Protesting SBA Certificate of Competency COC Decisions

The SBA agency  Certificate of Competency (COC)  rules allow small business firms to challenge, generally in a bid protest, the agency’s source selection decision that is not technically responsible to perform the contract.

What is a Certificate of Competency (COC)?

The Government Certificate of Competency Program is in place in order for someone to make a final determination if your company is qualified for a specific federal government contract. Yes, although the reason for having a source selection team to make such a decision, the bid evaluation phase can be viewed as subjective.  The process allows for a separation of power in that there is a prospective offeror, and there is doubt about the company’s ability to successfully perform the contract, then the contracting officer is required to refer the company to the Small Business Administration (SBA.) This is not discretionary.

• The Government certificate of competency GCC process allows the SBA to assess the facts and, if warranted, issue a COC in favor of the prospective bidder.
• When you request a COC review from the SBA, the burden is on you to demonstrate the firm’s ability to perform on the contract.
• The SBA COC process provides a way for you to appeal the contracting officer’s findings.

What Must Happen First Before the COC Referral Takes Place?

A common problem when looking at the overall SBA referral process is that the agency may confuse complying with the solicitation terms with whether a company is responsible (capable) of performing the contract. Having an experienced government contracts attorney on your team can quickly minimize this problem. When you submit a bid to the federal government, the first line of inquiry is whether the proposal first complies with the solicitation’s expressed requirements (responsiveness.) This is totally different than getting to the next step of deciding whether a company is responsible.

• See the Manus case that explains the two steps and ruling that procuring agency can not cure an incomplete proposal from a small business offeror by submitting the matter to the Small Business Administration (“SBA”) for a Certificate of Competency.

What Triggers A Referral to the SBA?

The general rule is that when the prospective awardee is a small business and the contracting agency finds that you are an otherwise technically acceptable small business that is  unacceptable under a LPTA pass/fail evaluation of responsibility-type criteria, such a nonresponsibility determination by the agency triggers the requirement for the contracting officer to refer the matter to the SBA for a Certificate of Competency determination.

• Knowing how to get a government certificate of competency determination is always helpful in the event that you disagree with the agency’s decision

Contracting source selection boards should look to see whether the responsibility decisions were based on issues related to your capability, business credit, the appearance of technical competency, professional capacity, the offeror’s business integrity, or similar finding in the proposal. A reasonable finding of any of these issues warrants referral to the local SBA agency for  the SBA Certificate of Competency determination. 

Basics for Government Certificate of Competency Decisions 13 CFR 125.5 & FAR 19.6

When agencies conduct technical evaluations of proposals, they must first make sure that your bid is responsive to the solicitation requirements. COC decisions under FAR 13 CFR 125.5 and FAR 19.6 are not intended to give the SBA sole authority to make proposal responsiveness decisions or to make source selection board decisions. Many agencies mistakenly avoid this step. Then lump responsiveness decisions into responsibility determinations. See the Manus case.

• Agencies should not initiate an SBA certificate of competency COC referral to cure a proposal defect.

SBA Certificate of Competency COC Process

Under SBA agency procurement regulations, if government contracting agencies refer the decision to the SBA for a Certificate of Competency COC, the CO must hold the award for 15  working days (the time can be extended if agreed to by the CO and the SBA). See 13 CFR 125.5 (c)(2) (2014).

• If the SBA does not issue a decision within the 15-day period, then the CO must make the award to the bidder that is next in line. FAR 19.602-4(c).
• The Contracting Officer has sole discretion to grant the SBA an extension of the 15-day requirement.  See Eagle Sec., Inc., B-242397, Apr. 29, 1991, 91-1 CPD ¶ 415 at 4.  
• FAR 9.104–1 gives a list of issues that the agency can find issues that lead to a getting a contractor certificate of competency.

When the CO denies the SBA request for a COC extension, GAO will not review a challenge to this decision unless the protestor shows that the contracting officer’s discretion in denying an extension was due to fraud or bad faith.

What Rights Do You have in This Process?

 When the agency makes a decision that the small business is not technically responsible, the contracting officer must refer the matter to the SBA for a Certificate of Competency determination. Once the SBA agency makes its decision to issue a positive determination, government contracting agencies must issue the contract to the challenged business. On the other hand, if the SBA does not issue a COC, the contracting agency will issue it to the next company in line for the award.

• You can challenge the contracting officer’s decision by requesting a competency determination from the SBA.
• Even when the CO refers the matter to the SBA, it’s a good practice to still request a COC from the SBA.

Avoiding Costly Mistakes as a Government Contractor

Generally, everyone, including the contracting agency, is bound by the SBA’s certificate of competency decision. However, you want to avoid making the costly legal mistake of appealing the decision only to find out that the Court of Federal Claims does cannot hear your case. To effectively appeal a contractor certificate of competency determination, and in accordance with Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907-08, 912 (Fed. Cir. 2013),you want to make sure that you can show the following:

1. The procurement lacked a rational basis or involved a violation of regulation or procedure; and 
2. The protestor was prejudiced by the error.

You want to avoid making conclusory arguments.

Either the contracting agency erred or the SBA erred, or both. You may want to look at each process and decision making individually. You also want to make sure that if you are the contractor protesting SBA certificate of competency decision that you are actually the apparent offeror. Otherwise, a COC bid protest may get dismissed as having no standing to bring the case. See What is a Bid Protest? COFC & GAO Government Contract Protest Timeline.

The Bid Protest and Appeal Process is Tricky

When deciding if to appeal an SBA certificate of competency decision, you must find the error(s) made by either the contracting agency or the Small Business Administration or both.  One has to first decide whether the error occurred at the beginning of the bidding process where the agency may have made a responsibility decision when it should have made a solicitation responsiveness decision. Many companies or lawyers miss this important step.  See FAR 15.404.1 Price Reasonableness Evaluations & Far Fair and Reasonable Price Bid Protests.

The first concern after reviewing the SBA’s decision is whether it went out of its authority to conduct what essentially was the source selection team’s assignment as directed from the solicitation.

Courts’ Insight Into the SBA COC Process

Agency Responsibility Determination The Rule of Law

The Small Business Act suggests that government contracting agencies should not make a non-responsibility determination without sending the issue to the SBA. The SBA has conclusive authority to make COC responsibility determinations under 15 USC 637 (b)(7) and FAR 19.6. There are some exceptions to this rule.

Many agencies believe that there are no checks and balances to the SBA’s COC authority under 13 CFR 125 and FAR 19.6. However, federal procurement law does have ways of testing unreasonable decisions where agencies abuse their discretion.

• In one case, GAO sustained a bid protest where the government excluded the protester from further competition based on the agency’s perceived lack of business integrity.  GAO found this to be a negative responsibility decision that should have been referred to the SBA for a Certificate of Competency determination.
• Courts have a hard position that you have an affirmative duty to submit a proposal that conforms to the explicit requirements outlined in the solicitation.
• Courts find that when an offeror failed to submit the required information for a past performance evaluation is different from finding that an offeror is not a responsible contractor.

We are Here to Help

If your company is involved in the government certificate of competency process or wants to appeal and SBA COC determination, please call the government contract lawyers at Watson & Associates, LLC for a Free Initial Consultation.

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