Agency: Department of the Navy
Disposition: Protest Dismissed
Decided: June 22, 2020
Keywords: Small Business Set-Aside, GAO Jurisdiction, 8(a) Program
General Counsel P.C. Highlight:
Protest that the awardee made a material misrepresentation regarding its bona fide place of business was dismissed where the matter concerned its status as a participant in the 8(a) program, which is for exclusive review by the SBA.
Summary of Facts
DLF-CPC JV, LLC, a joint venture and 8(a) small business, protests the decision by the Department of the Navy, Naval Facilities Engineering Command Southwest, to award a contract to VLJM JV, LLC, an 8(a) small business entity, under RFP No. N62473-19-R2604, which was issued for paving projects around Marine Corps Base Camp Pendleton, California and Naval Weapons Station Seal Beach, California. The RFP was issued on March 18, 2019 and was set-aside for 8(a) small businesses “located within the geographical area serviced by the SBA San Diego District Office and other 8(a) construction firms with a bona fide place of business within the geographical competitive area.”
Five firms submitted proposals, including DLF and VLJM. VLJM is an approved 8(a) joint venture between JM Construction Services, Inc. (JMCSI) and V. Lopez Jr. & Sons General Engineering Contractors Inc. JMCSI is VLJM’s designated 8(a) participant managing business party. On April 4, 2018, approximately a year before issuing the solicitation, the SBA conducted a site visit to JMCSI’s offices in San Diego to verify that they constituted a bona fide place of business. The SBA concluded that JMCSI had established a bona fide branch office in San Diego, California, within the geographical boundaries served by the SBA San Diego District Office.
On December 18, the SBA confirmed VLJM’s 8(a) award eligibility to the Navy. The Navy concluded that VLJM’s proposal represented the best value to the agency and awarded the contract to the firm on December 19. On December 24, DLF filed a size determination protest with the SBA and the Navy and questioned the validity of SBA’s determination regarding JMCSI’s bona fide place of business. The SBA inquired with JMCSI and JMCSI provided documentation reflecting that, on September 25, JMCSI received a notice to vacate its offices by October 25 because the building had been sold. The SBA concluded that, at the time of offer, JMCSI confirmed that it still maintained the approved Bona Fide place of business. The SBA then found that VLJM had leased a new office in San Diego, which was within the relevant geographic area, as of November 1.
On March 4, 2020, the Navy advised DLF that VLJM was the awardee. After requesting and receiving a debriefing, DLF filed this protest.
Basis of Protest
DLF argues that when VLJM submitted its revised price on October 31, 2019, it did not maintain a bona fide office in the relevant geographic area, because its prior lease ended on October 25, and it did not lease its new space until November 1. Thus, DLF argues that JMCSI made a material misrepresentation in its proposal concerning this place of business and should have been found ineligible for award. The Navy argues that GAO lacks jurisdiction over the dispute, because it would require GAO to review the SBA’s determination that VLJM was eligible for award.
Section 8(a) of the Small Business Act authorizes the SBA to enter into contracts with government agencies and to award subcontracts to socially and economically disadvantaged small businesses. GAO explained that under 13 CFR § 124.517(a) “the eligibility of a Participant for a competitive 8(a) requirement may not be challenged by another Participant or any other party, either to SBA or any administrative forum as part of a bid or other contract protest.” GAO noted that while it “will review competitive section 8(a) procurements for compliance with certain applicable procurement regulations,” its review “generally does not extend to matters
that are solely within the purview of SBA.” Specifically, challenges to a small business’s eligibility for award under the 8(a) program “are generally for review by the SBA,” not GAO. GAO concluded that “whether the SBA erred in its eligibility determination is a matter solely for the SBA; our Office will not review substantive determinations by the SBA regarding a program participant’s eligibility for a particular award.”
An exception to the above prohibition from review of 8(a) eligibility challenges exists for
“protests that show possible bad faith on the part of government officials, or that present allegations that the SBA failed to follow its own published regulations or failed to consider vital information bearing on the firm’s responsibility due to the manner in which the information was presented to or withheld from the SBA by the procuring agency.” Here, DLF argued that the SBA failed to follow its own regulations, and, thus, acted in bad faith in finding that JMCSI satisfied the eligibility requirements. GAO explained that “government officials are presumed to act in good faith, and a protester’s contention that contracting officials are motivated by bias or bad faith must be supported by convincing proof.” GAO determined that DLF provided no support for its argument or provided any evidence of bad faith.
The GAO dismissed the protest on this basis.