Vern,

From what I read in the GAO's decision, they did not rely on the statute as the basis to justify their action against Latvian (http://www.gao.gov/products/D14354#mt=e-report):

Quote

However, our Office necessarily reserves an inherent right to dismiss any protest, and to impose sanctions against a protester, where a protester’s actions undermine the integrity and effectiveness of our process.  PWC Logistics Servs. Co. KSC(c), B‑310559, Jan 11, 2008, 2008 CPD ¶ 25 at 12.  The inherent right of dispute forums to levy sanctions in response to abusive litigation practices is widely recognized and has been characterized by the Supreme Court as “ancient in origin,” and governed not by rule or statute, but by the control necessarily vested in a forum to manage its own affairs.  Roadway Express, Inc. v. Piper et al., 447 U.S. 752, 765 (1980).

Pepe:

Exactly!  

In 1982, GAO responded to Senator Stennis about a protester that submitted repetitive protests and came up with a solution.   That was before CICA.

Vern:

I agree.  I read the CICA provisions and found a weak phrase that I wouldn't want to use.  GAO wanted CICA, it got CICA, and now it wants to misuse its authority under CICA.  In 2009, Congress wanted to give GAO more avenues to deal with repetitive, frivolous, or vexatious protests including penalties for protesters.  It declined both because it said it didn't need anything else.  

Both of us agree that what GAO did was wrong.  I assume that GAO received support for what it did and phrased its protest to add some things that were mentioned with that support.

If we go to GAO's protest statistics, we see that GAO is receiving well over 2,000 protests a year.  About 20 to 25 percent go to some type of decisions.  That leaves about 1,900 to 2,000 protests it disposes of quickly.  I guess 10 percent more would break the GAO's back--not.

We can argue what GAO did was wrong a number of ways.

Matthew Fleharty said:

However, our Office necessarily reserves an inherent right to dismiss any protest, and to impose sanctions against a protester, where a protester’s actions undermine the integrity and effectiveness of our process.

They can assert such a "right," but asserting does not make it so. They should either withdraw their decision or be forced to persuade a court.

All:

Latvian's behavior is not the issue. The only issue is whether the GAO has authority under statute and regulation to decide as it did.

Vern:

I agree.

Vern Edwards said:

They can assert such a "right," but asserting does not make it so. They should either withdraw their decision or be forced to persuade a court.

Agreed, though even rights asserted based on statute are still subject to review (hence the existing of our entire judicial system) - like you mentioned, I'm sure this will be pursued further based on Latvian's behavioral trend and I'm curious to see the results.  I just wanted to make sure everyone was on the same page with regards to the basis for GAO's action.

The sanctions mentioned in PWC Logistics Servs. Co. KSC(c), B‑310559, Jan 11, 2008, 2008 CPD ¶ 25 at 12 do not resemble the sanctions against Latvian.

Did I miss something?

You may wish to look at the Supreme Court case they used to explain their inherent right . . . .

Quote

However, our Office necessarily reserves an inherent right to dismiss any protest, and to impose sanctions against a protester, where a protester’s actions undermine the integrity and effectiveness of our process.  PWC Logistics Servs. Co. KSC(c), B‑310559, Jan 11, 2008, 2008 CPD ¶ 25 at 12.  The inherent right of dispute forums to levy sanctions in response to abusive litigation practices is widely recognized and has been characterized by the Supreme Court as “ancient in origin,” and governed not by rule or statute, but by the control necessarily vested in a forum to manage its own affairs.  Roadway Express, Inc. v. Piper et al., 447 U.S. 752, 765 (1980).

Vern Edwards said:

The GAO followed the APA rulemaking process when it promulgated its regulations. See e.g., 49 FR 36386, September 17, 1984.

According to the GAO, they are not subject to the Administrative Procedures Act. See 81 FR 22197, April 15, 2017.

All the same, there is a question whether, having put the public on notice of their "regulations," which are published in the CFR, they should be permitted to depart from their own regulations at will and without public notice.

Latvian Connection LLC has requested membership on this forum.  Since it met the requirements, I approved the request.

In the above post [that I have removed], I have deleted a number of proper names of individuals, political figures, etc.  These violated the Terms of Use.  I have tried to identify any other violations.

--------------------------------------------------------------------------------------

The above former member has been removed for violations of the Terms of Use.

What is/are Latvian Connection's business specialty?

