GAO PROTEST CHALLENGING
THE GSA FEDERAL SUPPLY SCHEDULE EXEMPTION
Filed 10-26-2011
From: FitNet Hqts.
Sent: Wednesday, October 26, 2011 10:46 AM
To: FedBid Client Services; GAO Protests
Cc: 'Lorna.e.baptistejones@us.army.mil'; 'robert.c.taylor@sba.gov'
Subject: FedBid BUY # 307070 - GAO Protest (Army MICC Fort Carson)
ATN: FedBid Client Services
Please inform the FedBid Fort Carson contracting officer on the Buy in question of the FitNet Purchasing Alliance (FitNet)
timely GAO Protest against the Army’s decision to use a government reverse auction to a) allegedly circumvent the mandated set‐
aside requirements of the Small Business Act and b) limit the bidding to GSA Federal Supply Schedule Holders without regards to the
mandated requirements of the statutes as they relate to small businesses. In short, FitNet contends that the Army should have
issued this BUY as a set‐aside for small businesses.
For the record, FitNet is an interested party as it is eligible to participate in the FedBid ‘GSA Schedule Bids Only.’ FedBid
does allow for ‘teaming partners,’ and FitNet has, in the past, participated in such Buys. This time, however, FitNet, supported by
the Fairness in Procurement Alliance coalition, wishes for GAO to rule on its protest – regardless of the Army’s position and/or
disposition ‐ given the huge implications of the expected GAO ruling.
I respectfully offer, in support of this GAO protest, an SBA Legal Opinion, sought originally by GAO, on an identical case
dating back to February 7th, 2007 and available on this link, http://bit.ly/rkHKvg. In it, SBA stated “according to statute and
regulations, small business set asides are mandatory for acquisitions valued from $3,000 to $100,000 and take priority over GSA
Schedule contracts. This interpretation is consistent with the declared and unambiguous intent of Congress as it relates to Federal
procurement and small businesses.”
The SBA Legal Opinion further stated that “The FAR regulations support this position. 48 C.F.R. § 19.502‐2(a). In addition,
the FAR explains that such a small business set aside takes a priority over the GSA Schedule program. There is nothing in statute or
GAO rulings indicating that a GSA Schedule contract should or can take priority over this statutorily mandated small business
reservation requirement.”
FitNet wishes to reference both the GAO B‐400403 Delek Protest Decision
(http://www.gao.gov/decisions/bidpro/400403.pdf) and the GAO B‐405271 Aldevra Protest Decision
(http://www.gao.gov/decisions/bidpro/405271.pdf) both of which confirm that the GSA Federal Supply Schedule is subject to the
statutory set‐aside provisions of various legislations including the Small Business Act.
Should FitNet prevails on its protest, FitNet is requesting for GAO to cancel the Buy and re‐issued it as a set‐aside for small
businesses. GAO is urged to recommend for the Army to restrict all of its future procurements between $3,000 and $150,000 –
including those which rely on reverse auctions – to small businesses. Additionally, FitNet is requesting for all of its expenses,
including legal and professional costs, in connection with the filing of the protests to be reimbursed.
Please do request for the Fort Carson Contracting Office to acknowledge this communication. The Small Business
Coordinator for Fort Carson Mission and Installation Contracting Command is receiving a copy of this communication and so is the
SBA PCR. Respectfully submitted,
Raul Espinosa, President
Fairness in Procurement Alliance
Raul.Espinosa@Fitnet.net
Buy View Page 1 of 2
DETAILS FOR BUY 307070
GENERAL BUY INFORMATION
Buy Description: Fitness Equipment
Category: 78 -- Recreational and Athletic Equipment
Sub Category: 7830 -- Recreational and Gymnastic Equipment
FedBizOpps Solicitation: No
Recovery Act: No
Set-Aside Requirement: No Set-Aside Restriction
End Date: 10/26/2011
End Time: 11:00 EST
Buyer: U.S. Army ACC MICC Fort Carson
Bid Delivery Days: 30 Day(s) - Required (No. of calendar days after receipt of order (ARO) by which Buyer requires
Seller to deliver)
CONTRACT/ BIDDING REQ.
Instructions
GSA Schedule Bids Only : Sellers bidding on this opportunity MUST have the items requested on an existing GSA Schedule. The
Schedule must either be in the Seller's name or the Seller must be able to document its ability to act as an agent of a partner's
Schedule. Sellers must not bid more than their applicable contract ceiling price, excluding the FedBid Fee, for contract-specific items.
If FedBid receives notice that, due to inclusion of the FedBid Fee, the Selected Bid's line item pricing is higher than the Selected
Seller's applicable published government contract pricing, the FedBid Fee will be reduced to ensure the Selected Bid's line item
pricing does not exceed the Selected Seller's applicable contract pricing. Sellers may offer Open Market items only in accordance with
the approved Terms and Conditions of their respective GSA Schedule AND upon approval from the soliciting Contracting Officer.
Information regarding GSA Schedules can be found at www.GSA.gov.
Brand Name or Equal : The Buyer is allowing Sellers to submit bids for alternate items, provided those items meet all of the salient
physical, functional, or performance characteristics specified by this solicitation. Sellers MUST enter exactly what they are bidding
(including make, model and description) into the blank description field in order for the bid to be considered. The Buyer will evaluate
'equal' items on the basis of information furnished by the Seller or identified in the bid and reasonably available to the Buyer. The
Buyer is not responsible for locating or obtaining any information not identified in the Bid.
Minimum Bid Decrement is $1 : The Buyer is requiring that any rebid must be lower than the 'current bid price' by this amount. The
reduction is based on the total order and must be satisfied within the rebid minimum.
Purchase Order or Delivery Order : Buyer intends to issue award using a purchase order or delivery order. Bids from Sellers unable
to accept purchase orders or delivery orders will not be considered for award.
Set-Aside Requirement : There is no Set-Aside restriction for this Buy.
Use of FedBid : Buyers and Sellers agree to conduct this transaction through FedBid in compliance with the FedBid Terms of Use.
Failure to comply with the below terms and conditions may result in offer being determined as non-responsive.
Evaluation Criteria/Basis of Award : Sellers understand that FedBid ranks all Bids by price; however, pursuant to applicable
acquisition regulations and/or departmental guidelines, Buyers may use criteria other than price to evaluate offers. Accordingly, please
note that, unless otherwise specified in the Buy Terms, below, to the extent required by applicable regulations and/or guidelines,
award will be made to the responsible Seller whose offer conforming to the solicitation will be most advantageous to the Buyer on the
basis of price, technical capability, delivery, and past performance.
Question Submission : Interested offerors must submit any questions concerning the solicitation at the earliest time possible to
enable the buyer to respond. Questions can be submitted by using the 'Submit a Question' button. Questions not received within a
reasonable time prior to close of the solicitation may not be considered.
Default Terms : Unless otherwise specified in the Buy Terms, below, Bid must be good for 30 calendar days after close of Buy and
shipping must be free on board (FOB) destination CONUS (Continental U.S.)
