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 Protesting Agency SBA certificate of competency COC Decisions FAR 19.6 & 13 CFR 125.5responsible to perform the contract.

Agency Responsibility Determination –The Rule of Law: The Small Business Act suggest 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.

The contractor protesting SBA agency certificate of competency decision as non-responsible should be the apparent offeror. Otherwise, a COC bid protest may get dismissed. When the agency makes a decision that the small business is no 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 to the next company in line for the award.

Basics for SBA Certificate of Competency COC Determinations 13 CFR 125.5 & FAR 19.6

When agencies conduct technical evaluations, they must first make sure that the bidder 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.

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

Contracting source selection boards should look to see whether the responsibility decisions were based on issues related to the offeror’s 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. 

Filing an SBA Agency COC Bid Protest: Many bidders challenge the agency’s responsibility determinations in several ways. First, protestors may challenge the contract award because they believe that the successful awardee’s proposal should have been deemed technically non-responsible. This is a difficult argument because the contractors are merely challenging the source selection official’s business judgment.

Other companies filing a bid protest may argue that the adverse technical evaluation score was based on an issue of responsibility that should have been referred to the SBA for a final determination. This can be a winning argument only if the facts support the argument.

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.

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 ha 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.  

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.

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