For instance, could you perform construction in Germany/Europe/Middle East/Asia /Central/South America, etc., as a prime contractor?  Specifically, contracts between $3000 and $150,000 and larger? 

Edit: ...at fair and reasonable, competitive prices? 

Thank you.

On 8/23/2016 at 7:49 AM, bob7947 said:

I've been editing my entry for a period of time and believe that is unfair for members.  I won't do it further.  

If you read the report GAO submitted to Congress, you will see their explanation for not calling a frivolous protest frivolous.  They wouldn't call Daffy, Donald, or the insurance company's bird a duck either.

you just edited out Bob the words xxx, xxx, xxx, xxx, xxx, xxx,xxx,

Yes Latvian Connection, I deleted those words because of violations of the Terms of Use.  After I posted the reason I made those deletions, you felt it was necessary to put them back.  That was a terminal violation of the Terms of Use and you have been removed.

LATVIAN CONNECTION LLC said:

you just edited out Bob the words .... and other parts of what Latvian Connection LLC just wrote.

Yes, Bob did and if you read his reasoning it was because they were apparently in violation of the terms of use.  Try abiding by the rules of the forum by which you're participating...but in order to do that you'll have to read and understand them first.

Latvian Connection.  Yes, that is the third violation of the Terms of Use.  You are now removed.

What a rollercoaster of events this morning!

At first I was intrigued that Latvian Connection registered here and would start contributing some insight from his point of view.

Then I saw his six posts or so.  Wow.  Immense disappointment from what I had hoped to be some interesting arguments turned out to be angry, incoherent ramblings.

Finally, for the second time this week, he exacted another dismissal and sanction from a valued contracting forum.

An interesting start to the weekend, for sure!

Wow, it seemed like I missed all the fun!    I guess once a poster is banned their old posts are deleted.  That's understandable but at the same time a shame. I would have liked to see their side of the story.

Desparado said:

Wow, it seemed like I missed all the fun!    I guess once a poster is banned their old posts are deleted.  That's understandable but at the same time a shame. I would have liked to see their side of the story.

Don't worry, you didn't miss a thing - the company's remarks were incomprehensible.

On August 25, 2016 at 1:33 PM, Vern Edwards said:

All:

Latvian's behavior is not the issue. The only issue is whether the GAO has authority under statute and regulation to decide as it did.

I suspect GAO made a caculated decision to take their chances with that.

Latvian Connection (LC) would have to appeal to the right place (probable), in the right way (seems unlikely) or have someone else do it on their behalf (like an ACLU type, which also seems unlikely.)

In the short term GAO can toss LC protests aside without review.  In the long term GAO might invite an intervention which might result in some negotiated bounds on protestor "time wasting".  

So yes, it is outside the rule book but the rule book never anticipated the specific LC behavior, and it is highly doubtful that the GAO budget might expand to have more resources to address LC behavior within the current rules.  

The absolute worst case for GAO seems that they are ordered to going back to processing LC protests case-by-case.  I would imagine GAO is following other slower paths to address this too, so this buys them time while other wheels turn.  

Seems a reasonable and calculated move given the extraordinary circumstances.  I'm no expert at what happens when agencies step outside the box: is there practical downside for GAO here, given the circumstance?

(Edit: traffic laws say 'no running the stop sign' yet very, very rarely there may circumstances that are not exceptions in the law, yet, when told to a judge, would result in leniency.  I'm not saying this is traffic court but...seems GAO is willing to make that bet)

Deleted - out of pure frustration over expanding set-asides or other programs  overseas that would encourage brokering by special status firms who would simply hire local or other subs to actually perform the work and would justify resulting  price premiums of up to 50% as fair and reasonable.

joel hoffman said:

Deleted - out of pure frustration over expanding set-asides or other programs  overseas that would encourage brokering by special status firms who would simply hire local or other subs to actually perform the work and would justify resulting  price premiums of up to 50% as fair and reasonable.

So far, the FAR remains rigid in that regard as FAR 19 still limits itself (minus FAR 19.6) to the United States and outlying areas. The 19 August 2016 Open FAR Cases report still lists this issue as being open.

joel hoffman said:

expanding set-asides or other programs  overseas that would encourage brokering by special status firms who would simply hire local or other subs to actually perform the work and would justify resulting  price premiums of up to 50% as fair and reasonable

joel hoffman, PepeTheFrog would really appreciate hearing your detailed thoughts on this subject. Would you mind posting your criticism of overseas application of FAR Part 19, or at least send a private message to PepeTheFrog?

