In latest edition of The Wright Toolbox:
- Size Might Matter, Even It’s Unclear Whether It Does or Not
Size Might Matter, Even It’s Unclear Whether It Does or Not
SBA contractors out there know that size really does matter. In a recent case, the SBA Office of Hearings and Appeals (“OHA”) held that a task order issued under an IDIQ contract that itself was not size restricted, was a restricted task order that required size recertification. Historically, the rule was that a business that represents itself as a small business and qualifies as small at the time of its initial offer (or other formal response to a solicitation), which includes price, is considered to be a small business throughout the life of that contract, unless a contracting officer requests a new size certification in connection with a specific order. If a business self-certifies as small at the time of its offer for the underlying MAC, the business is generally considered to be small for goaling purposes for each order issued against the contract. Effective November 16, 2020, 13 C.F.R. § 121.404 was amended to provide that, for unrestricted MACs, size is determined for each set-aside task order at the time of proposal submission for such task order.
The case began when the Army issued an RFP for the Responsive Strategic Sourcing for Services (RS3) indefinite-delivery indefinite-quantity (IDIQ) multiple-award contracts (MAC). Specific services were intended to be defined in task orders issued after award of the RS3 contracts. The original NAICS code for research and development code had a corresponding 500 employee size standard and years later this was increased to 1,000 employees. Avenge, Inc. and Data Systems Analysts, Inc. (“DSA”) were prime contractors on the RS3 contract.
The RS3 RFP was not set aside or restricted to small businesses, and the RFP stated that the Army planned to award contracts to both large and small businesses. However, according to the RFP, individual task orders could be restricted to small businesses under certain circumstances. In such situations, “[t]he task order RFP shall indicate if the task order is restricted to small businesses.” The RS3 contract provided that “[t]he task order RFP shall indicate if the task order is restricted to small businesses.” If the task order was restricted only contractors eligible to compete as a small business could submit a proposal. Any proposals submitted for a task order restricted to small businesses were required to include the representation that the contractor met the applicable size standard. The Army issued task order request for proposals under the RS3 contract, the request stated that it “was released to all eligible RS3 contract holders but restricted to small business prime contract holders only.” The task order request stated that contract holders under the “restricted suite” were permitted to submit proposals. It then stated “In accordance with (IAW) the basic contract clause H.2.5 this task order RFP is Restricted to RS3 multiple award IDIQ contract holders.” The request did not reference an assigned NAICS code or size limit. The request did provide that the contractor’s representations and certifications, including those completed electronically via the System for Award Management (SAM), were incorporated by reference into the contract. The task order request required bidders to submit the Small Business Participation and Subcontracting document with their proposal. In the Q&A regarding the task order the Army stated that the task order was restricted to small business primes only and that only contractors eligible to compete as a small business may submit a proposal.
Avenge had been purchased by another company after the original award of the RS3 IDIQ contract and the Contracting Officer submitted a size determination protest to Avenge’s bid on the task order. DSA also filed a protest challenging Avenge’s size. DSA contended that Avenge itself had approximately 290 employees, and that through its affiliations had collectively more than 2,000 employees.
The SBA concluded that Avenge was not a small business and sustained the protest. Avenge appealed.
On appeal, the OAH noted that the task order did not contain language expressly instructing RS3 contractors to “certify” or “recertify” size at the task order level. However, “the absence of such missing words from the task order solicitation was immaterial, because recertification nevertheless was required.” The OHA observed that the underlying RS3 IDIQ contract contain provisions requiring recertification in situations when a task order is restricted or set aside for small businesses. Here the task order repeatedly stated that it was “restricted” and limited to the “restricted suite.” The OHA held that “statements that the order was ‘Restricted’ could only have meant that the order was restricted to RS3 prime contractors that are small businesses. Insofar as there was any uncertainty on this point, the Army also then clarified the issue in a subsequent Q&A.” Although the Q&A document was not formally incorporated into the task order request the OHA noted that as a matter of procurement law, that “information disseminated during the course of a procurement that is in writing, signed by the contracting officer, and provided to all vendors, contains all of the essential elements of an amendment — even where not designated as an amendment — and is sufficient to operate as such.” RS3 contracts clearly stipulated any proposals submitted for a task order was restricted to small businesses and shall include a size recertification. Because a size recertification was necessary, the current affiliations of Avenge had to be considered and as it was no long a small business under the original NAICS code it could not submit a proposal or be awarded the task order. The protest was sustained.
Bidders must be careful regarding size certification on task orders and consider all surrounding factors including the original IDIQ terms, Q&A responses, cover letters and the Contracting Officer’s position on whether the task order is size restricted.
If you have any questions regarding the subject of this article, please do not hesitate to contact any member of the WCS Government Contracting Group.