BID TERMS
Terms Criteria
Special Instruction 1 New equipment ONLY, NO remanufactured products
Special Instruction 2 Bid MUST be good for 30 calendar days after submission. In addition to providing pricing at
www.FedBid.com for this solicitation, each Offeror must provide any required, NON-PRICING responses
(e.g. technical proposal, representations and certifications, etc.) directly to
https://sellers.fedbid.com/seller/emailBuyView.do?token=JvZeiHrIi57II1VgH7LciOkeJbz9QhjQYAAAA... 10/21/2011
Buy View Page 2 of 2
Lori.J.NicholsFellows@us.army.mil (NOT THROUGH FEDBID.COM) so that they are received at that
email address no later than the closing date and time for this solicitation.
Shipping Condition FOB Destination CONUS (Continental U.S.)
Shipping Information No partial shipments unless otherwise specified.
CCR Requirement Agency requires registration with the Central Contractor Registry (CCR). Information can be found at
www.ccr.gov
Evaluation Factors The Government will award a purchase order resulting from this solicitation to the responsible offeror
whose technically acceptable offer conforming to the solicitation is the lowest price. The Government
intends to evaluate offers and make award without discussions; however, this does not preclude the
Government from having discussions if it is in the best interest of the Government to do so.
DFARS Clauses The following DFARS clauses shall apply: 252.211-7003 ALT I (Item Identification and Valuation) (Aug
2008), 252.225-7001 (Buy American Act and Balance of Payments)(Jun 2005), 252.232-7003
(Electronic Submission of Payment Requests) (Mar 2008).
Electronic Invoicing All invoices shall be uploaded through Wide Area Workflow. Information is available at
https://wawf.eb.mil/.
Buy American Act The Contractor shall provide a signed copy of the Buy American Act Certificate with their quote. A copy
of the clause 252.225-7001 can be viewed at http://farsite.hill.af.mil/VFDFARA.HTM.
FAR and DFARS The following provisions are applicable to this solicitation and may be viewed at http://farsite.hill.af.mil:
Provisions 52.211-6 (Brand Name or Equal).
SHIPPING INFORMATION
Shipping Address
FORT CARSON CO 80913
LINE ITEM(S)
Item No. Description Qty Unit
DUAL CABLE CROSS MACHINE (Free Motion Cable Cross Machine, Manufacturer Model #F624 or
equivelant) MINIMUM SPECIFICATIONS: - Shall have Swivel Pulleys with unlimited range of motion
and independent moving handles on each arm. - Shall have Independently Rotating Arms rotating
both vertically and horizontally with a minimum of 9 settings in each plane. Arms must be
001 counterbalanced for proper positioning. - Minimum Cable length on each arm must be no less than 85 9 EA
inches. - Must have 2 independently moving weight stacks of at least 75 lbs of resistance each.
Weight stack must be encased for safety. - Must be no longer than 130 inches in length. - Shall be
COMMERCIAL GRADE Equipment able to withstand heavy use in the high traffic military physical
fitness centers.
Installation/Set-up All items shall be installed at Building 1856, Fort Carson, Colorado 80913. All
equipment shall be assembled in accordance with manufacturer specifications. The POC for Lump
002 1
installation will be provided at award. The contractor and government POC will conduct a joint Sum
inspection of the equipment to ensure that equipment is serviceable prior use.
BUY ATTACHMENT(S)
No. Document Name Document Size
001 Buy_American_Act_Certificate.doc 34 KB
© 2001 - 2011 FedBid, Inc. All rights reserved.
https://sellers.fedbid.com/seller/emailBuyView.do?token=JvZeiHrIi57II1VgH7LciOkeJbz9QhjQYAAAA... 10/21/2011
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. FitNet Purchasing Alliance.
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. info@fitnet.net Email
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OBJECTION TO ARMY MOTION TO DISMISS
To: Pedro Briones email: brionesp@gao.gov
Company General Accounting Office Army Attorney: james.nelson3@us.army.mil
From: Raul Espinosa Date: 11/20/2011
Re: Protest B-406075
. . . . . . . . . .
FitNet Purchasing Alliance (FitNet) respectfully request GAO to deny the Army Motion to Dismiss
the GAO protest in question and proceed to rule on the merits of this protest – hopefully with SBA
and GSA legal opinions to aid the GAO ruling. Since FitNet raised its unsuccessfully challenge
against the GSA Schedule ‘exemption,’1 there have been two separate GAO Protest Decisions2
which have confirmed the unambiguous intend of Congress as it relates to the set‐aside statutes of
the Small Business Act and related legislation plus one attempt by the Regulators3 to fix the
allegedly unfair diversion of $44 Billion of potential FSS annual contracts away from small
businesses.
FitNet is herewith challenging the Army’s decision not to set‐aside a solicitation for nine brand‐
name or Equal Dual Cable Cross‐over Machines (Free Motion Cable Cross Machine Model F‐624 or
Equivalent.)4 The estimated value of the Buy is estimated at under $60,000. The procurement
vehicle the Army had selected – to allegedly circumvent the FAR and the set‐aside statutes ‐ was
the Fedbid reverse auction procurement vehicle, which has been the subject of a Petition to the
Secretary of the Army to bring transparency an oversight to their contracting practices. 5
1
The unsuccessful 2007 FitNet Challenge. – Protest B-309911
2
The Delex Case and the Aldevra case
3
The inconsistent FAR Rule of the Regulators. - http://1.usa.gov/skYcrV
4
The Free-Motion F-624 Cable Cross Over Machine. - http://bit.ly/vKTzlr
5
Refer to Attached Exhibit A
I wish to point out, for the record, that:
a) Participation on Fedbid Buys is restricted to a community of registered sellers,
b) Free Motion, the manufactured referenced on the Buy in question, is a ‘Large Business,’ by
SBA standards and is the alleged preferred supplier of the end‐user.
c) The Fedbid reverse auction rules were cited, in 2008, by the SBA Office of Advocacy on
their r3 Initiative6 which list the nation’s “Ten Worst Small Business Offenders.”
d) Neither the FAR nor GSAM references the rules and processes of governing reverse
auctions, many of which, ‐ as per the r3 Initiative and the attached Petition to the Army –
allegedly violate the FAR and SBA regulations. Regulators have not addressed the subject.
The Army Argument
The Army’s argument, to prevent FitNet’s from exercising its rights to due process through GAO, is
based solely on the assumption that “FitNet is not an Interested Party to file the subject protest with
GAO.”
The Competition in Contracting Act of 1984 (CICA) sets forth the GAO authority to entertain bid
protests. According to CICA, an “interested party” is as “an actual or prospective bidder or offeror
whose direct economic interest would be affected by the award of a contract or by the failure to
award a contract.” 31 U.S.C. § 3551(2)(a) see also 4 C.F.R § 21.0(a)(1) FitNet, along with the SBA
Contracting Law Department and attorneys for advocacy organizations consulted on the matter
believe that a combination of factors, including the fact that the procurement vehicle being used is
a reverse auction whose rules have been reported to be in conflict with the FAR and the fact that
similar GAO rulings support the contention that FitNet is an “interested party” to raise the issues set
forth in the protest.
6
Reverse Auction Rules Scheduled for an Overhaul by the r3 Initiative.- http://bit.ly/vsb6EG
As a member of the FedBid Community, FitNet is eligible to participate on all of the FitNet Buys,
including those which are restricted to GSA Schedules. The qualifications, for non‐GSA Schedule
suppliers are restricted to teaming with GSA Schedule suppliers something FitNet has done in the
past. Below is an excerpt from a Fedbid notice, which describes the eligibility of three separate
Buys, two of which were restricted to GSA Schedule Buys. Both of the GSA Schedule Buys were set‐
aside for small businesses, an option the Army should have never ignored.