Jason Lent said:

So far, the FAR remains rigid in that regard as FAR 19 still limits itself (minus FAR 19.6) to the United States and outlying areas. The 19 August 2016 Open FAR Cases report still lists this issue as being open

PepeTheFrog predicts the SBA (and, surprisingly, the banned protestor) will eventually get their way-- application of FAR Part 19 overseas. Whether it will be discretionary or mandatory remains an open question.

PepeTheFrog also predicts that SBA will also (illogically) use Kingdomware to try to expand the "rule of two" back into GSA order and task/delivery order territory.

The Paul Revere of Government contracts would be riding around on an expensive vehicle with all kinds of scope creep yelling, "The set-asides are coming! The set-asides are coming!"

PepeTheFrog said:

PepeTheFrog predicts the SBA (and, surprisingly, the banned protestor) will eventually get their way-- application of FAR Part 19 overseas. Whether it will be discretionary or mandatory remains an open question.

PepeTheFrog also predicts that SBA will also (illogically) use Kingdomware to try to expand the "rule of two" back into GSA order and task/delivery order territory.

The Paul Revere of Government contracts would be riding around on an expensive vehicle with all kinds of scope creep yelling, "The set-asides are coming! The set-asides are coming!"

In other readings he had made throughout the internet, the banned protestor also referred to Kingdomware, so that should give the casual reader a litmus test of the actual relevance and significance of that case to his plights.

I patiently await the day where the SBA sets up contingency offices in the mountain of Afghanistan.

On a side note, I wonder how often FAR 19.6 is invoked in an overseas contingency environment.

The Certificate of Competency process of FAR Subpart 19.6 only covers U. S. small business concerns -- small business concern is defined in FAR 2.101 as a concern that is qualified as a small business under 13 CFR 121 -- but concern is defined in FAR 19.001 as a business entity organized for profit with a place of business in the United States and so forth.

Thus, a mom-and-pop owned by Aaseya and Behnam in Kabul with three employees and average annual revenues of $853.47 would not qualify as a small business concern under FAR Part 19 and would not qualify for consideration under the COC process of FAR Subpart 19.6.  If an acquisition for performance in Kabul was conducted as a small business set-aside, then Aaseya and Behnam's business would be ineligible because it would not meet the definition of a small business concern.

I hope the FAR Part 19 application only in the U.S. and its outlying territories remains unchanged.

Have attempted unsuccessfully to post my reply for the past 30 minutes on my phone...  Will try another device when I get home.

Pepe, I was attempting to briefly respond to the now deleted LC response to my questions. 

Having worked overseas on projects in several Middle Eastern, South American and Central American countries and in Germany, I can see that expanding set-asides or sole source authority for construction or A-E contracting to various categories of SDB and/or emerging businesses would be impractical - and frankly, ill-advised (read that as amounting to stupidity), wasteful of taxpayers' money and an affront to "many" of the countries where DoD has a presence on their soil

In addition there would be possible conflicts with various country-to-country agreements or Foreign Military Sales cases which might provide for priority for local firms to compete for that work. For instance, the US Army Corps of Engineers has had a long standing presence in the Kingdom of Saudi Arabia under various forms of "Engineer Assistance Agreements", which eventually provided for preferences for Saudi firms. The Saudi firms developed over time into viable, capable companies in the construction and supply arenas. The Saudi's paid for every dollar (or every Riyal) of work as well as for our salaries, overhead, and other expenses as well as for costs of our Stateside support Division.  

Unless a US based SDB firm has a permanent presence in a country, similar to various US owned small business construction firms in Panama before the turnover of the Panama Canal to Panama, I don't see how they could successfully mobilize to or operate as a prime contractor there, let alone compete at reasonable prices with the local market. 

For gosh sakes, there are even some locations in the US that are defacto "closed market" to outside small Businesses as well as non-local SDB's.  The locals were either "told" or agreed not to cooperate with or - if providing quotes- to inflate prices to outside firms. I think that that situation would be greatly magnified in many of the overseas markets that I was familiar with.  

I saw many instances of fronts or other brokering arrangements in the various set-asides and sole source negotiated acquisitions during my career.  I also was aware of instances of collusion and bribery  between some government officials in countries that I won't name here in competition for unrestricted contracts.

