SBA Size Protests 13 CFR 121.404 – When Does Your Business Size Count?

A common question in federal procurement arises as to what date does your size count for an SBA small business size protest under Code of Federal Regulations Title 13 part 121 (13 CFR part 121 small business definition) SBA regulations stipulate that if you meet SBA size standards at the time you receive the contract, then you are considered a small business throughout the life of that contract. See 13 CFR 121.404 (g). However, there is still confusion when reading 13 CFR 125.18. and 13 CFR 125.2.

SBA size protests can make or break a company’s chances for award if the annual sales or amount of employees does not meet the regulatory requirements. A common problem for many companies occur when the solicitation expressly requires recertification of your small business status on the occurrence of certain events. This is where having SBA bid protest lawyers on your team can help.

Many small businesses still file a government contract protests that argue against the rules.  For example, the Small Business Administration (SBA) will not entertain a size protest against the award of an order under a GWAC or other long-term contract, unless the procuring agency requested recertification in conjunction with that order. Code of Federal Regulations Title 13 CFR Part 121.1004(a)(3)(iii).

Many companies in an SBA size standards protest use previous information and evidence to support their allegations. However, a common question arises as to the situation at the time the offeror submitted its bid. Failure to consider this point can lead to an unfavorable result.

When considering the characteristics of small business size regulations, look at the sale of businesses and when the sale was executed. These facts can seriously impact the outcome of a small business size protest.

13 CFR 121 Small Business Definition 

When does your small business size normally count for purposes of an SBA size protest?

If you are faced with defending a size protest about the 13 CFR part 121 small business definition, arguments pertaining to a conflict between 13 CFR Part 121.404(a) and 13 CFR 121.103(h)(3)(iii) will not be successful unless there a facts to support the argument in your case.

In small business size protest cases, 13 CFR 121.404(a) stipulates that SBA will examine “the size status of a concern, including its affiliates” as of the date of self-certification  and analyzed under the North American industry classification system NAICS.

When Does Your Business Size Count under the NonManufacturer Rule and Certificate of Competency?

The small business size status of an applicant for a Certificate of Competency (COC) relating to an unrestricted procurement is determined as of the date of the concern’s application for the COC.

The Business size status for purposes of compliance with the nonmanufacturer rule set forth in § 121.406(b)(1) and the ostensible subcontractor rule set forth in § 121.103(h)(4) is determined as of the date of the final proposal revision for negotiated acquisitions and final bid for sealed bidding. See also information about when Contractor Faces Service Disabled Veteran Fraud and False Claims Act Criminal Liability

Subcontracting to Other Small Businesses

When you win a federal contract, and you want to subcontract to other small businesses, you should be aware of the limitations on subcontracting rules. These rules mandate the minimum amount of work that the prime contractor must perform and the most that it can subcontract out to other small businesses.

To avoid SBA affiliation rules, you want to also be aware of the similarly situated small business rule and its application when you are subcontracting to other companies.

 SBA Small Business Size Standard Bid Protests for Task Orders

Task orders generally

In numerous SBA size protest decisions, OHA has ruled that “size protests may only be filed against task orders issued under long-term contracts if the contracting officer requests size recertification for that task order.” This was the decision in Size Appeal of Tyler Constr. Group, Inc., SBA No. SIZ-5323, at 3 (2012).  However, if there is no such requests from the CO, your business size reverts back to the date or bid submission.

• Small businesses and their corporate lawyers must understand this basic rule for purposes of filing an SBA size protest;
• You can spend quite a lot of money on attorney fees only to get your protest dismissed.

Under small business size regulations 13 CFR Part 121.404, small business status counts on the initial date of award for long-term contracts: When agencies solicit competition for task orders under long-term contracts such as GWAC, and set those orders aside for small businesses, this does not mean that bidders have to re-certify their small business size status all over again.

OHA has also repeatedly held that “SBA will not entertain a size protest against the award of an order under a long-term contract unless the procuring agency requested recertification in conjunction with the order.” Size Appeal of RX Joint Venture, LLC, SBA No. SIZ-5683 (2015). The terms of the original contract are the important factors.

