By Steven Koprince & Amanda Wilwert
SDVOSBs seeking to form a Contractor Team Arrangement to pursue a SDVOSB set-aside under the GSA Schedule may be out of luck unless their proposed teammates are all also SDVOSBs. Although the socioeconomic status of the members of a GSA CTA is not dictated by the FAR, a recent GAO bid protest decision highlights GSA guidance suggesting that every member of the CTA must be a SDVOSB if the CTA will pursue a SDVOSB set-aside.
By way of background, a CTA is an arrangement between two or more GSA schedule contractors to work together to meet agency requirements in an order. The arrangement must be documented in a written agreement between team members detailing the responsibilities of each team member. The agency benefits from CTA by buying a total solution that combines the supplies and/or services from the team members’ separate GSA Schedule contracts instead of making several separate buys from various contractors. Contractors benefit from the CTA by being allowed to combine each other’s capabilities to compete for orders for which they may not independently qualify.
CTAs differ from prime contractor/subcontractor arrangements because in prime/sub arrangement, the relationship is controlled and defined by the prime contractor. In CTAs, the roles and responsibilities are defined by the team, as accepted by the government. In this regard, the CTA is more akin to a joint venture than a prime/subcontractor team. The GSA has also long insisted that all parties to a CTA have the appropriate Schedule contract.
Now that Schedule set-asides are becoming more common, some SDVOSBs are wondering whether they may form GSA CTAs with non-SDVOSBs to pursue SDVOSB Schedule set-asides. As of now, the answer appears to be “no.”
Recently, in Veterans Healthcare Supply Solutions, Inc., B-409888 (Sept. 5, 2013), the GAO indicated—but did not directly hold—that a SDVOSB’s proposed CTA with a non-SDVOSB might be improper because both parties were not SDVOSBs. In a footnote, the GAO cited published GSA guidance stating that when a CTA pursues a set-aside contract, “[a]ll members of the CTA must be small (or whatever sub-set the order is set-aside for) for the CTA to be eligible for that order.”
Assuming that the GSA’s guidance accurately reflects the current state of the law (and there is no reason to believe that it does not), it means that SDVOSBs cannot form GSA CTAs to pursue SDVOSB set-asides unless all members of the CTA are SDVOSBs. If this is the case, the GSA CTA requirements would not only exceed those for prime/subcontractor teams (for which only the prime must be a SDVOSB), but would also exceed the requirements for SDVOSB joint ventures. Under the SBA’s regulations, only the lead member of a SDVOSB joint venture must be an eligible SDVOSB.
Perhaps the GSA, SBA, or FAR Council will provide more definitive guidance in the future. For now, though, SDVOSBs contemplating forming CTAs should be aware of the GSA’s current guidance.