I predict that there would be plenty of shady business practices in overseas countries where we would have even less control or ability to monitor.  If the US desired to control or eliminate such practices, many additional resources would be necessary .

To be more succinct, there would be a great potential for widespread abuse and increased costs, further bloating the deficit if FAR Part 19 set-asides and programs were extended to US foreign locations.

joel hoffman said:

To be more succinct, there would be a great potential for widespread abuse and increased costs, further bloating the deficit if FAR Part 19 set-asides and programs were extended to US foreign locations.

joel hoffman, thanks for your detailed explanation-- PepeTheFrog appreciates it.

PepeTheFrog said:

PepeTheFrog predicts the SBA (and, surprisingly, the banned protestor) will eventually get their way-- application of FAR Part 19 overseas. Whether it will be discretionary or mandatory remains an open question.

I don't think they'll be successful, especially when contingency environments like Iraq or Afghanistan are considered.  In those environments, I'd argue that the mission trumps concerns for US small business goals.  That is not to say that small businesses should be ignored or precluded - if a small business can offer a fair and reasonable price that meets the Government's requirement (often urgent in those cases), then great, but I can't envision an environment where they'd be the default option.

It's also worth considering the impacts of Status of Forces Agreements (SOFAs) the US has with other countries on contractors overseas - in most cases, they do not cover contractors (https://www.state.gov/documents/organization/236456.pdf pg. 1 subscript) and in other cases, the US Government agrees to purchase directly from the local economy (correct me if I'm wrong, but I recall this being the case in Qatar though quick research wasn't able to turn up the specific SOFA).  Furthermore, the local requirements and laws of other countries vary considerably as well (for some examples refer here: http://www.au.af.mil/au/awc/awcgate/awc/2006_ratton.pdf ...whether or not the author's conclusion is sound on reducing "outsourcing" to contractors is another conversation altogether, but the examples in the paper do provide some insight into the complications awaiting small businesses in any overseas environment).

I think there is more than enough work for the SBA in advising US small businesses on how to properly comply and perform contracts in compliance with US laws and the FAR before considering the difficulties/challenges awaiting those companies in an overseas (potentially contingency) environment.

P.S.:  My opinion is aimed at mandatory preference programs overseas for set-asides or sole source under the various FAR 19 Subparts .  I'm not necessarily stating that small business can't successfully perform construction overseas.

Jason Lent said:

I patiently await the day where the SBA sets up contingency offices in the mountain of Afghanistan.

Great comments by everyone regarding the challenges for overseas application, but PepeTheFrog thinks this one takes the cake! This is a quip worth stealing.

Some of you seem to think that the requirement for set-asides overseas is an open issue. The SBA regulations have required set-asides overseas when the applicable conditions are met for over two years. The GAO and the COFC have consistently held that the SBA regulations trump the FAR when there is a conflict.

Don,

Isn't there an open FAR case that might someday give direction to contracting officers on this matter?  In the meantime, shouldn't contracting officers follow the FAR and their own agency regulations, rather than SBA regulations?

Don Mansfield said:

Some of you seem to think that the requirement for set-asides overseas is an open issue. The SBA regulations have required set-asides overseas when the applicable conditions are met for over two years. The GAO and the COFC have consistently held that the SBA regulations trump the FAR when there is a conflict.

Don,

Apologies in advance for being lazy, but could you point us to the requirement and the "applicable conditions" - I'd be interested to read and understand them.

Matthew,

Read this.

Thanks Don - middle of the workday, otherwise I'd normally do it myself.

ji20874 said:

Don,

Isn't there an open FAR case that might someday give direction to contracting officers on this matter?  In the meantime, shouldn't contracting officers follow the FAR and their own agency regulations, rather than SBA regulations?

Yes, it's FAR Case 2016-002. Overseas contracting officers are in a tough spot. If they follow the FAR, they risk losing a protest that they didn't conduct a set-aside. If they follow the SBA regulations, they are deviating from the FAR. They have the FAR Councils to thank for that. I think that an interim FAR rule should be issued to make the FAR consistent with the SBA regulations.

Recieved my office's -tentative- small business goals, yesterday. So far, it appears overseas set-asides will be optional - at least for now.

DoD has many bases in foreign lands and those agreements are often long-standing. I wonder what the geopolitical ramifications of taking dollars away from the host-nation economy will be.