SBA OHA has specifically rejected the notion that “merely setting [a] task order aside for small businesses is a request for recertification,” and likewise has found that recertification does not occur simply because mandatory FAR clauses were incorporated. See Size Appeals of Safety and Ecology Corp., SBA No. SIZ-5177, at 21 (2010).

So what happens if the task order notification states “[n]o response is required unless a basis exists to challenge the small business size status of the apparently successful offeror?

The key answer is that the agency’s language does not override the SBA small business size protest process, which is governed by SBA regulations. See Size Appeal of HAL-PE Assocs. Eng’g Servs., Inc., SBA No. SIZ-5478 (2013) (procuring agency’s issuance of a corrected award notice did not extend the time period for filing a small business size standard protest, notwithstanding that the corrected notice stated that size protests were due five days after issuance of the corrected notice).

Make sure your protest is timely: SBA small business size standard regulations require that a small business size protest “… must be received by the contracting officer prior to the close of business on the 5th day, exclusive of Saturdays, Sundays, and legal holidays, after the contracting officer has notified the protestor of the identity of the prospective awardee.” 13 CFR Part 121.1004(a)(2). Regardless of the strong legal arguments made, any size protest filed after five days from the date the protestor learned of the identity of the prospective awardee will be dismissed. Size Appeal of HAL-PE Associates Engineering Services, Inc., SBA No. SIZ-5478 (2013). Also, find out more about the dos and don’s of filing NAICS protests.

Note

When you file an appeal to SBA OHA, note that the court’s review is based upon the evidence in the record at the time the SBA Area Office made its small business size determination. See 13 CFR 134.308 (a).  You want to be careful not to include evidence in your appeal that was not previously presented to the SBA Area Office. See also., Size Appeal of Maximum Demolition, Inc., SBA No. SIZ-5073, at 2 (2009).

SDVOSB Certification Requirements Under 13 CFR 125.18

A service-disabled business must certify its status for the underlying contract as of the initial offer ( there may be different requirements under the nonmanufacturer rule.) This is usually the standard certification date. However, there are other situations under which SDVOSB’s must also certify or recertify their SDVO status under 13 CFR 125.18. Your company business must submit the appropriate representations and certifications at the time it submits its initial offer which includes price (or other formal response to a solicitation) to the contracting officer, including:

•  It is small under the size standard corresponding to the NAICS code(s) assigned to the contract;
• It is an SDVO SBC; and
• There has been no material change in any of its circumstances affecting its SDVO SBC eligibility

SDVOSB Recertification Requirements 

As a general rule, an SDVOSB that represents itself and qualifies as a disabled veteran business at the time of initial offer (or other formal response to a solicitation), which includes price, including a Multiple Award Contract, is considered an SDVOSB  throughout the life of the contract. Unless otherwise required by the contracting officer in connection with a specific task order. The question becomes whether the CO must include those recertification requirements at the beginning solicitation and evaluation stages. Certainly, it may seem unreasonable for the CO to randomly select companies at various times to recertify their SDVOSB status.

If your company fails to qualify as an SDVOSB after award then the procuring contracting agency may exercise options and still count the award as an SDVOSB. However, the following exceptions apply.

• If your contract is novated to another company, then the continuing company must certify its SDVOSB status to the procuring agency, or inform the procuring agency that it does not qualify as SDVOSB, within 30 days of the novation approval. This does not mean that the novated-to company must be SDVOSB. Instead, if not then the agency can no longer count the options or additional orders pursuant to the contract from that point forward, towards its SDVOSB goals.
• Recertification must take place within 30 days after an acquisition or a merger with another company. This can be tricky because if the status changes after initial bid submission, then the SDVOSB  must recertify within 30 days of the merger (even if before the actual award). This can create a problem since according to the regulation, the agency can no longer count the options or orders towards SDVOSB goals.

Call an SBA Small Business Size Standard Protest Lawyer For Help

If you are not sure about 13 CFR Part 121 and applicable SBA size protest rules, you can avoid spending thousands in litigation or appeals by contacting our experienced SBA small business size standard protest attorneys and appeal lawyers at 1-866-601-5518.