Update: SBA Proposed Rule and Size Protest on a Task Order

By: Christine V. Williams on 10/14/2015

This update will briefly cover a size protest on a task order (with a basic review) and a proposed SBA rule regarding other than small prime contractors getting small business credit for awards made to small business participants past first tier subcontractors.  This rule gets a little tricky on tracking and representations and certifications, but it makes sense in light of the proposed rules regarding similarly situated entities and conceptually giving more credit (and incentive) to use small businesses at all levels of a contract.

 Size Appeal of RX Joint Venture, LLC, SIZ-5683 (Sept. 28, 2015)

Generally, size is determined at the time of offer plus price.  For example, for Multiple Award Task Order Contract (MATOC), size is generally determined at the time of the MATOC award.  When task orders under that general contract are issued, size does not have to be re-determined because it is a task order, not the original contract.  A contracting officer/agency may request a recertification of size, however, for any task order.  In this case, a party that was not the apparent awardee challenged the size of the apparent awardee of the task order based on size.

The Office of Hearings and Appeals for the SBA, which determines size issues, re-affirmed its earlier holdings on the issue.  A good reminder/refresher on task orders is the holding, which states at 3:

The Area Office correctly recognized that, on a long-term contract such as the ASB GWAC, size may be challenged at three stages: (1) when the long-term contract is initially awarded; (2) when an option is exercised; or (3) if a CO requests recertification in conjunction with an individual order. 13 C.F.R. § 121.1004(a)(3). In the instant case, there is no dispute that the Appellant’s protest did not seek to challenge the award of the underlying GWAC contract or the exercise of an option. Therefore, Appellant’s protest is timely only if the CO requested recertification for this particular order. OHA has repeatedly held that “SBA will not entertain a size protest against the award of an order under a long-term contract, unless the procuring agency requested recertification in conjunction with the order.” Size Appeal of AIS Eng’g, Inc., SBA No. SIZ-5614, at 5 (2014); Size Appeal of Tyler Constr. Group, Inc., SBA No. SIZ-5323 (2012); Size Appeal of Quantum Prof’l Servs., Inc., SBA No. SIZ-5207 (2011), recons. denied, SBA No. SIZ-5225 (2011) (PFR).

SBA Proposed Rule for Credit for Lower Tier Small Business Subcontracting

There are a couple of things you will want to review in this proposed rule, including the requirements as to some sort of subcontracting type plan for lower tier subcontractors if they are employing small businesses for small business credit and the representations and certifications involved (looks like SAM is fine but not required-124.411(d)).

The other than small contractors have a bit more imposed on them in the form of record keeping and tracking. Therefore a small business may do well by reviewing those requirements and commenting on whether such a reporting/tracking/NAICS Code assignment might be seen as too onerous and/or propose alternatives that would satisfy the Government that no bait and switch is occurring and/or a small business is actually performing at that lower level for the credit to be received.  This is the type of analysis completed when the proposed rules came out with a type of subcontracting plan, if a firm decided to use a similarly situated entity or entities to meet its mandatory performance levels.

The U.S. Small Business Administration (SBA or Agency) is proposing to amend its regulations to implement Section 1614 of the National Defense Authorization Act for Fiscal Year 2014.

The proposed amendments authorized by this statute would allow an other than small prime contractor that has an individual subcontracting plan for a contract to receive credit towards its small business subcontracting goals for subcontract awards made to small business concerns at any tier. The prime contractor shall incorporate the lower tier subcontracting performance into its subcontracting plan goals. Currently, other than small business prime contractors establish small business subcontracting goals at the first tier level, and receive credit toward their subcontracting plan goal performance at the first tier level.

The rule also proposes to implement the statutory requirements related to the subcontracting plans of all subcontractors that are required to maintain such plans, including the requirement to monitor subcontractors’ performance and compliance towards reaching the goals set out in those plans as well as their compliance with subcontracting reporting requirements. SBA is also proposing to clarify that the size standard for a particular subcontract must appear in the solicitation for the subcontract.

Comments close on December 7, 2015.  Please see this link to the regulation as well as the summary of the regulation for more information.