Buy End Set- Contract Seller
Buy Description Buyer
No. Date/Time Aside Type Community
FedBid Seller
Diversity Outreach Washington
11/16/2011 Small GSA Community (All
308794 Organizational Headquarter
12:30 Business Schedules qualified Sellers
Engagement Service
can bid)
FedBid Seller
Washington
11/16/2011 Small GSA Community (All
308797 Diversity Engagement Headquarter
13:30 Business Schedules qualified Sellers
Service
can bid)
FedBid Seller
DIVERSITY OUTREACH Washington
11/16/2011 Small Open Community (All
308772 ORGANIZATIONAL Headquarter
16:00 Business Market qualified Sellers
ENGAGEMENT Service
can bid)
The Fedbid rules, articulated on their instructions, do allow non‐GSA Schedule suppliers to team up
with Schedule Holders, many of whom are not Fedbid Members.
The 2007 GAO B‐309911 decision about FitNet was the result of several things. One of them was
GAO unfamiliarity with the rules of reverse auction which in spite of violating the FAR, they do
allow, nevertheless, for non‐GSA Schedule suppliers who belong to the Fedbid community to team
with GSA Schedule suppliers and bid on GSA Schedule Buys. The other fact was FitNet’s inability, on
a pro se challenge, to articulate its ability to bid on GSA Schedule Buys.
FitNet has claimed that it is an interested party because it could have submitted an offer on the Buy
in question and if it could have done so, it could have also challenged a decision not to set‐aside the
Buy as required.
SBA, through a Legal Opinion7 has stated that “according to statute and regulations,
small business set asides are mandatory for acquisitions valued from $3,000 to $100,000
(upgraded to $150,000 in 2011) and take priority over GSA Schedule contracts. This
interpretation is consistent with the declared and unambiguous intent of Congress as it
relates to Federal procurement and small businesses.” In other words, the Army did not
have any discretion on the matter.
The Army has falsely implied in its ‘Factual Summary’ that “Prior to Posting the Solicitation on
Fedbid, the Contracting Officer, through market research and with concurrence from Small Business
Administration, determined that the solicitation should not be set‐aside for Small Business.”
SBA never concurred with the Contracting Officer wishes, to allegedly satisfy the end‐user’s
preferred supplier – a large business, ‐‐ but objected to the CO’s desire not to set‐aside the Buy for
small businesses. According to a communication from Tanika Pierce, “As the PCR for Fort Carson,
I recommended that this procurement be set‐aside for small business and I did not
coordinate on form DD2579.” (see Exhibit B)
In LBM. Inc., B‐290682, Sept. 18, 2002, 2002 CPD ¶ 157, a small business protester
argued that the procuring agency was required to set aside certain motor pool services
for small businesses. The GAO stated that the protester, LBM, Inc. (LBM) was not
challenging the proposed award of a task order under an existing indefinite
delivery/indefinite quantity contract (IDIQ). Rather, LBM was challenging the agency's
acquisition planning in transferring the motor pool services to the IDIQ contract without
first considering the Small Business Act and implementing regulations. Further, in LBM,
Inc., the GAO explained that under the broad definition of "acquisition" as set forth in
the Federal Acquisition Regulations (FAR), the procuring agency's acquisition was
subject to the Small Business Act and particularly FAR § 19.502‐2(b) concerning small
business set asides. In addition, the GAO noted:
Had the agency complied with the requirements of FAR § 19.502‐2(b), it might
have concluded that the LOGJAMSS contracts were not the appropriate vehicle
for this acquisition. Whatever the outcome of the FAR § 19.502‐2(b) analysis,
though, the agency's intent to use a task order under LOGJAMSS as the contract
vehicle did not eliminate the legal requirement that the agency undertake that
analysis.
LBM, Inc., supra at 7‐8.
Although the issue was not specifically addressed in LBM, Inc., the GAO entertained the
protest and LBM was therefore deemed an "interested party," despite the fact LBM was
not an awardee under the lDIQ contract under which the motor pool services had been
transferred.
FitNet's protest is similar to LBM's. In this protest, FitNet has challenged the agency's
acquisition planning in utilizing the GSA Schedule Program without first considering the
Small Business Act and implementing regulations. FitNet has argued that the Army
should have first looked to small businesses, either through the GSA Schedule or outside
of it and issued a solicitation for a small business set aside. FitNet's argument, similar to
the ruling in LBM, Inc., is that if the Army had complied with the Small Business Act it
might have concluded that the GSA Schedule Program was not the appropriate vehicle
for this procurement. See LBM, Inc., supra. Thus, Fitnet, as a small business, is a
"prospective offeror" if this protest ground is sustained. FitNet, like LBM, is therefore an
"interested party."
7
The SBA Legal Opinion on the GSA Exemptions. - http://bit.ly/rkHKvg
We note that the Army subsequently filed a Request for Modification of
Recommendation of the GAO's decision in LBM, Inc. See Dept. of the Army ‐ Request for
Modification of Recommendation, B‐29068.2, 2003 CPD ¶ 23. Specifically, the Army
requested that the GAO permit it to implement FAR § 19 .502‐2(b) (the "rule of two") by
limiting competition to those small business that were holders of certain IDIQ contracts
(i.e. , the LOGJAMSS contracts). The GAO ruled that the "request” is not consistent with
the statutory and regulatory scheme applicable to small business set asides." Id. at 6.8
In addition, the GAO stated, in a footnote, that "if it were true that a small business set‐
aside could properly be limited to small businesses holding LOGJAMSS contracts, LBM,
which does not hold one of those contracts, would not be eligible for award and
therefore would not be an interested party, so that its protest should have been
dismissed on that basis." Id., fn. 4.
The statement in that footnote, however, does not consider that the issue in both
protests ‐ LBM, lnc, and FitNet ‐ is whether, during the agency's acquisition planning, it
must first consider the Small Business Act and implementing regulations. If the answer is
"yes," as FitNet and the SBA have argued before, then the next step is a determination
on what contract vehicle to use.9
Consequently, FitNet is an "interested party" to raise this issue because FitNet is a
"prospective offeror."
8
The SBA believes that the ruling and issues presented in Dept. of the Army, supra are distinguishable from the
procurement and issues raised in this protest. See SBA's September 4, 2007 Response to Agency Report in B·309911,
Protest of FltNet Purchasing Alliance
.
