Small Business Set Aside GAO Protest Decisions

Although congressional mandates show an increase in total small business set aside procurement, filing a bid protest that challenges the contracting agency’s decision to set aside a procurement for small businesses must be approached with extreme care.

The ultimate concern under FAR 19.502 is to understand what exactly is the government contracting agency supposed to do before making its decision.

In order to file a protest, whether, at the GAO or COFC, you have to address this critical part of the analysis.

FAR 19.502 Requirement – Rules for Total Small Business Set Aside Program

Under Federal Acquisition Regulation (FAR) 19.502-2(b), a procurement with an anticipated dollar value of more than $150,000, such as the one here, must be set aside for exclusive small business participation when there is a reasonable expectation that: (1) offers will be received from at least two responsible small business concerns; and (2) that award will be made at a fair market price.

Under Set Aside Program rules, the agency is only supposed to use reasonable efforts to find responsible small businesses that could potentially compete. An argument could be made that something as simple as searching SAMS could suffice. However, the correct approach to filing a bid protest based upon total small business set aside decision is not what should have been done.

GAO Bid Protest Approach to Decisions: Instead, government contracts and bid protest lawyer should analyze what the agency actually did in order to determine the reasonableness of its small business set aside actions. See Med-South, Inc., B-401214, May 20, 2009, 2009 CPD ¶ 112 at 2; National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD ¶ 138 at 2.

What are Reasonable Agency Actions under FAR 19.502? The contracting agency may choose to review prior procurement history or consider the recommendations of the small business specialists when making a small business set aside program decision. Small business specialists play a vital role in the decision to set aside a specific procurement. Generally speaking, if there is a disagreement then the decision may go as far as the appointing authority of the small business specialist. This is especially true on Air Force installations.

A small business set aside can also result from market surveys or sources sought efforts. These are the types of inquiries that a bid protest attorney may look at during the case analysis phase.

One thing to keep in mind is that agencies should go as far as making responsibility determinations. Government contracting rules require that they should focus on the “reasonable expectation” mandate.

  • Learning how to approach this type of bid protest at GAO or COFC is critical to your likelihood of success.
  • Courts cannot substitute business judgment which is within the contracting officer’s (CO) discretion.
  • A successful bid protest that challenges a total small business set aside will hinge its arguments on the abuse of the CO’s discretion and not what was the better way of making the decision.

If you are contemplating an upcoming requirement, it might be wise to contact the agency small business specialist and send copies of you capability statements that explain your core competencies. Of course, you are only one small business.

Understanding the role, and balance of power between a small business specialist and the CO can create a better understanding of the internal procurement process.

Never hinge you bid protest that challenges the CO’s decision by showing that market research was inadequate. Under FAR 19.502, chances are that you will not prevail.

A common goal when the decision to make a small business set aside decision results in unrestricted procurements is to show that the threshold has been met and you must show your own proof that two or more small business could have submitted a proposal and fair and reasonable pricing.

Contractors should always remember that filing a bid protest puts the burden of proof on you to draft a sound protest letter.

Contact a government contracts attorney.

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