Here's another post about a size appeal case involving Veterans Construction Coalition, LLC, SBA No. SIZ-5824 (2017), which involved 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.
Government Contract Size Standards Background
On June 9, 2016, the U.S. Department of the Air Force (Air Force), submitted a Request for Proposals (RFP) for “Simplified Acquisition of Base Engineering Requirements (SABER) procurement.” The Contracting Officer (CO) classified this request as NAICS code 236220, under the category of “Commercial and Institutional Building Construction” and carrying a size standard of $36.5 million. On December 7, 2016, the CO awarded the RFP to Megen-AWA 2, LLC (MA2), which classified itself a joint venture between AWA Business Corporation (AWA) and Megen Construction Company, Inc. (Megen).
On December 14, 2016, Veterans Construction Coalition, LLC (VCC) issued a challenge, arguing that MA2 should not qualify as a small business. VCC elaborated that AWA and Megen are essentially the same company, not a joint venture. The CO forwarded VCC’s size protest to the SBA Office of Government Contracting for Area IV (Area IV Office) for review.
On February 14, 2017, the Area IV Office delivered a formal size standard decision concerning MA2. The Area IV Office determined that MA2 qualified as a small business for this RFP.
On February 17, 2017, VCC appealed the Area IV Office decision, requesting review from the OHA. VCC claimed that the Area IV Office made an error in qualifying MA2 as a small business for this RFP.
Government Contract Size Standards Legal Analysis
After reviewing the facts and arguments of both parties, the OHA determined that the Area IV Office committed an error. Specifically, the Area IV Office failed to apply standard SBA regulations for joint ventures to MA2. This happened as a result of the Area IV Office’s mistaken interpretation of SBA regulations.
The OHA highlighted that it is merely an appellate organization, without the power to make formal size standard determinations. As a result, the OHA granted VCC’s government contract size appeal and returned the size standard determination of MA2 back to the Area IV Office for further review.
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