Link: GAO Opinion
Agency: Department of the Air Force
Disposition: Protest denied.
Keywords: Size Determination
General Counsel P.C. Highlight: An SBA area office formal size determination becomes effective immediately, and a contracting officer may award a contract based on that determination. If an award has been made, and the formal size determination is subsequently reversed upon appeal by the SBA Office of Hearings and Appeals, the OHA decision does not to apply to that procurement and the award of the contract may stand.
ONS21 Security Services (ONS21) protests the award of a contract under a request for proposals (RFP), issued by the Department of the Air Force, for communications security support services. ONS21 asserts that the agency improperly failed to terminate the award after the Small Business Administration’s (SBA) Office of Hearings and Appeals (OHA) reversed a formal size determination issued by an SBA area office finding that the awardee qualified as a small business.
The agency originally published a presolicitation synopsis on the FedBizOpps website announcing that the RFP would be issued under North American Industry Classification System (NAICS) code 541690, which has a small business size standard of $7 million. The contracting officer subsequently decided that it would be more appropriate to use NAICS code 541513 (which has a small business size standard of $25 million) for the procurement due to the complexity of the work. The agency then published a combined synopsis/solicitation on FedBizOpps advising the offerors that the applicable NAICS code for the RFP was 541513, but the actual RFP document remained unchanged. Two proposals were received.
ONS21 filed a timely size status protest alleging that the awardee was not a small business and at that time, the contracting officer realized the difference in the two NAICS codes. ONS21 then contacted the SBA area office asserting that the awardee does not meet the small business size standard of NAICS code 541690. The SBA area office issued a formal size determination that the awardee was a small business for the purposes of the procurements, that the NAICS code applicable to the RFP was unclear, and that the more appropriate NAICS code was 541513, under which the awardee qualified as a small business. The agency proceeded with performance of the contract.
OHA issued a decision reversing the SBA area office’s size determination. The OHA ruled that the SBA area office’s application of any NAICS code other than 541690, which was listed in the RFP, was improper. The agency still decided not to terminate the contract. ONS21 protests that the agency acted unlawfully in choosing not to terminate the contract after it received the SBA OHA decision that the awardee was not a small business for the procurement under the RFP’s NAICS code 541690.
GAO states that since the issue raised, regarding an SBA OHA’s reversal of an SBA area office formal size determination after an award has been made, concerns a matter of interpretation involving SBA’s regulations, it requested a report on the protest from SBA. The SBA’s report states that an SBA area office formal size determination becomes effective immediately, and a contracting officer may award a contract based on that determination. If an award has been made, and the formal size determination is reversed upon appeal by the SBA OHA, the OHA decision is not to apply to that procurement. Based on the SBA regulations, GAO states that since the SBA OHA decision here was received after award, there was no requirement for the agency to terminate the award. The protest is denied.