9
It is important that the procuring agency review the Small Business Act requirements first, and then decide the
competition method to use second (e.g., Fedbid, GSA Schedule, GWAC, small business set aside outside the GSA
Schedule Program, etc.). The Small Business Act states that for "[e]ach contract for the purchase of goods and services
that has an anticipated value greater than $2,500 but not greater than $150,000 shall be reserved exclusively for small
business concerns unless the contracting officer is unable to obtain offers from two or more small business concerns
that are competitive with market prices and are competitive with regard to the quality and delivery of the goods or
services being purchased." 15 U.S.C. § 6440(i) (emphasis added). If the agency decided to use the GSA Schedule
first, and there were not two or more small business concerns that met the "rule of two" requirements on the
schedule, but there were not two or more small businesses off the schedule, then this provision of the Small
Business Act would be circumvented,
This FitNet protest is also similar to MCI Telecommunication Corp., 70 Compo Gen. 20
(Oct. 10, 1990). In that protest, the GAO ruled that MCI Telecommunications Corp. (MCI)
was an "interested party" to protest the contemplated issuance of delivery orders under
Sprints' FTS2000 contract. The GAO stated that "[i]f, as alleged by MCI, providing long‐
distance telephone service for federal inmates is outside the scope of the FTS2000
contracts, then MCI never had the opportunity to compete for award of a contract to
provide this service." MCI Telecommunication Corp., 70 Comp, Gen. 20, 23. The same is
true here. If, as alleged by FitNet, the Army failed to consider the Small Business Act
when acquiring these supplies, then FitNet never had the opportunity to compete for
award of a contract to provide these supplies (because we do not know what vehicle the
Army would have or could have used). FitNet now seeks that opportunity through
means of a protest to the GAO.
If the GAO decides that the procuring agency must select the type of competition first
(GSA Schedule etc.) and then must apply the provisions of the Small Business Act, the
SBA believes that prior GAO rulings support the contention that FitNet is an "interested
party." In Information Ventures, Inc., B‐291952, 2003 CPD ¶ 101, May 14, 2003, the
protester, Information Ventures, Inc. (IVI), protested the Federal Emergency
Management Agency's (FEMA's) determination to purchase web site usability and
design reviewer services from the FSS rather than under a small business set aside, IVI
was not a FSS vendor at the time of the protest. Information Ventures, Inc., B‐291952,
2003 CPD ¶ 101 at 1. Nevertheless, GAO entertained the protest, never specifically
addressed the issue of "interested party," and ruled that (for procurements valued
above $100,000) FEMA was not required to set aside the requirement for small
businesses in lieu of purchasing from FSS vendors. FitNet, like lVI, is not a FSS vendor,
and is arguing, like lVI, that the procuring agency should have set aside the requirement
for small businesses. The GAO treated IVI as an "interested party" when ruling that
FEMA could use the FSS, and should treat FitNet as an "interested party" if it rules that
the Army should have set aside the requirement for small businesses, but could have
used anyone of a number of competitive procedures in doing so, including the GSA
Schedule Program. Otherwise, GAO's application of "interested party" status would be
incongruous.
The Army’s alleges that FitNet’s reference to The Fairness in Procurement Alliance (FPA)
does not make FPA an “interested party.” For the record, FitNet founded and manages
FPA as it can be noted on the FitNet’s website10.
Conclusion
FitNet trust that the above explanations, formulated in a very short time frame of three‐days, will
be sufficient to convince GAO that FitNet is, indeed, an “interested party” in terms of bidding on
GSA Schedule Buys on the FedBid Community. The Petition to the Secretary of the Army, which has
become a Congressional as well, articulates many of the issues and problems with reverse auctions
which GAO should address in conjunction with the GAO protest. FitNet appreciates the
opportunity to present its case to GAO and trust that GAO will decide to hear the GAO protest and
rule on its merit. Please do request the Army to incorporate, on its report, the alleged Research
Report and the documents claiming that SBA coordinated small business participation. All
materials including the ATP prices the Army referenced on the Buy should also be included.
Thank you for the opportunity to make a difference,
Raul Espinosa
President
10
FitNet’s FPA Division. - http://fitnet.net/Home.aspx
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. FitNet Purchasing Alliance.
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. info@fitnet.net Email
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. OBJECTIONS TO ARMY AGENCY REPORT
To: Pedro Briones email: brionesp@gao.gov
Company General Accounting Office Army Attorney: james.nelson3@us.army.mil
From: Raul Espinosa Date: 12/09/2011
12/09Re: Protest B-406075
The FitNet Purchasing Alliance (FitNet) although grateful to GAO for denying the Army’s motion to dismiss’
. . . . . . . .
on the grounds that ‘FitNet is not an interest party to bring up this protest,’ is nevertheless, disappointed
. .
because GAO chose only to ask GSA and not SBA for its views on this protest. Both the SBA and the Office
of Advocacy, which represent the interests of small businesses, have views quite opposite to GSA on the
subject of the statutes demonstrated on their historic February 2007 Opinion to GAO1. Both the SBA and
the U.S. Office of Advocacy views are critical to the subject of fair ‘access to contracts’ for small
businesses. With that said, let me begin, by stating my expectation of the outcome of this protest:
Through its ruling, I expect GAO to advice the Army to cancel and re-issue the
solicitation under protest as a ‘set-aside’ for small business and order the Army to
coordinate ALL of its future contracts between $3,000 and $150,000 - as required by
the Statutes and regulation procedures - through the SBA PCR community whose role
in small business coordination are being ignored. The Fedbid reverse auction own
rules has always allowed teaming arrangements on its ‘GSA Schedule Only Buys’
between non-GSA FSS holders that are members of the Fedbid Community and GSA
Schedule holders, many of whom are not. Additionally, the FAR Interim ruling now
allow set-asides on the GSA Federal Supply Schedule as well. Regardless of the above,
the Fedbid Reverse Auction Rules, do require an overhaul to make sure they are all
compliant with all the statutes, the FAR and the SBA regulations which they do not
appear to be.
1
The February 2007 SBA Opinion solicited by GAO.- http://bit.ly/rkHKvg
In its instructions, GAO told the Army to focus its Agency Report and its Case on the following
points:
1) The protest grounds and arguments2;
a) FitNet protested the terms of the solicitation to improperly use non-mandatory
Federal Supply Schedule procedures to procure commodities rather than using
a set-aside where the applicable statute – the Small Business Act – and
implementing regulations require the Army to use such set-aside where the
statutory prerequisitives are met.
b) FitNet protested the reverse auction own rules which allow the Army to
circumvent the mandated set-aside requirements of the Small Business Act and
the statutory prerequisitives and procedures that protect small businesses.
c) The GSA Federal Supply Schedule (FSS) circumvents the mandated
requirements of The Small Business Act statutes as they relate to small
businesses as both the GAO Delex3 and the GAO Aldevra4 decisions have
determined.
d) FitNet is an interested party on this protest by the fact that it is a member of
the Fedbid community; eligible to team up with GAO Schedule Suppliers
through the Fedbid own rules and with the ‘ability’ to participate in the Fedbid
‘GSA Schedule Bids Only’ solicitation or ‘Buys’
2) The protester's rebuttal (issues) Against the Army Request for
Dismissal5;
a) FitNet is an interested party and eligible to bid on the Buy in questions
because it is a member of the Fedbid Community and many GSA Schedule
holders with the commodity being sought - are neither Members of the Fedbid
Community or do not know of the Fedbid Buy which was not advertised on
Fedbizopps and allowed to be on the Fedbid community for less than five (5
days) for a response.
