The Government Accountability Office has ordered the Department of Veterans Affairs to redo its evaluation of a multiyear appraisal management contract after finding the agency credited the winning bidder with work it never actually performed, according to a decision posted August 6 in the protest brought by Veros Real Estate Solutions, LLC.
Background
The VA's Loan Guaranty Service ran a competition under RFP No. 36C10D25R0008 for automated appraisal management services supporting the agency's home loan program. The requirement covers a one-year base period plus four option years on a fixed-price basis. The VA selected Lynch Consultants, LLC over Veros, applying a 10 percent Service-Disabled Veteran-Owned Small Business price preference to Lynch's proposal in the tradeoff. On evaluated price alone, the gap between the two firms was wide: Veros came in at $31,659,908 while Lynch, with the SDVOSB preference applied, evaluated at $16,891,410.
Veros filed a series of protests at GAO, docketed as B-423965.2, B-423965.3, and B-423965.4, challenging multiple aspects of the award decision. The office consolidated the challenges and sustained the protest in part, while denying the remainder of Veros's arguments outright. Loan Guaranty Service appraisal management is a recurring, high-volume function for the VA — the contractor selected manages the network of appraisers who value homes financed through VA-guaranteed loans nationwide, making the incumbency and past-performance record of the winning firm a matter of practical consequence for veterans and lenders alike, not just for the competing offerors.
Key Details
GAO's decision centers on how the VA evaluated past performance, one of the factors used to judge whether Lynch's much lower price reflected genuine best value. The agency had credited Lynch with relevant experience based on an HHS contract reference that included "records management services" and "change management." GAO found that characterization did not hold up: those functions were actually carried out by the government program office — the Bureau of Primary Health Care — not by Lynch itself. In GAO's words, the VA "erroneously credited Lynch for performing work which it did not actually perform." Because past-performance relevancy findings have to be tied to what a bidder actually did, not what the underlying government office did, GAO concluded the agency's analysis could not stand.
A second past-performance reference posed a related problem. The VA had found a Cotality (formerly CoreLogic) contract covering flood-insurance work for USDA and FEMA relevant to three separate sections of the solicitation's performance work statement. GAO found the agency's record contained no explanation tying that flood-insurance experience to those three specific PWS requirements, leaving the relevancy determination unsupported. GAO did not find the Cotality reference irrelevant outright; it found the agency's file failed to document why the reference supported relevancy findings across three distinct sections of the work statement, which is itself enough to undermine a best-value tradeoff that leans on those findings.
Veros also raised claims of disparate treatment and material misrepresentation. On the misrepresentation count, Veros pointed to statements Lynch made to the Small Business Administration during a related size-status protest that Veros argued were inconsistent with representations Lynch made to the VA. GAO denied both of those grounds, finding they did not establish a basis for sustaining the protest. Only the past-performance relevancy argument succeeded.
The remedy GAO ordered is specific. The VA must reevaluate past performance for the competing offerors and document its relevancy analysis so it actually reflects who performed what work under each reference contract. Based on that reevaluation, the agency has to make a new source-selection decision. If Lynch no longer comes out as best value once the record is corrected, the VA must terminate Lynch's contract and make award to the firm that does. GAO also directed that Veros be reimbursed the reasonable costs of pursuing the protest, including attorneys' fees, with Veros required to submit its certified claim for those costs directly to the VA within 60 days of receiving the decision.
What It Means for Contractors
The decision is a reminder that past-performance credit has to trace back to the actual bidder, not to the government customer that oversaw a contract. Agencies frequently pull relevancy findings straight from a contractor's proposal narrative or from a performance questionnaire without verifying who did what under a referenced contract, particularly on task orders or interagency agreements where government program offices retain hands-on responsibilities like records management or change management. Offerors on the losing end of a close past-performance evaluation have grounds to dig into exactly which entity performed which duties on a competitor's reference contracts, especially where a government program office plays an active operational role.
The Cotality finding adds a second, narrower lesson: relevancy determinations need to show their work. An agency cannot simply declare a reference contract relevant to several PWS sections without stating why the referenced work maps onto those specific requirements. Contractors reviewing an unfavorable award decision should ask for that link explicitly, since a bare assertion of relevance — without an explanation connecting the reference work to the solicitation's actual requirements — is vulnerable on protest, as it was here.
The price gap in this procurement is also instructive for firms competing against SDVOSB set-aside preferences in full-and-open or preference-adjusted competitions. Even with a 10 percent price preference applied to Lynch's proposal, its evaluated price of $16,891,410 still came in at roughly half of Veros's $31,659,908. That kind of spread puts real weight on the non-price factors, which is exactly why GAO's finding on past-performance relevancy carries consequences here: a corrected evaluation could preserve the award, revise the tradeoff, or in the sustained scenario, cost Lynch a contract it has likely already started performing. Contractors currently performing under an award that is subject to an active or recently resolved protest should watch for corrective-action notices and be prepared for a termination-for-convenience scenario if a source-selection redo goes against them.
Finally, the denied grounds are worth noting for firms weighing whether to protest. GAO rejected both the disparate-treatment claim and the material-misrepresentation claim tied to Lynch's SBA size-protest statements, underscoring that inconsistent statements made in a separate forum do not automatically translate into a sustainable misrepresentation argument at GAO. Protesters need a direct, demonstrable link between the alleged misstatement and the agency's award decision, not just an inconsistency somewhere in the record.
