Two companies owned by disabled veterans have submitted bids to run a nationally recognized support program for New Hampshire National Guardsmen and their families.
And that may leave Easter Seals New Hampshire - which has run the Deployment Cycle Support Care Coordination Program in partnership with the Guard and the state from the start - out of the picture.
Larry Gammon, president and CEO of Easter Seals, calls it an "unintended consequence" of a law that gives priority in awarding federal contracts to small businesses, especially those owned by disabled veterans. Because the Guard is switching to a federal contract to run the support program, those federal rules bar Easter Seals from the first rounds of bidding.
"Who could argue against a small business owned by a disabled veteran?" Gammon said. "But I don't think the intention was ever to eliminate what is truly the best program of its kind around."
Keith Waye is procurement center representative for the Small Business Administration office that oversees federal contracts for New Hampshire.
Under federal law, Waye explained, a contracting agent - in this case New Hampshire National Guard - must first determine whether a contract could be fulfilled by small businesses before opening bidding to larger entities such as Easter Seals. And small businesses owned by service-disabled veterans are among those that get first priority.
Lt. Col. Greg Heilshorn, state public affairs officer for New Hampshire National Guard, said the point is to give veterans who were disabled in the line of duty a chance to compete for federal contracts. "It's a noble law," he said.
Last March, the federal contracting officer for the New Hampshire Guard posted a notice asking whether small businesses would be interested in bidding on the support-program contract. "He got 12 responses, and out of those 12, nine were service-disabled-veteran-owned small businesses," Heilshorn said.
So when the Request for Proposals went out in March, the first round of bidding was open only to small businesses owned by disabled veterans; those companies could be located anywhere in the country.
When bidding closed this month, two such businesses had submitted proposals, Heilshorn said.
Part of Waye's job is making sure contracting agents undertake due diligence to make sure the bidding process gives preference to small businesses. He said the contracting officer "has a lot of latitude on his procurement strategy," but is required to look first at certain "socio-economic" categories of small-business owners (including disabled veterans) to see whether any fit the contract in question.
And if so, he is obligated to "set aside" the contract for such businesses.
"The contractor makes the choice of what program they're going to use," Waye said. "In this case, they decided they were going to use the service-disabled-veteran-owned small business set-aside."
Here's why this is happening now.
For seven years, the Deployment Cycle Support Care Coordination Program has been run through a cooperative agreement, a sort of federal grant, among the Guard, Easter Seals and the state Department of Health and Human Services.
Heilshorn said the state receives about $1 million a year in federal funds to run the program.
However, about three years ago, the federal National Guard Bureau undertook a review of all its cooperative agreements, according to Heilshorn. The review revealed that New Hampshire's support program, the only deployment support program in the country run through a cooperative agreement instead of a federal contract, was not abiding by the federal rules.
"They told us we needed to basically change the way we did this program ... from a cooperative agreement to a federal contract," Heilshorn said.
He said the National Guard Bureau's decision to move to a federal contract "in no way" reflects dissatisfaction with how the program has been run.
"Certainly no one's questioning the quality of service Easter Seals has provided," he said. "It's a matter of following federal law."
He said the New Hampshire Guard requested, and received, a one-year grace period to make the switch. The current agreement with Easter Seals ends Sept. 30.
Now it's up to the federal contracting officer at the New Hampshire Guard to determine whether the two bids submitted are in compliance. After that, a committee of experts who have been involved with the program will decide whether either company can meet the program's needs, Heilshorn said.
If not, a second round of bidding would be open to any small business. And only if no acceptable proposals were to come in would a third round of bidding be open to any business, including Easter Seals.
A little surprised
Gammon said his agency knew the changeover to a federal contract was coming. But he said it wasn't until the Request for Proposals came out in March that Easter Seals realized it wouldn't be allowed to bid in the first rounds.
"No one told us the details," he said. "Maybe they thought we would understand, to give them the benefit of the doubt, but we did not understand that.
"I just don't believe in good conscience they would put something in place that would preclude us from bidding on it and not tell us."
Asked why local Guard officials didn't give folks at Easter Seals a friendly heads up about the bidding restrictions, Heilshorn said that kind of communication would have "broken some rules and laws" that prohibit "anything that would bias the process" in favor of a particular company.
The switch to a federal contract was first mentioned at a June 11, 2013, meeting with state representatives, Heilshorn said. Easter Seals employees at that meeting "asked if it would be a competitive bid, (to) which we said yes," he said.
The change also came up in a July 8, 2013, briefing during a visit to Pease Air National Guard by Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, he said.
But it apparently wasn't until March, when the first notice asking for small, veteran-owned businesses was posted, that Easter Seals became aware of the bidding process revisions and contacted the Guard with concerns, Heilshorn said.
Waye said it's not uncommon for a company to develop a program or product for the military and later lose out in the bidding process; he understands the "angst" involved in such an outcome. "I imagine it is very painful for the Easter Seals corporation," he said.
Waye said there's nothing in the rules that would preclude a veteran-owned business from partnering with another agency - such as Easter Seals - to run the support program, provided the veteran's company does at least half the work.
Asked whether the Guard would favor any new contractor partnering with Easter Seals to run the program, Heilshorn said that could be beneficial, especially for military families who are already working with caregivers.
Meanwhile, with more than 300 Army guardsmen deploying to the Middle East in January for a field artillery training mission, New Hampshire National Guard wants to make sure there are no gaps in services, Heilshorn said. He said the Guard would consider asking for an extension of the current arrangement if a new program can't get up and running in time.
Gammon said Easter Seals remains optimistic it will still get a chance to bid on the contract. "We're counting on the fact that we've run such a good program that so many people are involved in that it would be really hard for somebody to turn in a bid that comes close to it," he said.
And whatever happens with the contract, he said, Easter Seals' commitment to military veterans and families will continue. The agency recently expanded its services to pre-9/11 service members and is about to unveil a major drug and alcohol initiative.
"It's not the end of the story," Gammon said.