What is an SBA Size Protest?

What is an SBA Size Protest? small business lawyers

Are You Qualified to File an SBA Size Protest? Minimize the chance of getting your case thrown out.

An SBA size protest is a legal challenge to the agency’s decision to award a government contract because of the awardee’s alleged small business size violation. Specifically,  the protestor challenges the awardee size status by asserting and providing a legal and factual basis for the size protest.

13 CFR 121.1001 – Who Can File an SBA Size Protest Or Request a Formal Size Determination? An interested party to the awarded contract has legal standing to file an SBA size protest. For example, if your company was an actual bidder in a procurement set aside for small businesses, you would most likely be an interested party.

Besides the contracting officer and other government officials, under SBA regulations, an SBA  bid protest may be filed by “[a]ny offeror that the contracting officer has not eliminated from consideration for any procurement-related reason.” 13 CFR 121.1001(a)(1)(i). An area office “must dismiss a protest filed by a party without standing to protest.” Size Appeal of Conrad Shipyard, LLC, SBA No. SIZ-5873, at 6 (2017) (citing Size Appeal of KAES Enters., LLC, SBA No. SIZ-5425 (2012), recons. denied, SBA No. SIZ-5435 (2013) (PFR)).

However, if your company has been eliminated from consideration for the award for any other reason besides the company’s size, you would not be an interested party. An example would include you being eliminated from consideration for the award for being non-responsiveness, technical unacceptability of your proposal or outside of the competitive range.

On the other hand, a large business would arguably have no legal standing to file this type of bid protest since the company would not be qualified to receive an award. The contracting officer and the SBA can also file an SBA size protest without having to meet the normal filing deadline. See 13 CFR 121.1001 for more information about interested parties and who can file an SBA bid protest.

What are the SBA Bid Protest Filing Deadlines 13 CFR 121.1004? 

If you are contemplating filing an SBA size protest on a government contract award, you must file the challenge and it 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 protesting party of the identity of the prospective awardee.

SBA Size Protest Process

When the SBA receives a small business bid protest, it will investigate the awardee’s size status. It will notify the challenged contractor and requests a response to the SBA bid protest allegations. The awardee firm will also have to fill out SBA Form 355 and provide additional information as requested by the SBA. The SBA area office will generally make a size determination within 15 business days of receiving the bid protest. It will then notify the protestor and the challenged company. See information about Avoiding Costly SDVOSB Joint Venture Mistakes – CFR 125.18

Note: Failure to provide the requested information to the SBA, may trigger an adverse size determination for the company defending the small business protest. This is called the Adverse Inference Rule.

What happens when the protestor receives notification after business hours?

This problem occurs sometimes when the contracting officer sends an email to the protestor (unsuccessful offeror) after business hours. The question is whether it is the contracting officer’s business hours or the recipient’s business hours that count.

SBA Office of Hearings and Appeals has addressed this issue in the case of Size Appeal of Fed. Maint. Hawaii, Inc., SBA No.SIZ-5887, at 1 (2018). In that case, the contracting agency sent a notice to the awardee’s office after business hours. After business hours is usually considered as after 5PM. Therefore, the date of notification would be the next business day. Learn more about the CEO’s decision to file a size protest here.

What if there is no notice of the award?

According to 13 CFR 121.1004, if there is no requirement for written pre-award notice or notice of award, or where the contracting officer did not provide written notification of award, the 5-day size protest filing deadline period will commence upon oral notification by the contracting officer or authorized representative or another means (such as public announcements or other oral communications) of the identity of the apparent successful offeror.

What happens if the contracting officer receives a late SBA bid protest?

The contracting officer must still forward the size protest to the SBA. The SBA will dismiss an untimely protest. See SBA Office of Hearings and Appeals Reverses Totality of the Circumstances Test & Affiliation Analysis

SBA Size Protest Requirements

According to 13 CFR 121.1007(b) of the SBA regulation, rules on size protest requirements suggest that a small business size protest must be sufficiently specific to be considered reasonable notice as to the grounds upon which you are questioning the awardee’s small business status. In other words, you cannot simply give indications, or make general statements without some level of detail as to how you reach your conclusion. When filing your SBA size protest, you should also attach what supporting evidence you have.  See 13 CFR 121.1007(b).  See Tips on How to Avoid SBA Small Business Size Protests.

What is a Small Business Size Standard?

To analyze whether a company is small or other than small, the SBA will have to first apply the correct small business size standard. The measurement tool is usually by the number of employees or average annual receipts. The measurement also reflects the largest size that a business (including its subsidiaries and affiliates) must be to remain certified as a small business under SBA regulation and federal government contracting programs. Filing NAICS Code Size Standards Small Business protest.

Each code under the North American Industry Classification System (NAICS) drives whether your company is small or not. Your company could be small under one NAICS code and yet be large under another. This is very important when you are defending an SBA size protest. See also Consequences of Procurement Fraud Schemes & Avoiding Criminal Liability.

What is the Adverse Inference Rule in SBA Size Protests?  

When another contractor files an SBA size protest against your firm, it is your company that has to intervene and defend against the allegations. In other words, your company has the burden of proof to establish that your status meets the legal definition of being a small business. See 13 CFR121.1009(c). When the SBA requests information during its investigation, you must provide answers to the protestor’s allegations or findings of the SBA. See also 13 CFR121.1008(c).

If you do not submit the required information or responses to the allegations in the bid protest, or even if you provide  “incomplete information,” the SBA  may implement the Adverse Inference Rule and draw an adverse inference that the missing information “would demonstrate that the concern is other than a small business.” See 13 CFR 121.1008(d); see also 13 CFR 121.1009(d).See also Size Appeal of Perry Johnson & Assocs., Inc., SBA No. SIZ-5943, at 12 (2018). 

Impact of Adverse SBA Size Determination

The process and regulations that govern small business protests can be very tricky.  It is very important to understand that once the Area Office issues an adverse SBA size determination, you cannot represent your company as being small under that NAICS code for future procurements unless the SBA issues a new size determination or SBA OHA reverses the SBA’ decision.

What are Some Mistakes to Avoid in SBA Protests?

Although you might have a strong feeling that your competition does not meet the SBA’s size standards, you must avoid the following mistakes at all costs.

  • Filing a size protest with mere speculative language. You must support your bid protest letter with more than just mere hunches. Under the SBA protest regulations, a size protest that is based on speculation will get dismissed.
  • Alleging that the awardee cannot perform the contract without anything more. Companies often make the mistake of alleging the awardee is not a small business. However, the bulk of the argument is that the awardee cannot perform the contract requirements. Contract performance is usually left to the agency’s discretion and not something that courts usually get involved with.
  • Failing to understand that the SBA can find a company other than small for other reasons not stated in the bid protest.

Call our SBA Size Protest Lawyers and Appeal Attorneys Today

If you need help with the small business bid protest process, or with a size appeal to OHA, call the government small business attorneys and SBA size protest lawyers at Watson & Associates, LLC at 1-866-6015518.