b) FitNet is an interested party because it has the ‘ability’ to enter into a
compliant teaming arrangement - with GSA Schedule holders - that meet not
only the FAR 9.603 guidance, but the DoD guidance6 as well as the SBA
guidance as well.7
2
Text of GAO Protest B-406075 - http://bit.ly/tNWXFp
3
The GAO Delex decision. - http://www.gao.gov/decisions/bidpro/400403.pdf
4
The GAO Aldevra Case. - http://www.gao.gov/decisions/bidpro/405271.pdf
5
Text of Espinosa Rebuttal to the Army’s Motion to Dismiss. – Refer to the Attachments
6
DoD Guidance on Teaming Arrangements. - http://1.usa.gov/tospc1
7
SBA Guidance on Teaming Arrangements. - http://1.usa.gov/vFaf3T
c) FitNet is an interested party because it has already participated in numerous
Fedbid ‘GSA Schedule Bids Only’.
d) FitNet is an interested party because it has even won awards on the Fedbid
Buy type under dispute.
e) FitNet is an interested party because it is a member of the Fedbid community
whose rules have prejudiced FitNet’s own ability to contract with the
government as confirmed by the SBA Office of Advocacy r3 Initiative and as
noted on a document outlining such abuses. and
3) Whether it is permissible in a procurement conducted under FSS
procedures to allow FSS vendors to team with non-FSS firms. In
this regard, the agency should address the language in the RFQ that
the "seller must be able to document its ability to act as an agent of
a partners schedule."
a) Is an offer on a Fedbid ‘Buy’ which complies with the Fedbid rules and the
FAR (Part 9.603) including the SBA guidance, subject to the rules of the GSA
CTA , which - by its own nature - was designed solely to promote business
among GSA FSS sellers? If the answer is YES, then the Fedbid rule(s)
which allows such a teaming arrangement is unlawful and requires an
overhaul as the SBA Office of Advocacy r3 Initiative has proposed.
b) Is the Fedbid reverse auction rule that permits a simple ‘teaming
arrangement’ between a non-GSA Schedule holder who is a member of the
Fedbid Community and a GSA Schedule holder, many of whom are not
members of the Fedbid community or do not know about the Buy, not
subject to the GSA CTA, then the GSA CTA is NOT compliant with FAR 9.603
and not in alignment with the SBA rules that promote ‘teaming
arrangements’ to allow small businesses to get a larger share of the federal
contracts.
c) If GSA controls the FSS Program, it also controls their ‘small business
coordination’ which their program has avoided doing, as confirmed by the
SBA PCR community. This is noted in the correspondence provided on the
Exhibits. The same thing is taking place with Buys on Reverse Auctions.
There are no references on the FAR as far as ‘reverse auctions’ and
Agencies are purposely avoiding small business coordination on Fedbid
Buys. An SBA Opinion - which GAO chose to not to seek - will have shown
that the entire GSA FSS Program is inconsistent with applicable laws and
regulations d at giving small businesses a fair share of government
contracts.
d) Refer to the ‘Backgrounder’ on the GSA Schedule available on the Exhibits
for details on the issues claiming that the Program is abusive towards small
businesses.
The Army Main Argument on its Agency Report
Any time a business whose rights – granted by the statutes of the Small
Business Act and by FAR Part 19 - are violated, it is competitively prejudiced.
The reverse auction own rules - as confirmed by the SBA Office of Advocacy r3
Initiative8 and referenced on the document demanding transparency9 -
circumvent FAR 19 and the rules that protect the rights of small businesses to
access federal contracts.
Through both the GAO Delex decision10 and the GAO Aldevra decision11, GAO has
ruled on the inconsistency of the FAR exemptions with applicable law. Such
inconsistency has resulted on the unfair diversion of $44 Billion, annually, in GSA
contracts away from the small business reservation and this unlawful pattern of
abuse has been allowed to go on for over a decade. If such pattern of abuse is
not ‘prejudice,’ please give me a ticket to leave the country, because America
does not offers due process nor justice.
8
The SBA Office of Advocacy r3 Initiative referencing Reverse Auctions. – Refer to attachments
9
Petition to the Army to bring transparency. – Refer to the Attachments
10
The GAO Delex decision. - http://www.gao.gov/decisions/bidpro/400403.pdf
11
The GAO Aldevra decision. - http://www.gao.gov/decisions/bidpro/405271.pdf
The Agency Secondary Arguments
1. Decision not to set-aside solicitation for small businesses
The SBA PCR assigned to Fort Carson has gone on record objecting to the KO not
to set-aside their eligible procurements, as called for by FAR Part 19, for small
business and purposely avoid relying on the SBA PCR for small business
coordination. Currently, a KO choice to rely on either the FAR Part 8 venue
and/or the Fedbid reverse auction procurement vehicle has allowed the Army to
purposely avoid SBA PCR coordination and/or a SBA PCR challenge for those
decisions.
The amended KO Statement of Facts dated Nov. 2nd (Tab 2) claimed he received
its ‘concurrency’ not to set-aside the solicitation from his own small business
coordinator. What the KO failed to admit was that the Army ‘market research’
was prejudiced in terms of its accuracy and obvious objective to support the
end-user desire to offer preferential treatment to a large business. (non-
compliant with FAR Part 10)
The Army ‘market research’ as demonstrated by the documents we have
supplied, demonstrate that there are not seven (7) as the Army claims, but 168
small businesses on the CCR database as well as fifteen (15) small businesses on
the GSA FSS list capable of fulfilling the needs of the Buy in question.
Additionally, the market research avoids acknowledging that the Fedbid rules
have always allowed ‘set-asides’ on their ‘GSA Schedule only Buys’ and the fact
that there is a FAR interim ruling that allows for ‘set-asides’ on the GSA FSS at
the discretion of the Agencies.
On Tab 2, the KO contradicted himself. On the one hand, he said, “I did not
coordinate with SBA,” yet he also said, “Even though the coordination
requirements aren’t required for an FSS purchase, I did comply with them
(meaning the regulations.)”.
When it comes to the Fedbid reverse auction Buys, including the Buy in question,
both the SBA PCR community, as well as the OSDBU community have publicly
gone on record complaining that Federal Agencies, especially DoD Agencies,
have been circumvent the requirements of FAR 19 and the SBA regulations by
avoiding coordinating ‘Buys’ through the SBA PCR community; by avoiding
posting the Buys on Fedbizopps; by allowing very few days (less than 5) for
responding to Buys and by restricting Buys between $3,000 and $150,000 a
unrestricted and/or ‘sole brands’ without higher-up approvals and without
publication of the required justifications. The Fedbid rules allow those and a
whole array of other violations as referred on the document submitted with the
Objection to the Motion to Dismiss.12
On the Amended ‘Statement of Facts’ (Tab 2,) the KO avoid accepting
responsibility for what has become an endemic abusive pattern against the
rights of small businesses by saying, “the lack of SBA participation and
concurrence was consistent with applicable regulations,”
The Army should have known that one of the few ‘good things’ that the Fedbid
rules does is to allow ‘set-asides’ on their GSA Schedule Buys, yet the Army did
not set aside the Buy as a set-aside as they are required by the statutes and by
the regulations as the SBA has expressed on its 2007 legal opinion.13
The FAR does now allow – through an interim rule – ‘set-asides’ on the GSA FSS,
although such rule is “at the discretion of the Agency.” 14 FPA and its coalition
totally oppose such ruling because it is not only unfair, but unethical and
discriminatory. It’s like allowing the government to offer justice - one of the
inalienable rights of its citizens - but only “at their discretion.”
