The Government Accountability Office’s decision to ban Latvian Connection, a service-disabled veteran owned small business, from submitting any new bid protests for a year was both surprising and, at least to some, well deserved.
In case you aren’t familiar with the story, Latvian Connection has filed more than 500 bid protests over the last few years, claiming agencies are routinely and knowingly violating the Small Business Act and other small business provisions. In 2016 alone, the company filed 150 bid protests.
GAO decided on Aug. 18 that enough was enough, and said it would no longer entertain any new bid protests from Latvian Connection for one year.
“Of the 131 protests closed to date this fiscal year, one was denied on the merits. The remaining protests were dismissed, the most common reason being that Latvian Connection was not an interested party,” GAO said in its decision over yet another protest Defense Information Systems Agency task order that was worth $1.3 million and therefore below the legal protest threshold. “[B]ecause of these abusive litigation practices, and to protect the integrity of our bid protest forum and provide for the orderly and expedited resolution of protests, we are suspending Latvian Connection from protesting to our office for a period of one year as of the date of this decision. We are taking this action to conserve limited government resources that would otherwise be expended to respond to meritless protests filed by an entity with no direct economic interest in the outcome (as required by our statute and regulations). We are also taking this action because we have seen no evidence that Latvian Connection is prepared to engage constructively on the issues raised by the protests it files.”
Keven Barnes, the CEO of Latvian and an Air Force veteran, said in 18 separate emails to Federal News Radio that he is fighting the government’s intentional and illegal actions.
“My company has been discriminated against by the U.S. government agencies violating the Small Business Act for seven years. The Department of Defense, the State Department and FedBid have made me efficient and effective in dealing with those that discriminate against my company by not posting solicitations to FedBizOpps,” Barnes said. “I expect the rule of two to be complied with WORLDWIDE. That took me a lot of protests to get the visibility of B-408633 which is now called out in the Federal Register. The SBA has written seven legal opinions in favor of Latvian Connection LLC. I filed 500 GAO protests which does include the 59 they mention in B-413442, to get the two bid protest wins against the Department of State B-410947 and FedBid, and the other win against FedBid, B-410981, where the GAO stated FedBid doesn’t comply with the Small Business Act or other federal procurement rules and regulations.”
Barnes may have a true bone to pick with how the government interprets and implements many small business procurement regulations and laws. For the past 20 years, the government has rarely met statutory small business goals, and many experts say agencies have made bidding on contracts more difficult through initiatives such as bundling, strategic sourcing and poor decisions, like what we saw with the Kingdomware case that the Supreme Court decided in June.
But several procurement attorneys said Barnes is going about changing the system the wrong way.
“They are using the wrong system in order to have a policy voice,” said Bill Shook, an attorney and federal procurement expert. “Rather than doing a check and balance on procurement where you have to be interested party to protest, GAO said he isn’t a competitor. It sounds like his complaints are with procurement policy, and the proper place to address those complaints is with Congress, or the Federal Acquisitions Regulatory Council or the Office of Federal Procurement Policy, but not litigation.”
Shook said Latvian Connections is abusing the “check and balance” of the federal procurement system that’s really intended to level the playing field between competitors. He said since GAO believes Latvian is not an interested party in most of the protests it files, the company is abusing the system.
USASpending.gov shows Latvian has won two contracts with the Defense Department for a total of $113,000. DoD terminated the contract in 2013 two years after awarding it , and the other contract was for zero dollars.
Amy O’Sullivan, a partner with Crowell & Moring in Washington, said the sheer volume of protests drains resources from GAO, agencies and the vendors who act as intervenors.
“I can’t figure out what the protestor is trying to accomplish. It’s baffling considering the broad range of and types of procurement challenges that they’ve had no involvement in,” O’Sullivan said. “Considering they are really not a government contractor either, it begs the question, why are they filing so many protests? It’s the wrong forum to make policy change, and when you start attacking the decision makers you will not accomplish anything.”
But some small business advocates say Barnes is taking the only avenue truly available to change the system.
Lloyd Chapman, president of the American Small Business League, which also sued the Small Business Administration for how it calculates federal small business contracting goals, said history has shown that Congress and the FAR Council haven’t been very pro-small business over the last 25 years.
“Quite the contrary, there is a documentable track record of everything they do adopting legislation that has weakened the Small Business Act and reducing opportunities for all federal small business programs,” Chapman said. “I view Keven as a champion of small businesses. He’s fighting a good fight and we need more people like him out there. I don’t think it’s legal to ban him from filing protests. I don’t know of any legislation that would allow that. It’s unfortunate that individuals like Keven and myself that are committed to small businesses are so despised in Washington. We’re simply trying to expose the abuses in the system and we are trying to fight for positive change for small businesses and the middle class economy.”
Joe Jordan, a former OFPP administrator and now CEO of FedBid, said GAO’s unlikely decision to ban Latvian strengthens the integrity of the bid protest forum.
Jordan also disputes Barnes’ allegations that FedBid is anti-small business.
“When you look at the results small businesses get through FedBid, the data paints a pretty clear picture of their success. Every year, small businesses are winning 75-to-80 percent of the contracting dollars competed through FedBid,” he said. “This is more than three times the rate seen outside of our marketplace, and a testament to the power that reverse auctions have in opening up the market to new and diverse small businesses. In fiscal 2015, more than 5,400 small businesses won contracts on FedBid, totaling over $920 million.”
Shook and O’Sullivan said it’s unclear what Latvian Connection can do about the ban.
“I doubt the ban will deter the efforts, though it may redirect them,” O’Sullivan said. “Latvian may initiate filings on behalf of another entity or just continue to file with GAO. My sense is this doesn’t mean complete stop of these efforts. Going to the Court of Federal Claims is more challenging because of all the formalities of filling and the initial cost.”
The Court of Federal Claims charges $400 per filing whereas GAO charges no fees.
GAO, however, issued a proposed rule in April to start charging $350 per filing. Comments were due by May 16. Congress approved GAO’s ability to charge fees in the 2014 Consolidated Appropriations Act. A final rule is expected later this year or early next year.
Shook said Barnes may be able to file a suit against GAO in federal court, arguing that the ban is an “arbitrary and capricious action,” but that costs money, so it’s unclear if Latvian would be willing to go that route.
Either way, Shook said concerns over frivolous protests aren’t new and GAO could do more to stop them. But generally speaking, he said filing a protest isn’t cheap and most vendors do not like to sue their customers.
“I’ve had agencies complain we protest too much, and agencies don’t like that, and there are occasionally frivolous protests filed, but this is just an abuse and a misuse of the system,” Shook said. “It’s a process that should not and cannot be abused. It appears GAO’s decision was not only correct, but a bit tardy.”
Barnes said the facts of his allegations are clear and ringing the alarm bells about the illegality of the government’s actions will continue.
“It took the Supreme Court to tell the white collar criminals at the Department of Veteran’s Affairs what SHALL and MUST actually means legally, plain unambiguous text language,” he said. “The FAR and the [Small Business] Act had the word SHALL and still the U.S federal agency white collar criminal contracting officers ignored the word that is not just in the text involving Kingdomware’s case, but the Federal Acquisition Regulations, the Small Business Act, and SBA legal opinions state that AUTOMATICALLY these solicitations are set aside for small businesses. AUTOMATIC doesn’t even allow a thief, white collar criminal, politician, agency program manager, general officer, ambassador, or contracting officer the latitude to do any variation to counter the word AUTOMATIC. NOT EVEN an incompetent GAO attorney issuing decisions contrary to law could over-ride AUTOMATIC.”