Don Mansfield said:

Yes, it's FAR Case 2016-002. Overseas contracting officers are in a tough spot. If they follow the FAR, they risk losing a protest that they didn't conduct a set-aside. If they follow the SBA regulations, they are deviating from the FAR. They have the FAR Councils to thank for that. I think that an interim FAR rule should be issued to make the FAR consistent with the SBA regulations.

Has anyone actually had a sustained protest?

Don, don't forget the statutory changes to the limitation on subcontracting and SBA's changes in its regulations on that topic.  However, I have not seen a FAR case to change the FAR to be consistent with the clear language of the statute and SBA rules.

I've been following Latvian's protests for a long time. I was probably copied on all 150+ submitted this fiscal year. In a lot of cases, the agency took corrective action by either setting aside the procurement or cancelling the solicitation. The Air Force was the only one to argue that the FAR trumped the SBA regulations. I can't wait for that decision.

Retreadfed said:

Don, don't forget the statutory changes to the limitation on subcontracting and SBA's changes in its regulations on that topic.  However, I have not seen a FAR case to change the FAR to be consistent with the clear language of the statute and SBA rules.

You're right. I think an interim FAR rule is in order.

.Don, in regard to the AF arguing that the FAR trumps the SBA rules, see MCS Portable Restroom Service, B-299291 (March 28, 2007).  This was another protest where the AF interpreted the FAR in a manner inconsistent with statute and the SBA's regulations.

joel hoffman said:

Why? I think it's stupid. I think The FAR Council needs to fight, delay as long as possible and get the law changed if necessary, at least for construction contracting.

Because Congress has spoken and, per the Constitution, it's the executive branch's responsibility to enforce the law.

Joel, what is stupid?  The statement you quoted was in regard to a change in the limitation on subcontracting.

Retreadfed said:

Joel, what is stupid?  The statement you quoted was in regard to a change in the limitation on subcontracting.

Retreadfed, Thanks for clarifying that the reference was to limitations on subcontracting. I thought the reference was to FAR 19.000( b). My objection is withdrawn on that basis. 

I wasn't reading closely enough when the discussion veered off course, slightly to subcontracting issues. And then you referred a GAO decision that involved a domestic solicitation for services at my Alma Mater. I don't think that that case is on point. There, the FAR apparently wasn't harmonious with SBA and clear statute.

I think there is a distinction.  The argument between SBA and FAR  concerning FAR 19.000(  b )  has been based upon differences in interpretation of Statute from what I read.

Don Mansfield said:

The SBA regulations have required set-asides overseas when the applicable conditions are met for over two years. The GAO and the COFC have consistently held that the SBA regulations trump the FAR when there is a conflict.

15 USC § 644(a) says, in part:

Quote

To effectuate the purposes of this chapter, small-business concerns within the meaning of this chapter shall receive any award or contract or any part thereof, and be awarded any contract for the sale of Government property, as to which it is determined by the Administration and the contracting procurement or disposal agency (1) to be in the interest of maintaining or mobilizing the Nation's full productive capacity, (2) to be in the interest of war or national defense programs, (3) to be in the interest of assuring that a fair proportion of the total purchases and contracts for property and services for the Government in each industry category are placed with small-business concerns, or (4) to be in the interest of assuring that a fair proportion of the total sales of Government property be made to small-business concerns... These determinations may be made for individual awards or contracts or for classes of awards or contracts.

I don't think FAR 19.000(b) is all that important to the actual issue, which is whether overseas procurements are subject to set-asides. The statute says that the SBA and the contracting agencies get to decide whether or not to set aside a procurement or class of procurements. I think DOD or State could simply declare, on a class basis, based on sound argument, that overseas procurements will not be set aside for reasons of national security, which could include foreign relations. Such a determination would be subject to court review, but I doubt that a court would jeopardize overseas operations by overruling a class determination by the Department of Defense or the Department of State, assuming that it's based on a reasonable argument.

Vern has brought up some valid points.  However, there are some subsidiary issues relating to this topic.  First, is the set aside requirement for procurements over $2,500 but below the SAT.  That requirement is contained in a separate subsection of 15 U.S.C. 644.  Thus, it would be interesting to see how an agency argues that that requirement does not apply to contracts awarded overseas.  Second, is achievement of small business contracting goals.  I understand that there is disagreement between the SBA and some agencies as to whether overseas contracts should be included in the determination of whether an agency met its goals.

