Superior Optical Labs, Inc., a service-disabled veteran-owned small business (SDVOSB), filed suit against the United States in the Court of Federal Claims after the Department of Veterans Affairs (VA) terminated its contract. The contract involved the supply of eyeglasses to VA medical facilities. The VA ended the agreement after determining that Superior Optical Labs failed to meet SDVOSB eligibility requirements during performance.
The VA's determination followed a protest challenging Superior Optical Labs’ status. The protest alleged that the company did not meet ownership and control criteria required under SDVOSB regulations. The VA’s Center for Verification and Evaluation (CVE) reviewed the matter and concluded that Superior Optical Labs no longer qualified as an SDVOSB. As a result, the VA terminated the contract for convenience and barred the company from future SDVOSB set-aside awards unless it regained verification.
Superior Optical Labs argued that the termination was improper because it had been verified as an SDVOSB at the time of award and that the VA acted arbitrarily by reassessing eligibility during contract performance. The company sought damages and reinstatement of the contract.
Court’s analysis of jurisdiction and contract rights
The Court of Federal Claims first addressed its jurisdiction to hear challenges related to SDVOSB status determinations. It found that while eligibility decisions are generally subject to review by the SBA or VA’s CVE, the court could hear claims tied directly to alleged breaches of contract or wrongful terminations.
The court then considered whether the VA’s termination violated the contract terms. It noted that the solicitation incorporated SDVOSB requirements as ongoing obligations, meaning the contractor was required to maintain eligibility throughout performance. The court found no contractual or regulatory bar to the VA verifying status post-award and taking action if requirements were not met.
The record showed that the VA had received credible information suggesting noncompliance and followed its verification procedures before issuing the termination. The court concluded that the VA’s decision was supported by the evidence and consistent with the contract’s terms.
Final outcome
The Court of Federal Claims ruled in favor of the United States, holding that the VA acted within its rights to terminate Superior Optical Labs’ contract based on loss of SDVOSB eligibility during performance.
Help with SDVOSB eligibility and VA contract disputes
If your business is facing SDVOSB eligibility challenges, VA contract terminations, or set-aside program disputes, Whitcomb, Selinsky PC handles cases involving verification requirements, eligibility protests, and federal procurement compliance. Reach out to schedule a consultation and learn how our team can assist with your case.
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