Column: SBA’s Proposed Rule Alters the
Landscape for Size and Status Protests
By Samuel S. Finnerty, partner, and Daniel Figuenick III, associate
PilieroMazza PLLC
On Sept. 9, the Small Business Administration (SBA) issued a proposed rule that would make substantial changes to the 8(a) Business Development program.
Scattered throughout the proposed rule are various protest-related changes for the Women-Owned Small Business (WOSB), Service-Disabled Veteran-Owned Small Business (SDVOSB), and Historically Underutilized Business Zone (HUBZone) Programs.
The proposal would expand and limit the ground rules for filing a size or status protest against an apparent successful offeror. To avoid losing contracting opportunities to ineligible contractors, contractors should know when they can file size or status protests. Below are key potential changes and the implications for those seeking to file a size or status protest.
The deadline to submit a public comment is Nov. 8.
Standing to Bring Protests
- Next-lowest bidder: Currently, SBA’s regulations do not contemplate if size or status protests can be brought under sealed bid procurements against the next-lowest bidder in situations in which the original apparent awardee is deemed ineligible due to a size or status protest.
The proposed rule would allow concerns to protest the size or status of the next-lowest bidder if the protest is filed within five business days after notice of the identity of the next-lowest bidder.
There is no reason why the next-lowest bidder should be protected against a potential protest. Accordingly, the proposed rule would expand a disappointed offeror’s ability to bring a size or status protest under sealed bid procurements.
- Consistent rules across SBA programs: The proposed rule also would create consistent rules across SBA’s small business programs for who can initiate a size or status protest.
Currently, any WOSB or SDVOSB offeror can bring a size protest. Any HUBZone offeror not eliminated for reasons unrelated to size can file a size protest.
However, for small business set-aside contracts and competitive 8(a) contracts, only an offeror that the contracting officer has not eliminated from consideration for a procurement-related reason may initiate a size protest.
Under the proposed rule, those terms would apply to all of SBA’s small business programs. Thus, any offeror in the WOSB, SDVOSB or HUBZone program that the contracting officer has not eliminated from consideration for any procurement-related reason could initiate a size protest.
Pending Decisions at the Government Accountability Office (GAO)
The proposed rule also would make various changes and clarifications regarding size protests against firms who have related, pending bid protests against their contract awards at the GAO. In the event an agency takes corrective action in response to such a protest, the proposed rule would require SBA to automatically dismiss the size protests.
If an agency re-evaluates offers, any disappointed offeror could then protest the new (or same) apparent successful offeror within five business days of receiving notice of the awardee.
The proposed rule avoids situations where SBA proceeds with a size determination against a company which, as a result of agency corrective action taken in response to a GAO bid protest, may no longer be the awardee.
In addition, the proposed rule would add that if a bid protest is pending at the GAO, and SBA receives a size protest relating to the same procurement, SBA will suspend its proceedings until GAO has issued a decision.
Once GAO’s decision is issued, SBA would resume proceedings and attempt to issue a formal size determination within 15 business days. SBA already follows this suspension policy, with the proposed rule simply codifying it.
Status Protests of Small Disadvantaged Businesses (SDBs)
Since the SDB Program was effectively eliminated a number of years ago, firms have been unable to protest an awardee’s SDB status. The SBA Office of Inspector General believes that general authority to protest a firm’s SDB status should exist. As such, the proposed rule would authorize SBA to review the SDB status of any firm that has represented itself to be an SDB on a prime contract (for goaling purposes or otherwise) or subcontract to a federal prime contractor whenever it receives credible information calling into question the SDB’s status.
The proposed rule also would allow the contracting officer or SBA to launch their own protest against a proposed subcontractor’s or subcontract awardee’s SDB status.
Other interested parties would also be permitted to submit information to the contracting officer or the SBA in an effort to persuade them to initiate a protest. However, in order to be considered timely, such protests would need to be submitted to the SBA prior to completion of performance by the intended subcontractor.
Where SBA determines that a subcontractor does not qualify as an SDB, the proposed rule would prevent the prime contractor from including subcontracts to that subcontractor as subcontracts to an SDB in its subcontracting reports, starting from the time that the protest was decided.
As a result, prime contractors wanting to avoid the headache of not being able to count subcontracts to SDBs should pay closer attention to and investigate its SDB subcontractors’ status.
A changed landscape
While the proposed rule’s main focus is not on protests, the above changes alter the landscape for size and status protests.
Size and status protests can provide a quick, efficient way to challenge an award to an offeror who certifies as small under a certain category, but for whatever reason, may no longer be small or compliant with the SBA’s regulations. It is important for contractors to know when and what type of size or status protests can be filed.
If your firm is affected by these proposed changes and would like to submit public comment to SBA, please make sure to do so before the deadline on Nov. 8.
Additional coverage of the proposed rule is in the Sept. 23 issue of Set-Aside Alert.
If you have questions about this client alert or SBA’s proposed changes in general, please contact the author, Sam Finnerty, or another member of PilieroMazza’s Government Contracts Group. Special thanks to Daniel Figuenick for his assistance. Visit www.PilieroMazza.com. This column was reprinted with permission.
