CS-360 LLC v. The United States, No. 10-457C

CourtCourt of Federal Claims
Writing for the CourtMILLER, J.
PartiesCS-360, LLC, Plaintiff, v. THE UNITED STATES, Defendant.
Decision Date16 September 2010
Docket NumberNo. 10-457C

CS-360, LLC, Plaintiff,

No. 10-457C

United States Claims Court.

Tiled September 16, 20101

Ralph C. Thomas, III, McLean, VA, for plaintiff. Bryan R. King, Barton Baker Thomas & Tolle, LLP, McLean, VA, of counsel.

Michelle R. Milberg, Washington, DC, with whom was Assistant Attorney General Tony West, for defendant. Tony A. Ross, Staff Attorney, Department of Veterans Affairs, Office of Regional Counsel-Region 3, Glen Bernie, MD, and Patricia Trujillo, Staff Attorney, Department of Veterans Affairs, Washington, DC, of counsel.



This pre-award bid protest is before the court after argument on defendant's motion to dismiss on jurisdictional grounds and the parties' cross-motions for judgment on the

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administrative record. CS-360, LLC ("plaintiff"), a self-represented service disabled veteran-owned small business ("SDVOSB") contracting firm, seeks permanently to enjoin the Department of Veterans Affairs (the "DVA" or "VA") from denying plaintiff a contract award for an emergency electrical system upgrade at the VA Maryland Health Care System at the VA Medical Center in Perry Point, Maryland (the "Project"), on the ground that plaintiff is not listed on the DVA's online Vendor Information Pages (the "VIP") database. O n April 30, 2010, the DVA sustained against plaintiff a status protest in an unrelated procurement, and plaintiff was removed from the VIP database. Plaintiff contends that it has satisfied the DVA's concerns related to its SDVOSB status and charges that the DVA unreasonably delayed re-listing plaintiff on the VIP database. On July 30, 2010, the DVA acknowledged that plaintiff resolved its earlier concerns, but concluded on other grounds that plaintiff is ineligible for SDVOSB status, a prerequisite for inclusion in the VIP database and for contract award. The issue presented is whether the court is divested of subject matter jurisdiction because plaintiff lacks standing or, alternatively, because the DVA's July 30, 2010 letter moots plaintiff's claim.


The administrative record ("AR") is the source of the following facts, unless otherwise noted. The court also draws on several agency documents that the parties provided with their briefs, which were not included in the administrative record.

I. Background

1. The VIP database and SDVOSB contracts

The Veterans Benefits, Health Care, and Information Technology Act of 2006, Pub. L. No. 109-461, §§ 502-03 (codified at 38 U.S.C. §§ 8127-28 (2006)), was enacted to increase contracting opportunities for service-disabled veteran and veteran-owned qualified small businesses. See 38 U.S.C. § 8127(a). Accordingly, the DVA sets aside certain contracts for SDVOSB concerns. See id. §§ 8127-28. The DVA keeps an online database of qualified SDVOSBs at its VIP website, www.VetBiz.gov. See icL § 8127(f) ("[T]he Secretary shall maintain a database of small business concerns owned and controlled by veterans and the veteran owners of such business concerns."); 48 C.F.R. 2§ 804.1102 (2010) (providing VIP online database).

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Until January 1, 2012, in order to be awarded a contract, an otherwise qualified SDVOSB must be listed in the VIP database. See id. § 8127(e) ("A small business concern may be awarded a contract under this section only if the small business concern and the veteran owner of the small business concern are listed in the database of veteran-owned businesses maintained by the Secretary under subsection (f)."); 48 C.F.R. § 804.1102 ("Prior to January 1, 2012, all VOSBs and SDVOSBs must be listed in the VIP database, available at http: //www.VetBiz.gov, and also must be registered in the Central Contractor Registration (CCR) (see 48 CAR subpart 4.11) to receive contract awards under VA's Veteran-owned Small Business prime contracting and subcontracting opportunities program."). Also until December 31, 2011, an applicant can self-represent its status as an SDVOSB in the VIP database. See 48 C.F.R. § 819.7003(b) (2010) ("At the time of submission of offer, the offeror must represent to the contracting officer that it is a-(1) SDVOSB concern or VOSB concern;... and (3) Verified for eligibility in the VIP database."). 3

