Material weakness means a deficiency or combination of deficiencies in the internal control over information in contractor business systems, such that there is a reasonable possibility that a material misstatement of such information will not be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the likelihood of an event occurring is— (1) Probable; or (2) More than remote but less than likely. . . .

In accordance with 15 U.S.C. 644(r), a contracting officer’s decision to set aside or not set aside an order for small business concerns is an exercise of discretion granted to agencies and not a basis for protest. However, this does not preclude the filing of a protest of such an order if such a protest would otherwise be authorized on a separate basis recognized in accordance with paragraph (a)(10)(i) of this section.

Appellant’s claim argued that the construction cost estimate for the statement of work had been negligently prepared and requested that the fixed fee rate specified in the contract be increased. . . . In contrast, the appeal raises two different arguments that merited an increase to the value of the contract: (1) the modified scope of work required increased design effort in preparing drawings, and (2) the modified scope of work required a greater number of drawings as compared to what appellant anticipated based on the original cost estimate. . . . On this record, we find that the arguments and relief sought in the claim are different than those in the appeal.

[W]e find no language that could be read to create a duty for MARAD to deliver any completed item of construction. Nothing states what specifically is to be built, where, or with what dimensions. Nothing identifies a deadline for delivery, or any binding timeline for any part of the project. Nothing identifies the cost for what MARAD is ostensibly delivering to Anchorage. Consistent with the 2003 Memorandum’s plain language, Cheryl Coppe, a former Anchorage official and one of the primary drafters of the 2003 Memorandum, . . .  testified that the 2003 Memorandum did not define any particular project structure to be built or any price, and that the decision of what was going to be built had not yet been made when the 2003 Memorandum was executed. . . .  The absence of any of these terms demonstrates that MARAD did not contractually promise to construct a port structure or to assure that one would be built through the 2003 Memorandum. 

In VSBC Appeal of Snowfensive LLC, the OHA overturned the denial of a firm's SDVOSB status because a provision in its Operating Agreement requiring the agreement of a "majority of members" must be read in light of the definition in the agreement that a majority of members meant members "holding more than 50% of the Sharing Ratios,” of which there was only one: the SDV.

In VSBC Appeal of Xebec, Inc., the OHA overturned the denial of a firm's VOSB status for alleged lack of control by the veteran because: (i) the veteran sat on the Board of Directors and was the majority shareholder in a situation where there were no supermajority voting requirements; (ii) according to the law of the state where the firm was registered, a simple majority was required for shareholder action, and the veteran, as the majority shareholder, clearly had the ability to control formal shareholder action; (iii) the applicable state law merely required a plurality vote to elect directors, and as the majority shareholder, the veteran had the ability to control the election of directors; and (iv) a provision in the Bylaws that informal action by the shareholders required the written consent of all shareholders was not a supermajority voting requirement but provided, as a convenience, an alternate mechanism for actions to be taken without a meeting, but did not enable the minority shareholder to block any action.

In VSBC Protest of Veteran Elevated Solutions LLC JV, the OHA denied a protest of  a firm's SDVOSB status because, inter alia,  its SDV provided persuasive evidence that his involvement with other firms did not interfere with his management of the firm to which he devoted his efforts full time during normal business hours every day of the workweek and on weekends as necessary.

In VSBC Protest of Blue Water Thinking, LLC, the OHA held that: (i) the fact that the SDVOSB member of a mentor-protégé JV had been temporarily listed as inactive by the controlling state agency (as a result of a clerical error) was not fatal to its status because the firm had been reinstated and that state's law provided that once reinstated, the reinstatement related back to, and took effect as of, the effective date of the dissolution and the firm thereby resumed carrying on its business as if the dissolution had never occurred; (ii) the assertion that the JV agreement failed to comply with the applicable requirements was unsupported and refuted by a point-by-point comparison of the JV's provisions to their counterparts in the controlling regulation. By the way, the sentence fragment in the first paragraph is not my mistake.

First, only five positions—out of 102—lacked duty and cost descriptions. . . .  [The Awardee] provided the costs for those five positions in its cost proposal, and the Army (in its cost-realism analysis) found that those positions matched with SCA/CBA positions. . . .  Third, the solicitation explicitly vested the Army with discretion in how to address technical uncertainties. AR 128 (stating that a proposal “may”—not must—be rejected for technical uncertainty); see also ITellect, LLC v. United States, No. 24-935 . . . (Fed. Cl. Oct. 21, 2024) (“While the use of the permissive ‘may’ does not confer plenary discretion to the contracting officer, in the absence of any prescribed standards . . . the government’s discretion is at its apex.”). Hence, the Army did not have to reject the proposal merely because [the awardee] did not list costs and duties for five positions. And contrary to [the plaintiff's] assertion that the Army had to provide a detailed explanation for why the defect did not render [the awardee's] proposal unacceptable, nothing in the solicitation required the Army to do so.