According to this story, overseas contracts will be included when calculating goals and achievements for DoD. The only exceptions will be for contingency operations and procurements subject to a SOFA.

Yes, the goals now contain overseas spend.  So while we achieved 41% last year, our goal for this year was negotiated with SBA to be 22.5%.  We may make it this year due to a huge contract award  to a  large business slipping from this year into next.   But that same action will almost certainly have us failing next year.    

The FAR council was orginally going to delete 19.000(b) to make all of FAR 19 apply overseas but are now going reword (due to Department of State and DoD input).  Using US small business will be the preference but overseas contracting activities will be able document the file with why not using US small business is preferable (e.g. faster and cheaper to buy down the street, cost of shipping excessive, in country policy requires use of local vendors, etc). Any purchase made with a  US vendor would have to comply.   I am not sure how the final wording may come out in final rule.  Our concern now is how intensive does the justification for the file have to be to satisfy outside auditors or a protest venue.  Market research not currently done and documentation will still increase Post workload and cost.   This will not relieve us of counting those dollars in our goals however.

Boof said:

...overseas contracting activities will be able document the file with why not using US small business is preferable (e.g. faster and cheaper to buy down the street, cost of shipping excessive, in country policy requires use of local vendors, etc). 

Our concern now is how intensive does the justification for the file have to be to satisfy outside auditors or a protest venue.

The "Rule of Two" should still apply, without any additional FAR provisions, correct? The Rule is not an overseas or stateside only practice. (FAR 19.502-2(a))

I think we need to wait for the FAR Case to be published.

On 8/29/2016 at 1:04 PM, Desparado said:

I would have liked to see their side of the story.

PepeTheFrog just finished reading an article in NCMA's November edition of Contract Management called "How Many Bid Protests Is Too Many?" NCMA members can read it online at NCMA's website.

It covers the one-year suspension and includes an interview with Latvian Connection LLC's CEO.

PepeTheFrog said:

PepeTheFrog just finished reading an article in NCMA's November edition of Contract Management called "How Many Bid Protests Is Too Many?" NCMA members can read it online at NCMA's website.

It covers the one-year suspension and includes an interview with Latvian Connection LLC's CEO.

I wish I still had my login for the site.

After browsing his other interactions with the internet, I would love to see how he interacted with the interviewer.

The writer of the article is planning to put it on this site in the near future.

On 11/2/2016 at 9:43 AM, Jason Lent said:

After browsing his other interactions with the internet, I would love to see how he interacted with the interviewer.

The article is mainly of summary of the background of Latvian's protests. The interview, which comes at the very end, consisted of only six questions, one of which was why the company is named "Latvian." The owner of the company comes across as entirely reasonable and rational. He wants agencies to comply with FAR Part 19, and he doesn't think that enough are doing that. There are no fireworks.

It was an interesting read...

On 11/2/2016 at 2:50 PM, Vern Edwards said:

...He wants agencies to comply with FAR Part 19, and he doesn't think that enough are doing that. There are no fireworks.

I don't totally agree with that statement. See FAR 19.000 Scope of Part: 

"...(b) This part, except for Subpart 19.6, applies only in the United States or its outlying areas. Subpart 19.6 applies worldwide."

 Latvian Connection has protested numerous solicitations for foreign acquisitions. The SBA doesn't agree with FAR, as discussed earlier here.

On ‎8‎/‎22‎/‎2016 at 11:24 PM, joel hoffman said:

"Fair"? You bet it's fair to have an inherent right to fight to maintain the integrity of the system. 

I'm not a lawyer but it was always fun watching a certain Judge in the TV series "The Good Wife" blasting and sanctioning the lawyers for their various legal antics.

I miss The Good Wife - one of the best shows on TV.

It was very good before it got very bad. It had jumped the shark.

Due to the SBA opinion, the FAR has a proposed rule change to encourage use of FAR 19 overseas. It will make most of FAR 19 apply to overseas but allow use of local vendors when more practical or required by local country agreements.  The downside is that it expects every award  not being made to U.S. small business to have a justification in the folder with research as to why it is required or more economical to procure the item locally.  This will increase work load at our 269 posts around the world.  It could be a really big manhour waster if the oversight agencies end up wanting extensive market research and cost comparisons in each file.  They never have any common sense from what I have observed.

For those that want to read the article published by NCMA dealing with Latvian Connection it is now here:  How Many Bid Protests Is Too Many?

