NAICS Appeal of Creative Information Technology, Inc., SBA No. NAICS-5828
This case concerns the Small Business Act of 1958. Recognizing the importance of free enterprise and competition, the Small Business Act requires the U.S. Government to assign a fair portion of contracts and purchases to small businesses. The Small Business Administration (SBA) and its Office of Hearings and Appeals (OHA) oversee the administration of the Small Business Act. The SBA uses size standards and the North American Industry Classification System (NAICS) to define what qualifies as a small business.
On March 23, 2017, the U.S. Department of State (DOS), Bureau of Population, Refugees, and Migration (PRM), submitted a Request for Proposals (RFP). The RFP requested assistance with “maintenance and enhancement to the Worldwide Refugee Admissions Processing System (WRAPS) application” as well as “development, delivery, and deployment” of a new version of the application, titled “WRAPS 2.”
On April 25, 2017, the Contracting Officer (CO) classified the RFP under NAICS code 541512, “Computer Systems Design Services,” which carries a $27.5 million size standard. The CO set a proposal deadline of May 15, 2017.
On April 3, 2017, Creative Information Technology, Inc. (CIT) filed a NAICS code protest challenging the use of NAICS code 541512. CIT argued that the proper choice should be NAICS code 518210, “Data Processing, Hosting, and Related Services,” which carries $32.5 million size standard. CIT elaborated that the primary purpose of the RFP involves “data processing of refugee application and movement information.”
On April 19, 2017, the CO and a third party – ValidaTek, Inc. (VT) – responded to CIT’s appeal and defended the CO’s choice of NAICS code 541512. Both parties argued that the primary purpose of the RFP involves computer systems design services for ongoing WRAPS support and eventual WRAPS 2 development.
Before following a NAICS code protest or overturning any NAICS code designation, SBA regulations under 13 CFR 134.314 require proof that the designation was “based on clear error of fact or law.” The OHA stressed that the CO is not expected to select the “perfect” NAICS code, referencing its decision in NAICS Appeal of Evanhoe & Assocs., LLC, SBA No. NAICS-5505 (2013). Rather, as outlined in SBA regulations under 13 CFR 121.402, the CO should choose the code that “best describes the principal purpose of the product or service being acquired.”
The OHA then turned to the NAICS Manual, comparing and contrasting the descriptions of NAICS code 518210, “Data Processing, Hosting, and Related Services,” and NAICS code 541512, “Computer Systems Design Services.”
Ultimately, the OHA determined that the primary purpose of this RFP concerned computer systems design services for ongoing WRAPS support and eventual WRAPS 2 development. As a result, NAICS code 541512 was a proper classification for this RFP. Thus, the OHA denied CIT’s appeal.
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