Bid Protest Spotlight: Size, Supply Schedules, SINs

This month’s Law360 Bid Protest Roundup focuses on two Government Accountability Office (“GAO”) decisions and one Office of Hearings and Appeals (“OHA”) decision. From General Services Administration (“GSA”) Schedule holders to joint ventures, each decision serves a different helpful reminder for contractors submitting proposals and unsuccessful offerors looking to file a protest, alike.

Hometown Veterans Medical, LLC[1]

In this size appeal, OHA addresses what constitutes “award of the first contract” in relation to the Small Business Administration (“SBA”) two-year rule for joint ventures. The two-year rule provides that two years after a joint venture is awarded its first contract, SBA will treat the partners to the joint venture as affiliated with one another when calculating the size of the joint venture. This means that for any contract proposal submitted outside of this two-year window, the size of the joint venture for the procurement will be the size of the partners combined.

Veterans Choice Medical Equipment, LLC (“VCME”), the awardee of the U.S. Department of Veterans Affairs (“VA”) Service-Disabled Veteran-Owned Small Business (“SDVOSB”) set‑aside contract at issue, submitted its proposal for the contract on November 1, 2022. VCME is a Mentor Protégé Joint Venture and was awarded its first contract on March 5, 2018 (the “2018 Contract”). However, shortly after award, the 2018 Contract was subject to a bid protest at the GAO. As a result of the protest, performance was suspended, and the contract subsequently was terminated for convenience. Therefore, VCME performed no work, and received no benefit, from the 2018 Contract.

After the VA identified VCME as the apparent awardee of the instant contract, Hometown Veterans Medical, LLC (“Hometown”) filed a size protest against it, arguing VCME was a large business, and thus ineligible for award, as a result of submitting a proposal for the contract more than two years after it had been awarded its first contract in 2018, in violation of the two-year rule. The SBA Area Office disagreed, finding the 2018 Contract did not constitute “award of the first contract” for purposes of the two-year rule, but rather VCME’s next contract, awarded on April 30, 2021, did. Because proposals were submitted within two years after that award, the Area Office found it did not have to aggregate the size of the partners to the joint venture when calculating VCME’s size. Hometown successfully appealed the Area Office’s decision to OHA.

Agreeing with Hometown, OHA found that the plain text of the two-year rule says “award of the first contract” and makes no distinction between contracts that are performed and those that are canceled. Therefore, because OHA agreed the 2018 Contract was VCME’s first contract, and the proposal for the contract at issue was submitted more than two years later, OHA found the Area Office should have aggregated the partners’ size. Because the mentor partner in VCME is a large business, OHA found VCME was a large business ineligible for award of the contract.

Takeaways

This case can now be added to a long list of cases finding joint ventures ineligible for set-aside awards due to technicalities in SBA’s regulations. Any joint ventures whose first contract award was ultimately terminated due to a bid protest (or more recently, DOGE) should consider forming a new joint venture before bidding on its next contract opportunity to ensure that the initial award for which it received no benefit does not cause issues with the two-year rule in the future.

KesselRun Corporate Travel Solutions, LLC[2]

KesselRun Corporate Travel Solutions, LLC (“KesselRun”) protested GSA’s exclusion of KesselRun’s quotation for a Banket Purchase Agreement (“BPA”) for travel and expense consulting services. GSA issued the BPA request for quotations (“RFQ”) to GSA Federal Supply Schedule (“FSS”) holders and anticipated the BPA would have a one-year base period of performance and four one-year option periods. KesselRun, an FSS holder, timely submitted its quotation.

However, the period of performance on KesselRun’s FSS was set to expire approximately 20 days prior to the last day of the BPA’s full potential ordering period (the 5 years of base and four option periods). Although FAR 8.405-3(d)(3) provides that “[c]ontractors may be awarded BPAs that extend beyond the current term of their GSA Schedule contract,” this is only permissible “so long as there are option periods in their GSA Schedule contract that, if exercised, will cover the BPA’s period of performance.” In excluding KesselRun’s quotation from the competition, the contracting officer noted that the exercise of the last option period for KesselRun’s FSS expires on January 10, 2030, which preceeded the full BPA period of performance (set to end on February 6, 2030).

KesselRun argued that because BPA option periods are not yet exercised, the contracting officer need only look at the base period of performance of the BPA to determine whether the BPA would exceed the GSA Schedule period of performance. GAO disagreed with the protester, finding that this interpretation would ignore the fact that the RFQ anticipated that the period of performance was the base period plus the four option periods. Furthermore, GAO was persuaded by GSA’s argument that agencies need to have the underlying GSA Schedule period of performance cover full BPA option periods because, unlike an order, a BPA cannot survive the expiration of the underlying FSS.

Takeaways

KesselRun Corporate Travel Solutions, LLC is a reminder to any GSA Schedule holders bidding on BPAs under their GSA Schedules to carefully calculate the period of performance of the BPA and their underlying GSA Schedule to ensure the BPA period of performance does not exceed the Schedule’s. It also serves as a lesson to unsuccessful offerors on BPA competitions under GSA Schedules to check the awardee’s Schedule period of performance for potential protest grounds.

SynergisT JV, LLC[3]

SynergisT JV, LLC (“SynergisT”) similarly protested the exclusion of its quotation for a BPA under its GSA Schedule. Specifically, the Department of Homeland Security, Federal Emergency Management Agency (“FEMA”) issued an RFQ to establish a BPA for project management and cybersecurity compliance services under the special item number (“SIN”) 54151HACS under the GSA Schedule. The RFQ required offerors to complete a comparison of the RFQ's labor categories (“LCATs”) with the labor categories and rates on their GSA schedules.

In completing this comparison, SynergisT proposed seven LCATs and rates on its GSA Schedule, two of which were associated with SINs on its GSA Schedule other than 54151HACS. FEMA eliminated SynergisT from the competition simply because it quoted these two LCATs and rates under SINs different from 54151HACS. In its protest, SynergisT argued this was improper because the RFQ did not limit vendors to quote only LCATs under SIN 54151HACS.

Agreeing with the protester, GAO further explained that when an RFQ does not include a provision that specifically limits goods or services to a particular SIN, the offeror simply needs to quote goods or services that are available on its underlying GSA Schedule (regardless of what SIN it is associated with). Although FEMA argued the RFQ did this by indicating the BPA would be “solicited under GSA MAS 54151HACS,” GAO found this was insufficient to restrict offerors from proposing only goods and services related to that SIN. Furthermore, the RFQ contained language that the BPA “will be based on the Quoter’s current GSA MAS” without any references to the SIN. Therefore, the RFQ did not expressly limit offerors to a particular SIN, and it was improper for FEMA to exclude SynergisT’s quote for proposing two LCATs associated with different SINs on its GSA Schedule.

Takeaways

When proposing LCATs for opportunities solicited under GSA Schedules, offerors should pay particular attention to whether they are limited to proposing only those associated with particular SINs under their Schedules. In doing so, offerors should review the solicitation for explicit restrictive language. In the absence of such language, offerors are permitted to propose any goods or services available on their underlying GSA Schedules responsive to the solicitation.

[1] Size Appeal of: Hometown Veterans Medical LLC, SBA No. SIZ-6343 (2025).

[2] KesselRun Corporate Travel Solutions, LLC, B-423311, Apr. 10, 2025, 2025 WL 1124683.

[3] SynergisT JV, LLC, B-422384.4, et al., March 11, 2025, 2025 WL 1026358.