Government Contracts Monitor

Getting Larger? You’re Not Automatically Ineligible for Small Business Task Orders

February 16, 2015

Most small business contractors know that growth past a certain point can adversely impact their ability to win new work from the Government. And this understanding is correct, as far as it goes. But, as the recent decision in Research and Development Solutions, Inc., B-410581; B-410581.2 (January 14, 2015), makes clear, it is important not to overstate the impact of becoming “other than small.” In this case,the Government Accountability Office (GAO) confirmed the distinction between being counted towards an agency’s small business numbers and being eligible for award. Simply put, since an offeror’s eligibility for a small business contract generally depends on the offeror’s size at the time of its proposal submission for the overarching contract (unless a task order requires recertification), not at the time a subsequent task order is issued, a business may still be eligible for task orders set aside for small businesses even after it becomes “other-than-small.” The fact that the agency cannot count such a task order as a small business award generally does not affect the issue of eligibility.

This protest arose in response to the Department of the Navy’s award of a task order under the SeaPort-e indefinite-delivery/indefinite-quantity (IDIQ) contract to ICI Services, Corp. (ICI). The protester, Research and Development Solutions, Inc. (RDSI), contended that ICI was ineligible for the award, in part because ICI had recertified as “other-than-small” between submitting its proposal and the Navy’s issuance of the subject task order. Specifically, RDSI protested that the Navy did not comply with Section K of the solicitation, or 13 C.F.R. § 121.404(g) of the Small Business Administration (SBA) regulations when the Navy failed to confirm that ICI was still small at the time of award.

Section K of the solicitation stated that: “Offerors are not required to submit representation or certifications in response to this solicitation or its subsequent Task Order award, if any [but] . . .[t]he Ordering Officer will consider quoter’s size/socioeconomic status as defined within the SeaPort-e portal . . . .” RDSI asserted that this language required the contracting officer (CO) to reconfirm ICI’s size status before awarding the task order. GAO concluded that the CO did in fact considerICI’s size (all that was actually required here) by recognizing that ICI had voluntarily recertified as “other-than-small” after submitting its original contract proposal. Having recognized the recertification, the CO consulted with the Seaport-e procuring contracting officer and the Navy’s small business advisor, both of whom correctly advised the CO that ICI remained eligible for the task order because ICI was certified as a small business at the time it submitted its original proposal. According to the GAO, this consultation satisfied the solicitation’s “consider[ation]” requirement.

Likewise, GAO found that the award decision was consistent and compliant with the applicable SBA regulation, 13 C.F.R. § 121.404(g), which does not require disqualification of an offeror deemed small at the time of initial proposal submission if and when it later becomes “other than small.” To the contrary, GAO noted that the SBA regulation makes clear that a concern qualified as small at the beginning of a contract “is considered a small business throughout the life of that contract.” The regulation goes on to state, “Where a concern grows to be other than small, the procuring agency may exercise options and still count the award as an award to a small business.” The regulation’s only limitation is that in contracts in excess of five years (including options), where the CO is required to obtain recertification, “if the contractor certifies that it is other than small, the agency can no longer count the options or orders pursuant to the contract towards [the agency’s] small business prime contracting goals.” 13 C.F.R. § 121.404(g)(3)(v); accord 13 C.F.R. § 121.404(A)(1)(i). Thus, based on the plain language of the SBA regulation, the fact that the order will not count towards the small business contracting goals does not preclude the award of a task order to a business which was small at the time of receipt of a contract.

Note that this scenario is distinguishable from one in which recertification is specifically required in connection with a task order. In that case, the size of the business at the time of recertification would impact eligibility for an award in accordance with, for example, 13 C.F.R. § 121.404(g)(3)(v). See also 13 C.F.R. § 121.404(A)(1)(i), as noted in Size Appeal of Research and Development Solutions, Inc. (re ICI Services Corp.), SBA No. SIZ-5626 (Dec. 12, 2014).

Small businesses in growth mode – and their competitors – would do well to keep in mind the lessons of this case.As long as a concern is small at the time of award, even if it subsequently recertifies as “other-than-small” it can continue to pursue task orders under an existing contract unless recertification is required for the new task orders. On the flip-side, small business competitors seeking to challenge a task order award to a formerly small business solely on the basis that the awardee is no longer small should think twice about launching a size-based protest as it may be futile.

Lara Nochomovitz is responsible for the contents of this article.