12
Document Submitted with the Protestor Objection. – Refer to Attachments
13
The SBA 2007 Legal Opinion. - .- http://bit.ly/rkHKvg
14
The FAR interim Rule which allows set-aside on the FSS. - http://1.usa.gov/s17BOx
2. FitNet has failed to document that it has a ‘teaming
arrangement’ in place
The Fedbid reverse auction rule states solely that the seller must be able to
document its ”ability” to act as an agent of a partner’s Schedule. The Merriam-
Webster’s definition of ‘ability’15 is limited to having ‘competence,’ ‘capability,’
‘skill’ or ‘acquired proficiency’ to perform a task. FitNet demonstrated that it did
have such an ability by supplying numerous instances of having done so.
3. GAO has settled the case that FAR Part 19 does not
apply to FSS under FAR Part 8
The Army allegation is wrong. Both the GAO Delex case16 as well as the Aldevra
case 17 decisions demonstrated that GAO has already ruled that the set-aside
statutes of the Small Business Act and similar legislation requires that ALL
solicitations are subject to the set aside provisions of the Act and similar
legislations.
The SBA Legal Opinion of February 2007, sought by GAO18, had confirmed that
“according to statute and regulations, small business set asides are mandatory
for acquisitions valued from $3,000 to $150,000 (upgraded in 2011) and take
priority over GSA Schedule contracts. This interpretation is consistent with the
declared and unambiguous intent of Congress as it relates to Federal
procurement and small businesses.” In other words, Agencies do not have any
discretion on the matter.
15
Merriam-Webster definition of ‘ability.’ - http://www.merriam-webster.com/dictionary/ability
16
The GAO Delex Case.- http://www.gao.gov/decisions/bidpro/400403.pdf
17
The GAO Aldevra Case. - http://www.gao.gov/decisions/bidpro/405271.pdf
18
The SBA Legal Opinion of February 2007. - http://bit.ly/rkHKvg
4. FitNet cannot enter into a GSA Contractor Teaming
Arrangement (CTA)
FitNet does not dispute the Agency allegation that FitNet does not have a CTA.
Frankly, FitNet and the entire small business community consider the GSA CTA
discriminatory towards them because the CTA violates the guidance of FAR 9.603
and the SBA approved provisions on teaming arrangements.
The Fedbid solicitation or ‘Buy,’ does not require a CTA, which is a “teaming
agreement between Schedule holders.”
The Fedbid reverse auction does, however, allow basic teaming agreements
between “non-schedule sellers and GSA Schedule suppliers” as long as the non-
schedule holder is a member of the Fedbid community. For the record, many of
the GSA Schedule holders are not members of the Fedbid community and/or
those who might be, might not be aware of many Fedbid Buys that are posted,
purposely, without any publicity on fedbizopps and/or with very short responses
(i.e., less than five days)
The Army does not dispute that Fedbid does allow teaming arrangements and
the fact that FitNet has participated on such teaming arrangements before.
5. FitNet must have an “Agent Authorization Letter” to
become an agent of a FSS holder.
The Agency assumption is wrong. First of all, the Fedbid reverse auction does not
require an “Agent Authorization Letter” for the Buy in question. Fedbid does
allow, however, for a ‘teaming arrangement’ and the FAR 9.603 policy states
that “the government will not encourage the dissolution of contract teaming
arrangements “ that are entered by contractors.
The Agency assumption is wrong. The Fedbid requirement is restricted to
documenting the non-schedule supplier’s ‘ability’ which, as stated previously, is
limited to having ‘competence,’ ‘capability,’ ‘skill’ or ‘acquired proficiency’ to
enter into a teaming arrangement to perform a task.
The Agency assumption is wrong. FitNet has demonstrated that it did have such
‘ability’ by supplying numerous instances of having entered into such
agreements, even though such proof is in the form of email, letters and/or
acknowledgements.
The GSA CTA is not compliant with FAR 9.603, the DoD and SBA guidance of
‘teaming arrangements.’
6. FitNet’s documentation regarding its ability to
participate on the ‘Buy’ under protest does not refer to
Schedule 7830, consequently, FitNet has not
established that it is an interested party.
Again, the Fedbid requirement refers solely to the “ability” of the non-GSA
schedule holder to team with a Schedule supplier, which has the commodity
being sought on their own schedule. The Army’s own ‘market research,’ (Tab 4)
as demonstrated on Exhibit XX, is, frankly, prejudiced against small businesses
and does not comply with the requirements of FAR Part 10. The documentation
required by Fedbid ( on their Buy ) to demonstrate the seller’s ‘ability’ to team
up is limited to listing the GSA Schedule Contract number of the proposed GSA
Schedule partner, even if the GSA Schedule holder is not a member of the Fedbid
community, which FitNet has done numerous times on its ‘teaming
arrangements.’
The Army market research documentation, on the Agency Report Tab 4 ) only
demonstrates how the Army’s end-users or program staff circumvented the
market Research requirements of FAR Part 1019 by selecting the Fedbid reverse
auction procurement vehicle whose unlawful rules20, circumvent FAR 19 and the
regulations that protect small businesses.
The Fedbid reverse auctions allow preferred brands or suppliers to be sought
through their Buys in numerous fashions as noted on the original protest, and
through the Objection to the Army Motion to Dismiss (See Exhibit XX.)
19
FAR Part 10 . - https://acquisition.gov/far/html/Subpart%2010_0.html
20
SBA Office of Advocacy 2008 r3 Initiative reference on reverse auctions. – Refer to attachments
OFPP, through four (4) separate directives addressing the subject of ‘unfair
justifications’21 has attempted to prevent the contracting community to solicit
preferred brands which the Fedbid rules does allow. Among the ways, listed on
the document submitted on the Objections to the Army’s Motion to dismiss are
the following: a) unrestricted acquisitions on the ‘GSA Schedule Only’ Buys ; b)
‘exact match’ with no pre-approved and published justification; d) no publicity
on fedbizopps; very short (less than 5 days) responses.
Conclusion
FitNet trust that the above explanations, will be sufficient to convince GAO that FitNet is, not only an “interested party” in
terms of bidding on GSA Schedule Buys on the FedBid Community, but eligible to request for GAO to rule in a fashion similar
to our expectations:
Advice the Army to cancel and re-issue the solicitation under protest as a ‘set-aside’ for small
business and order the Army to coordinate ALL of its future contracts between $3,000 and
$150,000 - as required by the Statutes and regulation procedures - through the SBA PCR
community whose role in small business coordination are being ignored. The Fedbid reverse
auction own rules has always allowed teaming arrangements on its ‘GSA Schedule Only Buys’
between non-GSA FSS holders that are members of the Fedbid Community and GSA Schedule
holders, many of whom are not. Additionally, the FAR Interim ruling now allow set-asides on
the GSA Federal Supply Schedule as well. Regardless of the above, the Fedbid Reverse Auction
Rules, do require an overhaul to make sure they are all compliant with all the statutes, the FAR
and the SBA regulations which they do not appear to be.
FitNet appreciates the opportunity to present its case to GAO and trust that GAO will still secure the SBA and the Office of
Advocacy views on the subjects of the protest. Thank you for the opportunity to make a difference,
Raul Espinosa
President
21
Procurement Advisory summarizing the subject of Unfair Justifications. - http://bit.ly/Unfair_Justifications
.
. FitNet Purchasing Alliance.
.