After December 31, 2011, the regulations require that an applicant be "listed as verified" in the VIP database. 48 C.F.R. § 804.1102 ("After December 31, 2011, all VOSBs, including SDVOSBs, must be listed as verified in the VIP database, and also must be registered in the CCR to be eligible to participate in order to receive new contract awards under this program."). The Center for Veterans Enterprise (the "CVE"), a division of the DVA, evaluates applications for inclusion in the VIP database to verify whether an applicant satisfies the eligibility requirements to be listed as a SDVOSB. See 38 C.F.R. § 74.11(a) (2010) ("The Director, Center for Veterans Enterprise, is authorized to approve or deny applications for VetBiz VIP Verification. The CVE will receive, review and evaluate all VetBiz VIP Verification applications."). The CVE has authority to remove from the VIP database a firm "found to be ineligible due to an SBA protest decision or other negative finding," and the firm will not be eligible to participate in the 38 U.S.C. § 8127 program. 38 C.F.R. § 74.2(e) (2010). "Once an application, a request for reconsideration, or an appeal to a cancellation notice, as applicable, has been denied, the applicant or participant shall be required to wait for a period of 6 months before a new application will be processed by CVE." 38 C.F.R. § 74.14 (2010).

An interested offeror bidding on a procurement may challenge another offeror's listing status as an SDVOSB in the VIP database by filing a protest with the VA Office of Small and Disadvantaged Business Utilization (the "OSDBU"). See 48 C.F.R. § 819.307(c) (2010).

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Pending an interagency agreement with the Small Business Administration (the "SBA"), the Executive Director of the OSDBU decides protests of SDVOSB status raised by either another offeror or the contracting officer. Id. His decision is final. Id.

2. Pre-solicitation

In November 2009 plaintiff submitted to the CVE its application for inclusion in the VIP database. Pl.'s Br. filed Aug. 6, 2010, at 1. "While its application was pending," plaintiff self-certified as an SDVOSB "so that it would be listed on the VIP" database. Id.; see also Compl. filed July 13, 2010¶11. At no time prior to the filing of this bid protest had the CVE verified plaintiff's status as an SDVOSB.

Prior to the procurement at issue in the instant matter, plaintiff bid on another, unrelated SDVOSB set-aside DVA procurement (the "protested procurement") and was selected for the award as the low bidder. Compl. ¶ 11; Pl.'s Br. filed Aug. 6, 2010, at 1. Another interested offeror bidding on the protested procurement challenged plaintiff's SDVOSB status in the VIP database by filing a status protest with the DVA's OSDBU. On April 30, 2010, the Executive Director of the OSDBU sustained the status protest, determining that plaintiff did not qualify as a SDVOSB. The OSDBU found that plaintiff's Operating Agreement potentially gave non-service disabled veterans ("SDV") control of the company, in violation of 38 C.F.R. § 74.4(f)(1), (f)(2)(ii) (2010) (requiring veteran control of a board of directors, of a company, and any executive committee). See Pl.'s Br. filed July 13, 2010, Ex. 2 at 5. The O SDBU's Executive Director, Timothy J. Foreman, explained:

Here, non-veterans can join with a SDV to override the control of the other SDV. Further, the Operating Agreement provides no requirements that both SDVs be present to establish a quorum of the Executive Committee. Therefore, if one SDV were absent, the other three members could vote to override the control of the remaining SDV. Therefore, it cannot be reasonably determined based on the documentation submitted that SDVs control the company. In the absence of clear and sufficient evidence supporting your claim to SDVOSB status, VA has no choice but to go forward and determine that the firm is ineligible.

Id. Plaintiff was disqualified from the protested procurement and was removed from the VIP database.

In response, plaintiff amended its Operating Agreement in order to overcome the OSDBU's objections. See Pl.'s Br. filed July 13, 2010, Ex. 3; Pl.'s Br. filed Aug. 6, 2010, at 1. On May 6, 2010, plaintiff sent the OSDBU "a red-line Operating Agreement indicating

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that it had changed its Operating Agreement to conform with the views of the VA." Pl.'s Br. filed July 13, 2010, at 6. Plaintiff received no response. On May 12, 2010, plaintiff wrote the OSDBU a second time, attaching a copy of its revised Operating Agreement and stating that plaintiff's president, Walter A. Davis, was now the single SDV fifty-one percent majority owner of the company and would make all management decisions. See id., Ex. 4. No response was forthcoming. On May 21, 2010, plaintiff again wrote the OSDBU, this time requesting a determination that plaintiff had "overcome the reasons for the initial ruling of ineligibility" and requesting to be placed back on the VIP database. Id., Ex. 5 at 2. To date, the O SDBU has not responded to plaintiff's requests.

On July 30, 2010, after the instant protest was filed, the CVE ruled on plaintiff's application for SDVOSB status verification. See Def.'s Br. filed Aug. 19, 2010, Ex. 1 at 1. Its decision...

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