NAICS Code Protest, SBA No. NAICS-5828

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.

Factual Background

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.

Legal Analysis

Before following a NAICS code protest or overturning any NAICS code designation, SBA regulations under 13 CFR 134.314require 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.

Do You Need Legal Advice from an Experienced Government Attorney?

Navigating the Small Business Act and its application to government contracts can be a challenge. There are various legal regulations and considerations at play, which can make it difficult to understand the proper course of action. But a knowledgeable government attorney can make all of the difference, helping you avoid pitfalls and resolve any issues that might arise.

If you are in need of assistance with government contracts or other related matters, please do not hesitate to contact Whitcomb, Selinsky, McAuliffe, PC immediately. Located in Denver, Colorado, you can reach the attorneys at Whitcomb, Selinsky, McAuliffe, PC by phone at (303) 534-1958 or online by completing a simple form.

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