. info@fitnet.net Email
.
.
.
.
. OBJECTIONS TO GSA OPINION
To: Pedro Briones email: brionesp@gao.gov
Company General Accounting Office Army Attorney: james.nelson3@us.army.mil
From: Raul Espinosa Date: 01/14/2011
Re: Protest B-406075
. . . . . . . .
I wish to go on record acknowledging GAO , first of all, for finally agreeing to accept voluntary opinions from
.
valuable parties which support the FitNet position on this highly significant protest which highlights the
.
endemic abusive procurement practices of Federal Agencies, specifically GSA and the Army in using unfair
justifications on simplified acquisitions on the GSA Schedules (FSS), including reverse auctions a) to offer
preferential treatment to large businesses;1 b) to circumvent the statutes and the regulations that protect the
rights of small businesses as the SBA Office of Advocacy has confirmed2 and c) to continue relying on the
Exemptions to divert simplified acquisitions away from small businesses.3
My documentation on this protest, along with the voluntary opinions submitted will help convince GAO of the
need to strongly support its latest protest decisions involving simplified acquisitions on the FSS4 – which
government policy officials had the audacity to neither acknowledge nor obey – involving the FSS and the
rules of reverse auctions.5 Small businesses believe that the GAO decision on the FitNet case will help bring
transparency to the government‘s abuse of the ‘reverse auction rules’ and eventually help level the playing
field in government contracting.
‐ MORE ‐
Federal Agencies, especially the Army have been using the GSA Contract Teaming Agreement (CTA) to
circumvent the statutes and the regulations that protect small businesses to please requestors or end users on
solicitations or Buys and that practice must come to an end once and for all.
1
Summary of the four OFPP directives issued to prevent unfair justifications.- http://bit.ly/Unfair_Justifications
2
SBA Office of Advocacy r3 Initiative position on the Exemptions and the rules of reverse auctions. - http://1.usa.gov/umx5Jc
3
OP-ED on the Exemptions. - http://bit.ly/vROY11
4
Delex, Aldevra and Kimdomware GAO Decisions
Through its ruling, I expect GAO to recommend the Army cancel and re‐issue the solicitation under protest as a ‘set‐
aside’ for small business and order the Army to perform adequate and compliant Market Research before
coordinating this and ALL of its future simplified acquisitions (between $3,000 and $150,000) ‐ as required by the
Statutes and regulation procedures ‐ through the SBA PCR community whose role in small business coordination are
being ignored. I also expect for GAO to affirm that the Fedbid simple teaming arrangements on their ‘GSA Schedule
Only Buys’ between non‐GSA FSS holders that are members of the Fedbid Community and GSA Schedule holders,
(many of whom are not) are compliant and valid. Additionally, I also expect for GAO to rule that the GSA CTA
language is inconsistent with applicable laws and regulations and that their requirements are not applicable in this
protest. And, finally, I expect for GAO to reference that the Fedbid Reverse Auction Rules, do require an overhaul to
make sure a) they are all compliant with all the statutes, the FAR and the SBA regulations and b) they are fair to both
parties and are not used by Federal Agencies, any longer, to gain unfair advantage over the Sellers. Finally, I expect
for GAO to recommend that the Army reimburse me for the costs of filing and pursuing the protest.
FitNet is an Interested Party
First of all, FitNet has met the interested party definitions under the GAO rules, and its standing is very clear.
The most recent GAO decision involving the FSS on the Kindomware (B‐405727) case6 states that “the
protester is challenging the terms of the solicitation, and the remedy sought is the opportunity to compete
under a revised solicitation, the protester is an interested party, even if it did not submit a quotation or offer.
See Courtney Contracting Corp., B‐242945, 1991, 91‐1 CPD ¶ 593 at 4‐5.
Furthermore, FitNet has been prejudiced by the Army’s decision not to set‐aside a ‘simplified acquisition’ on
the FSS which relies on the ‘government reverse auction’ (i.e., Fedbid) as a procurement vehicle. As noted on
the GAO decision on the Aldevra (B‐405727) case7 “the (Agency) decision to procure items from the FSS
without first determining whether the procurement should be set‐aside for (small businesses) violates the
(small business) regulations.”
‐ MORE ‐
In the Aldevra case , GAO ruled by saying “we conclude that the exception in the FAR that permits agencies to
award task and delivery orders under the FSS without regard to government‐wide small business
programs…does not govern.”
5
Petition to the Army to investigate their use of reverse auctions. - http://bit.ly/vwW6Zp
6
GAO Kindomware decision. - http://www.gao.gov/products/B-405727
I have also attached – even though it is not required to prove that I have standing ‐ documentation which
demonstrates that FitNet does have and has had arrangements, since the company was established in 1995,
with fitness equipment manufacturers many of whom have ‐ directly or indirectly through third parties ‐ GSA
Schedule Contracts on Schedule 7830.8
The Fedbid Simple Teaming Arrangement is Compliant
When Fedbid publishes a Buy which an Agency has purposely restricted for ‘GSA Schedule Bids Only,’ Fedbid
has always allowed non‐GSA Schedule suppliers which are members of its Fedbid community to team up with
GSA Schedule suppliers, many of which are not members of the Fedbid community – without the complexity,
overly restrictive and discriminatory policy of the GSA CTA – to bid on those Buys.
The Umbrella Initiative Think Tank research on small businesses contracting with the Federal Government
submitted to the Senate Committee on Small Business and Entrepreneurship has demonstrated that the GSA
Schedule holders represent a very small percentage of small businesses registered to do business with the
government, yet the federal procurement data system (FPDS) has demonstrated that the government has
been awarding more than three out of every four simplified acquisitions to large businesses when the Small
Business Act exclusively reserves those purchases for small businesses.
Small Business Participation in Government Contracting at the Federal Level as of March 2011
Latest U.S. Business Registered to contract with Small Businesses on the GSA Federal Supply
Census the Federal Govt. Schedule Program
Total Small Businesses 27.2M 482,262 (1.7%) 14,345 (< 2%)
(of the total small businesses registered on CCR)
‐ MORE -
The Unfair and Damaging Results of falsely Justifying Market Research
7
GAO Aldevra decision. - http://www.gao.gov/products/B-405271,B-405524
8
See Attachment D
The Market Research submitted by the Army9 on this case demonstrates the unprofessional and incompetent
manner in which a procurement specialist attempted to justify a decision not to set aside the procurement and
unfairly offer preferential treatment to a large business. The market research performed was not only not
compliant with the regulations including FAR 10 as FitNet has proven,10 but was done to avoid the small
business coordination that SBA PCRs provide. In short, there were in excess of 150 small businesses on the
CCR database capable of fulfilling the requirements of the Buy in question.
