Even though the options of long-term IDIQ contracts help a small business to grow, and perhaps even outgrow, their small business size, a competitor’s right to challenge the size status of a no-longer-small-business at the SBA is very limited. A recent decision of the SBA’s Office of Hearings and Appeals (OHA) discusses the protest deadlines and shows how difficult it can be to challenge an allegedly improper certification of an option when the protester knew or should have known when the winner had recertified.
Generally, competitors can challenge size status (1) when the long-term contract is initially awarded; (2) when an option is exercised; or (3) if a CO requests recertification in conjunction with an individual order. 13 C.F.R. § 121.1004(a)(3). The latter two are typically used because a company’s organic growth to outgrowing its small business size is common.
Challenging the certification of size status for an individual task order.
A size protest of an individual task order can only be raised if the ordering agency explicitly requests certification of small business size as part of the solicitation. The SBA has been very rigid in interpreting whether a solicitation contains an explicit request. For example, it would seem that the very fact of submitting a solicitation for an order that has been set-aside for a small business should be a de facto recertification requirement. SBA case law, however, says that is not true. Nor is there an explicit recertification requirement as a result of the inclusion of FAR clauses 52.212-1, 52.212-3, 52.212-4, and 52.212.5 referencing SAM and the company’s current small business status in SAM.
Challenging the recertification of small business status at option renewal.
A recent OHA decision involved a competitor challenging size status when an option was exercised. It was not successful because it was late by at least four months.
In 2012, NIH awarded Digital Infuzion, Inc. a 10-year IDIQ contract (5-year base, one 5-year option) under NIH’s Chief Information Officer — Solutions and Partners 3 (CIO-SP3) small business multi-award Government-wide Acquisition Contract (GWAC) program. FAR requires holders of long-term small business set-aside contracts to recertify their small business status within 60 to 120 days prior to the end of the fifth year of the contract. Therefore, Digital must have re-certified its small business status on some date between February 19, 2017 and April 20, 2017. Digital did so on April 6, 2017.
On June 9, 2017, an agency issued a task order RFP that did not explicitly require an offeror to certify its small business status. Digital and Unissant, Inc. submitted offers.
Digital won that task order, leading Unissant to challenge Digital’s award based on data published at the Federal Procurement Data System suggesting that Digital was no longer a small business.
Digital argued that the protest was too late. Months prior to the June 9th issuance of the RFP, the Contracting Officer asked Digital and all other contractors under the long-term IDIQ, including Unissant, to re-certify their size status. Digital did so on April 6, 2017. Digital argued that Unissant must have known of the date of recertification, because it was required to re-certify at the same time.
OHA agreed and dismissed the size protest as untimely. “A size protest in connection with the size certification made for the option period of a long-term contract must be received by the contracting officer prior to the close of business on the fifth business day after receipt of notice of the size certification made by the protested concern. Unissant filed its protest at least four months after Digital’s recertification.”
Unissant also admitted that it knew that Digital had been awarded the CIO-SP3 GWAC in 2012 at about the same time as Unissant, that Unissant had received its recertification modification, and that Digital’s recertification had to occur no later than April 20, 2017.
“Based on these admissions, I find Unissant therefore knew or should have known that Digital would have received its recertification modification at that time, and could have learned whether and exactly when Digital was recertified.”
OHA piled it on: “In addition, as Digital points out, Digital was listed among the eligible small business offerors for task orders under the GWAC. Further, the ordering agency CO’s questions and answers informed potential offerors, which of course included Unissant, that Digital was eligible for this Task Order. Thus, Digital must have been recertified as small before the CO released the questions and answers. Unissant had numerous opportunities to protest Digital’s size in connection with its recertification, but chose not to until the end of August 2017, after learning Digital had won the Task Order.”
The decision shows both the limited bases for challenging small business size as well as the tight deadlines for doing so. Berenzweig Leonard lawyers can guide small businesses in certification compliance as well as the deadlines for protesting violations.
Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring upcoming contracts, key protest decisions, legal updates, events, and more. This post was published in the January 2018 Monthly Insights newsletter. To sign up for Monthly Insights, please click here.