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Size Protest Dismissal Sustained by SBA's Hearings and Appeals

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Government contracting can be a lucrative business and when you are a small business the government is compelled to “open the door” for you. Under the Small Business Act, the government must offer contracts to small businesses that qualify (qualifications may vary). That said, the process for winning a government contract can often-times become complicated by businesses posing to be small businesses.

Onus Is On Bidders

Instead of putting the onus on themselves, the government makes it the responsibility of competing contractors to prove that a small business is not actually a small business by filing a bid protest. One such example can be found below. On October 26, 2018, the Contracting Officer (“CO”), for the Defense Information Systems Agency, Defense Information Technology Contracting issued a Request for Proposals (“RFP”) as a small business set-aside for DISN Optical Network Enhance Link 40. The CO limited the firm size of bidders to 1,500 employees. The original deadline for initial offers was November 30, 2018, but the deadline was extended on multiple occasions to December 5, 2018, February 07, 2019,  February 22, 2019, March 17, 2019 and lastly on April 12, 2019, respectively.

Contract Award Challenged

On June 17, 2019 the CO awarded the contract to By Light Professional IT Services, LLC (By Light). AOC Connect, LLC (“AOC”), asserting that By Light exceeded the number of employees to qualify under the RFP, challenged the CO’s award and filed a size protest on June 20. On July 15, 2019, the Small Business Administration Office of Government Contracting (Area Office) issued a size determination dismissing the size protest brought by AOC. The Area Office came to its conclusion by finding that AOC failed to show that By Light’s size exceeded 1,500 employees at the time of By Light’s initial proposal on December 5 th , 2018. AOC filed an appeal of the dismissal with the Office of Hearings and Appeals on July 26. On August 25, 2019, the appeal was denied by the Office of Hearings and Appeals due to lack ofspecificity and lack of factual support by AOC.

Standard of Review

The Office of Hearings and Appeals (OHA) will consider whether a protest was sufficiently specific to provide notice of the grounds on which the protestor is challenging a firm’s size and whether the protest included factual allegations to support the claim.

In addition, the protesting party bears the burden to prove by a preponderance of the evidence that the party being challenged does in fact fail to meet the requirements for a successful bid. In this case, AOC would have to prove that By Light had 1,500 or more employees.

Failed Size Protest

AOC’s size protest stated that the only relevant bid proposals were submitted on April 12, 2019, that By Light had been acquired in 2017, that the acquiring company had more than 1,500 employees as of June 20, 2019, and that By Light itself exceeded 1,500 employees based on a June 2019 news article that stated that By Light had 1,100 employees in March 2019.

In summary, AOC’s factual support indicated that at some point prior to April 12, 2019, By Light had more than 1,500 employees. However, as the Area Office ultimately concluded, the relevant date for determining By Light’s size was the date of By Light’s initial proposal: December 5, 2018. AOC needed to show that By Light exceeded 1,500 employees on or before December 5, 2018, in order to successfully challenge the award to By Light.

The OHA affirmed the Area Office’s finding that AOC failed to provide any facts that showed By Light exceeded 1,500 employees on or before December 5, 2018. As such, AOC failed to meet its burden of proof and the protest was dismissed. The OHA found that the Area Office correctly concluded that the size protest submitted by AOC was nonspecific because AOC used the incorrect date.

Takeway

In matters of size protests, OHA is the final authority for decisions made by the Small Business Association and as such it is vital for protestors to succeed in this venue. Although OHA decisions may be appealed to the Court of Federal Claims, this process can be costly and time-consuming. AOC’s bid protest failed because it argued the wrong date. The SBA determines the size of a concern when the concern submits its initial proposal, including price. 13 C.F.R. 121.404(a). AOC erred in arguing that the relevant date for size determination was April 12, 2019, the date of the final deadline for submitting bids, instead of December 5, 2018, when By Light submitted its initial proposal. AOC’s evidence of By Light’s size in April of 2019 was irrelevant.

Please contact us if you were unfairly denied a government contract award. The attorneys at Whitcomb, Selinsky, PC, are experienced in helping government contractors with their bid protests. Call (303) 534- 1958 or complete our online contact form.

About the AuthorMarc Tawil

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