Protesting the SBA NAICs Code size standard for a government contract can be tricky. This is especially true when there are differences between the amount of labor required and the overall cost of the contract.
The SBA’s regulations instruct that, in making a size standard determination, the contracting officer must select “the single NAICS size standard code which best describes the principal purpose of the product or service being acquired.” See 13 CFR 121.402(b) (2014). If you choose to protest the NAICs code, courts will give primary consideration to:
- The industry descriptions in the [NAICS Manual], the product or service description in the solicitation,
- The relative value and importance of the components of the procurement making up the end item procured, and
- The function of the goods or services being purchased.” Id. (b)(1).
SBA NAICs code regulations further clarify that “a procurement is usually classified according to the component which accounts for the greatest percentage of contract value.” Id. (b)(2).
The Federal Acquisition Regulation (“FAR”) gives the same guidance by clarifying that that classification is normally a product of the “component which accounts for the greatest percentage of contract value.” 48 CFR 19.303(a)(2) (2014).
What is a Small Business Size Classification?
As a government contractor, your small business size classification is based on the stated in number of employees or average annual receipts (depending on the specific NAICS code), represents the largest size that a business (including its subsidiaries and affiliates) may be to legal remain classified as a small business for SBA and federal contracting programs. The small business concern definition varies by industry.
Do’s: The key thought process for protesting the SBA NAICs code is to first look at the largest component of the solicitation at issue. For example, if the contract entails plumbing electrical and carpentry, and 70% of the project is plumbing, then the NAICs code would be that for plumbing.
SBA NAICS Code Size Standard Protest Based Upon Other Contracts?
Don’ts: As compared to the old rules, you should not files an SBA NAICs code size standard protest based upon what other contracts have called for. Instead, the new rules require the court to look at the specific challenged requirement. See.76 Fed. Reg. 5680, 5683 (February 2, 2011).
The NAICs code regulations require the contracting officer to perform an analysis of the relative weight of the components of the contract and decided the appropriate NAIC according to “the component which accounts for the greatest percentage of contract value.” 13 CFR 121.402(b)(2); see Red River Serv. Corp. v. United States, 60 Fed. Cl. 532, 548-49 (2004).
How and Where Should You File an SBA NAICS Code Protest?
Don’ts: Many government contractors often make the costly mistake of filing an SBA NAICs code protest with the Contracting Officer. However, this could be looked at as more of a request for reconsideration. If the Contracting Officer makes the official call, then the proper place to file the protest is at SBAOHA.
- You have to be an interested party to file an SBA NAICs code protest.
- You have to file and serve the protest to OHA within 10 calendar days after the issuance of the initial invitation for bids or initial request for proposals or quotations (see 13 CFR 134.304(a)(3)).
- With respect to an 8(a) sole source contract, only the Director for Business Development may appeal.
For immediate help filing an SBA NAICs code size standard protest, call at government protest lawyer at 1-866-601=5518.