SBA Certificate of Competency Determinations (Small Business COC)

Understanding the specific roles at the agency level and what the Small Business Administration SBA must do when evaluating your proposal for a Government Certificate of Competency (COC) and responsibility can save you the contract.

What is the Small Business Certificate of Competency Program?

In defense contracting, a Certificate of Competency states that the holder is authorized to receive and perform on a specific government contract . The Small Business Administration ( SBA ) issues certificates of this kind to individuals it finds to be responsible in terms of capability, competency, capacity, credit, integrity, perseverance and tenacity.

In government contracting, a contractor’s certificate of competency as the intended awardee is authorized to receive a federal contract. Typically, the Small Business administration is responsible for assessing and awarding companies the contract if it finds that the contracting is responsible with regards to technical capability, competency, credit, capacity and integrity

The SBA Certificate of Competency (COC) program allows companies that submit small business bids to challenge the contracting agency’s conclusion that it cannot perform the contract according to the solicitation terms and conditions.

If you are somehow determined to be the apparent successful offeror and the agency questions contractor performance, for specific reasons cannot perform the contract requirements, then the rules say that the government must refer the matter to the SBA for a COC determination.

• SBA COC requirement issues arise in government contracting when the contracting officer makes a determination that your company, the apparent offeror, cannot perform the contract.

However, common disputes occur about whether the referral is valid and whether the SBA followed its regulations when acting on the SBA COC referral and decision. 

• When the contracting makes a nonresponsibility decision, he or she must refer the matter for an SBA certificate of competency (COC) determination.  When the SBA issues a positive certificate, it requires the contracting officer to award the contract to the small business.

Government contracting offices run into problems with how to apply for a government certificate of competency during bid protest litigation because of the confusing rules that regulate when the contracting officer must refer responsibility matters to the SBA. Also, small businesses also get confused as to when they can actually challenge the SBA’s certificate of competency decision in a bid protest.

Challenging SBA COC Determinations in a Bid Protest

Don’t Miss the Interested Party Legal Requirement! When filing a bid protest based upon SBA Certificate of Competency matter, you must still meet the interested party requirements for a GAO protest. Under GAO’s Bid Protest Regulations, an interested party is an actual or prospective offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract. 4 CFR 21.0(a). It is generally difficult to challenge a certificate of competency determination at GAO. The burden of proof is usually hard to show and at some point, you may even have to show that the SBA did not follow its own regulations. 

• Being an actual or prospective bidder can meet this requirement.
• A protestor must show that either the contracting officer did not make a valid responsibility determination.
• The SBA ‘s actions were arbitrary and capricious, and it failed to follow its own SBA COC regulations.
• If GAO rules in your favor, you must show a substantial chance of getting the award.

See also information about Protesting SBA Certificate of Competency COC Decisions 13 CFR 125 and FAR 19.6.

CO Must Refer Technical Responsibility Issues to the SBA – But See 13 CFR 125.5; FAR 9.104 and FAR 19.602

Only for contractor responsibility matters: According to the Small Business Act, government contracting agencies cannot make competency decisions without referring the company to the SBA for a government small business certificate of competency determinations. Failure to follow this procurement regulation can cause a GAO protest to be sustained. See recent case.

A common problem at government contracting agencies is when the CO sends the apparent offeror to the SBA for a proposal responsiveness issue. The overriding intent of the SBA COC regulations does not expect the SBA to decide proposal responsiveness matters.  See 13 CFR 125.5; FAR 9.104 and FAR 19.602.

Instead, each agency has a source selection team that actually makes a determinate as to whether bidders have first met the material requirements of the solicitation. A contracting agency cannot send an offer to the SBA for a certificate of competency decision to cure a proposal defect. See Manus case. See also Special Rules When Appealing SBA Certificate of Competency decisions

Can Contractors Request an SBA Small Business Certificate of Competency?

Yes. The small business contractor can appeal the contracting officer’s decision. Keep in mind that the procurement law requires the contracting officer to send your package to the SBA if there is a true contractor responsibility issue. When you get the news, you should still request the SBA to conduct a small business certificate of competency. See SBA size protest requirements.

What is Considered Technical Responsibility Matters?

Many cases end up in disagreement as to what is a contractor’s technical responsibility matter compared to the proposal responsiveness matters.

Keep in mind that referral of your proposal to the SBA is necessary only “[u]pon determining and documenting that an apparent successful small business offeror lacks certain elements of responsibility.” FAR 19.602-1.

Does SBA Certificate of Competency Requirements Only Apply to LPTA Contracts?

The Court of Federal Claims tends to suggest that SBA certificate of competency issues apply to both comparative evaluations and Lowest Price Technically Acceptable (LPTA) contracts. See Manus Medical, LLC v. United States.

Also, keep in mind that the contracting agency uses an LPTA source selection evaluation process, the CO may “elect[] to consider past performance as an evaluation factor.” FAR 15.101-2(b). Such an election, however, does not eliminate the general contracting requirement to make an affirmative determination of responsibility prior to every award. FAR 9.103(a)-(b).

