Updates on Timely Topics Impacting the Government Contracting Industry from Vice President of Acquisition Policy, Ken Dodds of the Coalition for Government Procurement (www.thecgp.org)
In a recent bid protest, the Government Accountability Office (GAO) had a difficult time determining whether a firm was a Service-Disabled Veteran-Owned small business concern (SDVOSB). The protester represented itself as an SDVOSB with its offer for its Federal Supply Schedule (FSS) contract which was awarded in May of 2019. On January 26, 2023, the procuring agency issued a Request for Quote (RFQ) to award a Blanket Purchase Agreement (BPA) under the FSS. The agency issued the RFQ to firms identified as SDVOSBs on the relevant FSS and identified the RFQ as an SDVOSB set-aside but did not request size recertification in connection with the RFQ. On February 1, 2023, the protester submitted its quote. On June 28, 2023, the protester was acquired by a non-SDVOSB. The protester was the incumbent on a BPA and informed the procuring agency that it was no longer an SDVOSB. On August 28, 2023, the procuring agency awarded the BPA to another offeror. The procuring agency argued the protester was not an interested party to challenge the award because the protester was not an SDVOSB and was not eligible for award.
In resolving the interested party challenge, GAO noted the Small Business Administration’s (SBA) general rule that size for a contract is determined at the time of offer for the contract. For multiple award contracts (MACs), contracting officers may request size recertifications in connection with orders or BPAs. However, when an order or BPA is set aside under a full and open MAC, size must be determined at the time of offer for the order or BPA, but the FSS is exempt from this provision. SBA’s rules further provide that if there is an acquisition or merger, the contractor must recertify its size status within 30 days, and if the firm is other than small the agency cannot count future dollars awarded to the concern towards its small business goals. In addition, SBA’s rules at the time the RFQ was issued provided that If the merger or acquisition occurred within 180 days of the offer but prior to award, the firm was not eligible for award of the “contract.”
The procuring agency argued that because the acquisition occurred within 180 days of the offer or quote for the BPA, the protester was required to recertify and was ineligible for award. The protester contended that the requirement to recertify after offer but prior to award applied to contracts, not orders or BPAs under those contracts.
GAO agreed with the protester. SBA’s rules expressly exempt the FSS from the requirement to recertify size in connection with a set-aside order or BPA. In addition, SBA Office of Hearings and Appeals (OHA) caselaw indicated that a merger or acquisition triggering recertification at the FSS contract level did not trigger a requirement for recertification for pending orders or BPAs, when the solicitation for the order or BPA did not request size recertification.
Epilogue: In the GAO protest, SBA sided with the procuring agency and argued that the recertification requirement applied, and the protester was ineligible for award. On April 27, 2023, SBA issued a final rule effective May 30, 2023, to include the terms “order” and “agreement” in its rule providing that a firm is not eligible for award if a merger or acquisition occurs within 180 days of offer but prior to award. The change was not discussed in the preamble to the proposed or final rule. While this rule concerning eligibility for award will apply to set-aside orders under non-FSS full and open MACs, It does not appear that an unsuccessful offeror could file a timely size protest on this issue in connection with an FSS order or BPA where the contracting officer did not request size recertifications with the offer or quote. However, SBA or a contracting officer may file a size protest at any time, so OHA may ultimately have to address the issue.