Protester’s VOSB Status Restored

The Court of Federal Claims granted a protester’s motion for a preliminary injunction because there was no credible basis for the government’s determination the protester did not qualify as a veteran-owned small business. The Department of Veterans Affairs’ Center for Veterans Enterprise determined the protester was a VOSB eligible to participate in the Veterans First Contracting Program. But after the protester was awarded a construction contract, an agency protest resulted in the VA’s Office of Small and Disadvantaged Business Utilization determining the protester did not qualify as a VOSB. The OSDBU concluded the protester’s veteran majority shareholder did not have sufficient control over day-to-day management because he resided in a different state slightly more than half the year and “[t]he nature of construction requires on-site supervision and direct human contact to adequately complete projects.”

Cursory Investigation

The status protest regulations ( Part 819) incorporate 38 CFR Part 74, and 38 CFR 74.4 defines control as “the day-to-day management and long-term decision-making authority for the VOSB” and states “[i]ndividuals managing the concern must have managerial experience of the extent and complexity needed to run the concern.” The majority shareholder had ample construction management experience, employed various electronic means to keep track of the protester’s day-to-day business, and traveled to attend “any meeting in which anything of importance is discussed.” However, whereas the CVE’s detailed, extensive, and thoroughly documented investigation focused on the extent and effectiveness of the shareholder’s personal activities in relation to his control of the protester, the OSDBU’s investigation was cursory and did not include a site visit or interviews. The divergent results produced by CVE and OSDBU could not be attributed to the application of a disparate standard, the record did not credibly suggest the shareholder could not meet the control standard, and the government failed to articulate any other rationale for denying VOSB status. The government was ordered to restore the protester to the roster of approved VOSB entities and extend the protester’s eligibility to participate in the Veterans First Contracting Program by the number of days the protester was wrongfully removed from eligibility. ( KWV, Inc. v. U.S., FedCl, 57 CCF ¶79,986)