SBA rules in favor of firm’s client in size protest

The Small Business Administration (SBA) has ruled in favor of one of the firm’s clients in size-determination case.

In April 2014, the U.S. Army Contracting Command issued a request for proposals (RFP) for the Army Evaluation Center. Task order 3 (TO3) of this RFP was set aside entirely for small businesses and used a size standard of $35.5 million in average annual receipts.

As part of its proposal, the contractor provided résumés from a subcontractor for three key positions: a general engineer, a systems analyst, and systems engineer. The contractor’s proposal also indicated their work would be supervised by its own personnel: a technical director and an assistant program manager. But the contractor did not furnish résumés for these two individuals because the RFP (1) did not request their résumés and (2) indicated that the proposal was to be kept brief.

On January 6, 2015, the contracting officer announced that the contractor had been awarded TO3. On January 9, 2015, an unsuccessful offeror filed a size protest, alleging that the contractor was affiliated with the subcontractor under the ostensible subcontractor contractor rule. 13 C.F.R. § 1211.103(h)(4). The SBA’s area office dismissed the unsuccessful offeror’s size protest for not being filed on time, but the SBA’s area director initiated her own size protest against the the contractor, adopting the unsuccessful offeror’s allegations.

The area office found that the contractor was not a small business for purposes of bidding on TO3. Furthermore, the area office found that the contractor had violated the ostensible contractor rule by finding that the size of TO3 was five times greater than the contractor’s largest contracts listed in the federal government database (Federal Procurement Data System–Next Generation or FPDS-NG) and by finding that the number of subcontractor personnel (based on the number of submitted résumés) to be employed for TO3 was too high. These facts, the area office said, made the contractor unusually reliant on the subcontractor.

Dale Gipson and Clark Pendergrass appealed the areas office's decision to the SBA’s Office of Hearings and Appeals. The administrative law judge found in favor the contractor, for the following reasons:

1. The idea that TO3 was greater in size than any other contracts handled by the contractor was wrong. The area office looked at only the contracts in the federal government database, which did not reflect nine active contracts the contractor is currently working on. Two of these contracts—one valued at over $24 million and another at over $25 million—exceed the estimated value of TO3 (at $10.2 million).
2. The area office overlooked the requirements of the RFP that limited the bidders to providing only one résumé for each position. Although the contractor had submitted résumés of subcontractor personnel, it had also proposed using it own personnel. For that reason, the contractor was not dependent (unusually reliant) on the subcontractor to fill these positions.

The administrative law judge concluded that from the evidence he reviewed, the contractor was not unusually reliant on the subcontractor and therefore not in violation of the ostensible contractor rule. But because the area office’s decision hadn’t been based on the contractor’s final proposal, the decision had to be remanded to the area office for further review.

See size determination 3-2015-035 (SBA No. SIZ-5658) decided on May 20, 2015.