In the GAO Bid Protest Annual Report to Congress for Fiscal Year 2016 (B-158766, December 15, 2016), GAO reports that there was no such instance in which "a final decision in a protest was not rendered within 100 days after the date the protest is submitted to the Comptroller General."

http://www.gao.gov/assets/690/681662.pdf

The "ban" or "suspension" of Latvian Connection LLC and its principal in Latvian Connection LLC (B-413442) was issued August 18, 2016-- less than 100 days before the end of fiscal year 2016.

Based on published interviews and articles covering Latvian Connection LLC's future plans, PepeTheFrog assumes that Latvian Connection LLC has continued to file bid protests at the GAO, despite the "ban" or "suspension." PepeTheFrog assumes that GAO will not issue a "final decision" for these protests.

Does this mean that in the 2017 report, GAO must report to Congress that there were (many) protests from Latvian Connection LLC that GAO chose to ignore based on B-413442?

Does anyone think Congress will care? Remember, as others in this thread pointed out: Congress asked GAO years ago what power GAO needs to deal with so-called "frivolous" protestors, and GAO balked, likely to protect their bid protest turf from the Court of Federal Claims.

Instead, will GAO issue several batches of unusually short and nondescript "final decisions" to address-- within 100 days-- each Latvian Connection LLC protest launched after August 18, 2016? Perhaps that will avoid the need to report failures to render "final decisions," but such attention and process would seem to contradict the "ban" or "suspension" in B-413442.

The GAO is not the only forum that bans certain individuals from filing complaints, protests or claims.  See, the COFC decision at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv0570-16-0 in which the Court directed "The Clerk of the Court is directed not to file future complaints in which Mr. Hood asserts allegations that arise from the same facts set forth in Case Number 16-570 in this court."

On 1/19/2017 at 9:02 AM, Retreadfed said:

The GAO is not the only forum that bans certain individuals from filing complaints, protests or claims.  See, the COFC decision at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv0570-16-0 in which the Court directed "The Clerk of the Court is directed not to file future complaints in which Mr. Hood asserts allegations that arise from the same facts set forth in Case Number 16-570 in this court."

The COFC was on firm legal ground.  As for the quoted decision, how many thousands of taxpayer dollars and hours of the COFC's (precious - I might add)  time and resources did it take to have to develop a 12 page decision to legally justify why the COFC was banning filing of future complaints arising from the same facts here?  And what about the wasting of the other lower and appeals courts time and resources!  I hope that the Judge was able to borrow some of another court's decision

For the record, I commend the GAO for its stance, regardless of real, implied or lack of specific authority. Frivolous protests waste the taxpayers' money and the GAO's limited time and legal resources.  Outside affliction of Waste - Fraud - Abuse on the taxpayers and government agency.

I would hope that those here, especially government employees who question GAO's authority to limit such abuse against the taxpayers and  government resources will contact their members of  Congress to advocate granting any specific or implied authority that GAO would need to satisfy their concerns. 

Unfortunately, members of Congress are politicians, who don't always have the taxpayers' interests in mind.  Congress doesn't get campaign funding from GAO or (much) from beleaguered government employees.

I don't expect the industry members here to particularly support adding limits to the industry's "rights" to submit protests.  However, it would probably serve their interests, too..

.

Banning individuals from filing protests, lawsuits or complaints is an extreme mean for the appropriate forum to control their dockets.  I know of one U.S. district court that banned an individual from filing EEO complaints after the individual had filed 181 EEO complaints with the court.

The problem of serial or vexatious litigation widespread in Western democracies. There is vast body of literature about it. You can trace it back to classical Athens. Today is appears to be especially bad in connection with the Americans with Disabilities Act. See, for example:

The Vexatious Litigant http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=2910&context=californialawreview

Fighting the Tide of Serial ADA Litigation https://www.law360.com/articles/654820/fighting-the-tide-of-serial-ada-litigation

Vexatious Litigation: A Vexing Problem https://bostonbarjournal.com/2012/09/12/vexatious-litigation-a-vexing-problem/

House approves automatic fines for filing frivolous lawsuits http://thehill.com/blogs/floor-action/votes/190310-house-approves-automatic-fines-for-filing-frivolous-lawsuits

Its been one year, any betters on what Latvian does next?

They protested a solicitation on August 1. I don't know the result, though. They've been banned from my inbox.

Nothing shows on GAO. My bet is he drops 100+ on Monday.