BTR Enterprises Loses Bid Protest Over VA Contract Eligibility

The case of BTR Enterprises of SC, LLC v. United States, decided by the United States Court of Federal Claims in 2018, examined key issues regarding Service-Disabled Veteran-Owned Small Business (SDVOSB) verification and eligibility. The case examined how misrepresentation and regulatory compliance influence federal procurement processes.

Background of the Case

BTR Enterprises of SC, LLC ("BTR") was a certified SDVOSB listed in the Department of Veterans Affairs (VA) database. The VA had awarded BTR multiple set-aside contracts. However, following allegations of misrepresentation regarding BTR’s eligibility, the VA’s Center for Verification and Evaluation (CVE) initiated a review of the company’s status.

The review was prompted by inconsistencies in BTR’s application and subsequent interviews with Brian Roberts, BTR’s owner and a service-disabled veteran. These included:

• Discrepancies between Mr. Roberts’ statements about his ability to manage the business and documentation submitted during the verification process.
• Evidence suggesting significant involvement of non-veterans in BTR’s management and operations.

As a result, CVE issued a Notice of Verified Status Cancellation, citing failure to meet SDVOSB eligibility requirements and submission of false information.

Legal Issues

The case presented several important legal questions:

1. Good Character Requirement: Whether Mr. Roberts’ guilty plea for conspiring to defraud the VA affected his compliance with the "good character" requirement.
2. Control and Management: Whether BTR’s operations were independently managed by Mr. Roberts as required by SDVOSB regulations.
3. Regulatory Compliance: Whether BTR’s failure to disclose the involvement of non-veterans in its operations constituted grounds for cancellation.

Court’s Analysis and Decision

The Court of Federal Claims reviewed the CVE’s decision to cancel BTR’s verified status. Key findings included:

• Good Character: The court found that Mr. Roberts’ guilty plea for defrauding the VA supported CVE’s determination that he did not meet the good character requirement.
• Control and Management: The court agreed with CVE’s assessment that Mr. Roberts did not independently control BTR’s day-to-day operations. Statements from Mr. Roberts indicated reliance on family members for managing the business.
• Regulatory Compliance: The court upheld CVE’s conclusion that BTR’s failure to disclose the extent of non-veteran involvement in its operations constituted a violation of SDVOSB regulations.

The court denied BTR’s motion for a preliminary injunction and upheld the government’s motion for judgment on the administrative record. The ruling reinforced the importance of accurate representations and compliance with eligibility criteria for federal set-aside contracts. Businesses seeking federal contracts must ensure accurate documentation and independent control by eligible veterans to maintain compliance.

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