• Arguably, when there is a go-no-go standard for evaluation, then the SBA COC process seems to become more important.

The Court of Federal Claims in Manus found that  an LPTA contract award can be understood as proceeding in two broad steps:

(1) evaluation and identification of the lowest-priced, technically acceptable proposal, which may include past performance as an evaluation factor; and

(2) determination of the apparent awardee’s responsibility, which must include past performance along with other responsibility factors.

Avoid Problematic Arguments in the SBA COC Process

When making a distinction as to whether you should file a bid protest that challenges the government’s certificate of competency requirements or process, also keep in mind that:

• The first requirement after bid submission is to make sure that the contractor has actually complied with the solicitation requirements.
• A failure to comply with the solicitation requirements does not amount to a requirement to send the proposal for an SBA certificate of competency review.
• You have to make a distinction between solicitation responsiveness versus contractor technical responsibility.
• You cannot reach the second step for a competency determination without first evaluating the proposal for compliance. See Manus, Citing Pacific Sky Supply, Inc., B-215189 et al., 85-1 CPD ¶ 53, at 4 (Comp. Gen. Jan. 18, 1985).

SBA Small Business COC Requirements

What are Responsibility Procedures Under FAR 19.602?

FAR 19.602 sets out the basic SBA small business certificate of competency requirements for the contracting officer to refer responsibility matters to the SBA. The language states as follows:

(a) Upon determining and documenting that an apparent successful small business offeror lacks certain elements of responsibility (including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, tenacity, and limitations on subcontracting, but for sureties see 28.101-3(f) and 28.203(c)), the contracting officer shall—

(1) Withhold contract award (see 19.602-3); and

(2) Refer the matter to the cognizant SBA Government Contracting Area Office (Area Office) serving the area in which the headquarters of the offeror is located, in accordance with agency procedures, except that referral is not necessary if the small business concern—

(i) Is determined to be unqualified and ineligible because it does not meet the standard in 9.104-1(g), provided, that the determination is approved by the chief of the contracting office; or

(ii) Is suspended or debarred under Executive Order 11246 or Subpart 9.4.

(b) If a partial set-aside is involved, the contracting officer shall refer to the SBA the entire quantity to which the concern may be entitled, if responsible.

(c) The referral shall include—

(1) A notice that a small business concern has been determined to be nonresponsible, specifying the elements of responsibility the contracting officer found lacking; and

(2) If applicable, a copy of the following:

(i) Solicitation.

(ii) Final offer submitted by the concern whose responsibility is at issue for the procurement.

(iii) Abstract of bids or the contracting officer’s price negotiation memorandum.

(iv) Preaward survey.

(v) Technical data package (including drawings, specifications and statement of work).

(vi) Any other justification and documentation used to arrive at the nonresponsibility determination.

(d) For any single acquisition, the contracting officer shall make only one referral at a time regarding a determination of nonresponsibility.

(e) Contract award shall be withheld by the contracting officer for a period of 15 business days (or longer if agreed to by the SBA and the contracting officer) following receipt by the appropriate SBA Area Office of a referral that includes all required documentation.

Contracting Agency and SBA Do Make Mistakes With how to apply for government small business certificate of competency Determinations

When it comes to SBA COC requirements, did you know that:

• By the contracting officer referring an incomplete proposal to the SBA for a Certificate of Competency determination does not constitute a proper exercise of discretion?
•  When it comes to the issue of proposal responsiveness versus and offeror’s technical responsibility, when an agency cannot evaluate information because the offeror fails to provide it, the agency does not reach the question of responsibility, and thus is not required to refer the matter to the SBA? See Pacific Sky Supply, Inc., B-215189 et al., 85-1 CPD ¶ 53, at 4 (Comp. Gen. Jan. 18, 1985)
• The SBA is also bound by the Government requirements and not just SBA regulations (13 CFR 125.5; FAR 9.104 and FAR 19.602)

Generally, GAO will not review bid protests challenging the SBA Certificate of Competency decisions unless, the protestor shows that the denial was a result of bad faith or the SBA decision was due to the SBA’s failure to consider its own regulations of to consider vital information or because of how information was presented to, or withheld from, the SBA by the procuring agency. Bid Protest Regulations, 4 CFR 21.5(b)(2). See information about appealing to the Federal Circuit Court.

• Government contracting agency’s refusal to extend the time for SBA COC by itself will not sustain a bid protest. See Eagle Sec., Inc., B-242397, Apr. 29, 1991, 91-1 CPD ¶ 415 at 4.
• Not complying with a material requirement of the solicitation does not require the contracting offer to refer the matter to the SBA for a COC determination.
• See information about technical proposals.

Get immediate help

For information about how to apply for SBA certificate of competency or help to litigate small business COC determinations about your ability to perform a specific government project and government small business requirements, call our GAO protest lawyers and SBA COC attorneys at 1-866-601-5518 for a FREE INITIAL CONSULTATION.