Federal Circuit Court of Appeals NAICS Code Protest OHA Exhaustion Of Administrative Remedies

Lawyers Appealing from COFC Federal Claims Protest Decisions to the Court of Appeals for the Federal Circuit

In a recent case, the United States Court of Appeals for the Federal Circuit reversed a bid protest decision from the Court of Federal Claims  because the appellant had failed to first exhaust  administrative remedies with OHA about its NAICS code disputes.

The appeals court brings to light the importance of intervening in cases that impact government contractors.

Process for NAICS Code Size Standard Disputes

SBA’s regulations instruct that the procuring agency’s contracting officer “designates the proper NAICS code size standard and corresponding size standard in a solicitation, selecting the single NAICS code which best describes the principal purpose of the product or service being acquired.” 13 CFR 121.402(b).

The NAICS code assigned to a solicitation limits the small businesses that may submit bids to those that qualify under the size standard associated with that particular NAICS code. By regulation, the contracting officer’s choice of NAICS code and corresponding size standard “is final unless timely appealed” to the SBA’s OHA.

13 CFR 121.402(d). SBA uses the North American Industry Classification System (“NAICS”) to determine which entities qualify as small business concerns.

The Importance of Intervention in a Bid Protest

One important lesson to take away from the United States Court of Appeals for the Federal Circuit’s decision  is that sometimes, successful offerors should still protect their rights by intervening into a bid protest. In this case, the appellant did not exercise its rights as an intervenor.

SBA regulations identify the types of parties that can either initiate, intervene  or participate in an OHA NAICS code appeal.  Any person that is adversely impacted  can participate in a NAICS code decision appeal to SBA OHA. 13 CFR 134.302(b). See also 13 CFR 121.1103(c)(1)(ii).

Once the NAICS size standard appeal is filed, then any interested party may serve as intervenor and a file a notice or motion to intervene.  Furthermore, when a bid protest is launched, any interested party should seriously consider whether or not they would be impacted by the decision.

If a final agency is made, and you did not participate in the administrative process, the final decision may be binding upon you. Therefore, a subsequent appeal by your company could end up like the above US Court of Appeals  for the Federal Circuit’s decision  

Exhaustion of Administrative Remedies

In the Federal Circuit Court of Appeals decision, the government was successful in its summary judgment motion because it argued that the appellant  failed to exhaust administrative remedies before filing a pre-award protest at the U.S. Court of Federal Claims.

The United States Supreme Court  has recognized the exhaustion doctrine as a mandatory requirement before seeking judicial review.   See McKart v. United States, 395 U.S. 185, 193 (1969);  Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed. Cir. 1998) (quoting McKart, 395 U.S. at 193). 

See How We Can Help With Size Protest Litigation

When appealing a Court of Federal Claims bid protest decision to the Court of Appeals for the Federal Circuit, call our government contract law attorneys at Watson & Associates, LLC for a free INITIAL CONSULTATION at 1-866-601-5518.