The Inconsistency of the GSA CTA with applicable laws and regulations
The GSA arguments on their Opinion11 that their CTA prevents FitNet from teaming with a Schedule holder on
a simplified acquisition, which, ‐ to begin with ‐ is supposed to be exclusive for small business ‐ is unlawful,
unfair and discriminatory. Below is how the Fedbid describes their rules on those Buys:
GSA Schedule Bids Only : Sellers bidding on this opportunity MUST have the items requested on an existing
GSA Schedule. The Schedule must either be in the Seller's name or the Seller must be able to document its
ability to act as an agent of a partner's Schedule. Sellers may offer Open Market items only in accordance with
the approved Terms and Conditions of their respective GSA Schedule AND upon approval from the soliciting
Contracting Officer
FitNet has bid and won Fedbid Buys restricted for ‘GSA Schedule Bids Only’ in the past. The only issue that
conceivable might affect FitNet in those Buys is the fact that SOME agencies (not ALL) prefer to issue the
resulting contract to the Schedule holder even though the ‘non‐schedule holder’ was the one doing the
bidding. Frankly, FitNet has never been concerned about such eventuality because FitNet knows how to
protect its rights and make sure that its share of the profits from that Buy are received from its ‘teaming
partner.’ To demonstrate, I am offering the comment from one of the COs FitNet has dealt with on an award
it had received. The comment confirmed that, even on those cases, FitNet is able to receive such awards.
‐ MORE ‐
“It is our policy to issue a GSA delivery order to the company that holds the GSA contract unless the GSA
Schedule uses “Authorized GSA Schedule Partners”. Authorized GSA Schedule Partners must be listed in the
9
See Attachment A and its corresponding notes (A1)
10
See Attachment B and its corresponding notes (B1)
11
See Attachment C
GSA Schedule. Unless your company is listed as an Authorized GSA Schedule Partners, the delivery order in
question will only list your company as Care Of “C/O.”
A great deal of GSA Schedule suppliers, frankly, do not belong to the Fedbid community and some which do,
typically are unaware of many of the opportunities that are available through the Fedbid Buys. I don’t intend
to reveal to the Army or GSA the proprietary knowledge acquired through the years on how FitNet goes about
winning restricted buys unless GSA or the Army pays me six figures to tell them the knowledge I have acquired
to fulfill Fedbid Buys.
In summary, reverse auctions makes it possible for non GSA Schedule companies ‐ on the Fedbid community ‐
to actually team up on those Buys ‐ without divulging critical information to their GSA Schedule partner with
whom they do business with.
If those businesses were to divulge their knowledge, prematurely, the GSA Schedule holder might be inclined
(as it has happened in the past) to by‐pass the non‐schedule supplier which brought them the opportunity and
pursue those opportunity themselves. In short, a) FitNet complies with the rules of the reverse auctions and
b) FitNet complies with the teaming requirements of the Buys.
The GSA CTA, in the opinion of many attorneys FitNet has consulted with, violates not only the FAR 9.60.3‐
Policy, but the SBA and the DoD views on ‘teaming arrangements.’ Those policies permit small businesses to
pursue contracts for mutual benefit.
The GSA Contractor Teaming Arrangement (CTA):
a) The GSS “policy” on team members having schedules is nowhere in the regulations, and it would
require a notice plus a comment change to the GSA acquisition rules to give GSA’s position legal effect.
b) The CTA Is overly restrictive because it limits the teaming to GSA Schedule holders and focuses solely
on promoting them while disregarding other valid and compliant teaming agreement possibilities.
c) The CTA violates FAR 9.603 – Policy which outlines what are the requirements for a teaming
arrangement and acknowledges the fact that “the government will recognize the integrity and validity
of contractors teaming agreements, provided, the arrangements are identified and fully disclosed on an
offer, or for arrangements entered into after the submission of an offer before the arrangements
become effective.”
d) The CTA does not appear to recognize the Fedbid simple agreement on their ‘GSA Schedule Buys Only’
even though many non‐schedule holders on Fedbid, including FitNet, have been awarded contracts
through such teaming agreements. The Fedbid teaming agreement on ‘GSA Schedules Only’ Buys has
been in place since Fedbid began operating government reverse auction, under a GSA contract.
e) The CTA Is akin to what SBA would consider a ‘joint venture’ (JV) in another context whereas the
‘team’ is used to refer to a prime/sub team instead of a JV. Like a JV, the GSA CTA provides that both
parties have privity with the government and that both parties are responsible for the duties
addressed in the CTA document. This is not required for JVs in the SBA small business programs. An
8(a) firm may JV with a non‐8(a), a SDVO may JV with a non‐SDVO, a WOSB may JV with a non‐WOSB,
etc., etc., etc.
f) The CTA Violates the SBA’s teaming agreement main objective on their small business programs, which
is solely to ensure that large businesses do not exercise undue control or influence, especially in
‘simplified acquisitions. This policy helps small businesses maximize their teaming opportunities.
g) The CTA would invalidate the Fedbid compliant and simple agreement which discloses ‐ on the actual
offer ‐ the ‘companies on the teaming agreement’ (they do not both have to be schedule holders)
and the GSA Schedule contract to be referenced. FAR 9.603 specifically states “the government will not
normally require nor encourage the dissolution of contractor team arrangements.”
h) The CTA is non‐consistent with applicable laws and regulations when it is applied to ‘simplified
acquisitions,’ (contracts between $3,000 and $150,000), which are exclusive to small businesses. The
CTA language makes no reference to small businesses.
‐ MORE ‐
i) The CTA allows poorly trained contracting specialists ‐ as exemplified on the solicitation under protest ‐
a) to avoid the guidance of the regulations, including FAR 10 and submit incompetent and misleading
market research; b) to offer unlawful preferential treatment to large businesses; c) to avoid the
guidance of four (4) OFPP directives issued to prevent unfair justifications12 and c) to avoid the
involvement of the SBA PCRs in providing small business coordination to Agencies which use the GSA
Schedules and/or the government reverse auction vehicles, to purposely circumvent FAR 19.
Conclusion
FitNet trust that its documentation along with the above explanations, will be sufficient to convince GAO that FitNet is not
only an “interested party” in terms of bidding on GSA Schedule Buys on the FedBid Community, but that it is also eligible to
request for GAO to rule and make recommendations in a fashion similar to our expectations:
Recommend that the Army cancel and re‐issue the solicitation under protest as a ‘set‐aside’ for small business and
order the Army to coordinate and order the Army to perform adequate and compliant Market Research before
coordinating this and ALL of its future simplified acquisitions (between $3,000 and $150,000) ‐ as required by the
Statutes and regulation procedures ‐ through the SBA PCR community whose role in small business coordination are
being ignored. I also expect for GAO to affirm that the Fedbid simple teaming arrangements on their ‘GSA Schedule
Only Buys’ between non‐GSA FSS holders that are members of the Fedbid Community and GSA Schedule holders,
(many of whom are not) are compliant and valid. Additionally, I also expect for GAO to rule that the GSA CTA
language is inconsistent with applicable laws and regulations and that their requirements are not applicable in this
protest. And, finally, I expect for GAO to reference that the Fedbid Reverse Auction Rules, do require an overhaul to
make sure a) they are all compliant with all the statutes, the FAR and the SBA regulations and b) they are fair to both
parties and are not used by Federal Agencies, any longer, to gain unfair advantage over the Sellers. Finally, I expect
for GAO to recommend that the Army reimburse me for the costs of filing and pursuing the protest.
FitNet appreciates the opportunity to present its case to GAO and trust that GAO will rule and make recommendations that
will clear, once and for all, the fact that ‘simplified acquisitions are exclusive for small businesses. ‘
Thank you for the opportunity to make a difference,
Raul Espinosa
President
12
The Procurement Advisory summarizing four (4) OFPP Directives. - http://bit.ly/Unfair_Justifications