Much has been written, including on this blog, about filing size protests. However, less attention is paid to an equally important subject – namely, defending size protests. This article, the first in what will be a five-part series on defending size protests, provides an overview of size protests. Future articles will address (i) the importance of advance consideration and planning to address and avoid size issues, (ii) responding to a size protest and SBA’s Form 355, (iii) subsequent proceedings before the Area Office, and (iv) litigating appeals before SBA’s Office of Hearings and Appeals (OHA).
Size protests are an important check on abuse by concerns that are other than small. However, size protests themselves can be abusive, and if not timely and properly defended, can cause the loss of an award. The threshold to file a size protest is low. For this reason, a size protest can be done at little cost. Once filed, however, the Area Office is not limited by the initial protest, and can find a concern other than small based on grounds other than those raised in the protest. Therefore, small businesses must properly address size issues in establishing their business structure and preparing their proposals, and be prepared to defend size protests properly.
The size protest process is deceptively simple, informal and quick. Generally speaking, any offeror can challenge the size of an announced awardee. The protest must be submitted or noticed to the cognizant contracting officer within five business days of notice of the proposed or actual award. The contracting officer, who also can question a proposed awardee’s size on his or her own initiative, then forwards the protest to the cognizant SBA Area Office, which notifies the challenged concern. That concern is required to respond to the protest, and complete and return SBA Form 355 and supporting documents, within just three working days. The Area Office then reviews the protest and the response, and may seek additional information.
The Area Office has a very tight 15-working day decision target from receipt of the protest. The Area Office may seek an enlargement of this time from the procuring agency, which the agency may or may not grant, depending upon the time sensitivity of the procurement.
The agency is required to stay award pending the Area Office’s review, but may proceed where necessary to protect the public interest. Once the Area Office issues a decision, any adversely affected person may appeal the decision to OHA within 15 calendar days of receipt.
Where a concern is determined other than small, it cannot receive the award or, if the award has already been made, it faces termination. The concern also (i) may not thereafter self-certify under the same size standard until SBA recertifies the concern as small and, importantly, (ii) must notify the contracting officers under any pending procurements as to the adverse size determination.
The following considerations frame the proper defense of a size protest:
- While the protest is filed with the contracting agency, the protest will be resolved by SBA, and SBA’s regulations, not the FAR, govern the processing and decision of the protest, including any appeals;
- Any offeror may file a size protest (a much broader standard than the “interested party” bid protest model), and the required specificity is very low, making it easy to protest;
- Once a protest is filed, the Area Office is not limited to the protest grounds, and may seek or use other information;
- Importantly, and unlike most court or agency proceedings, the concern whose size is at issue, not the protestor, bears the burden of proof to establish its small business size status;
- Size generally is determined as of the date the concern submits its written self-certification as part of its initial offer, and SBA will not consider later changes; this makes it difficult for a concern to cure, for the instant procurement, any problems that may be identified during the course of a protest;
- The tight three business-day initial response time, and the Area Office’s 15-business day decision target, create tremendous time pressures, and while some extensions may be granted, they are apt to be short; challenged concerns thus have little time to respond;
- The Area Office may draw an adverse inference if the concern whose size is at issue fails to timely or fully respond, or provide requested information or documents;
- The consequences of an adverse finding are substantial, and include not only the likely loss of the subject award, but also may adversely impact the concern’s ability to compete for other pending or future awards.
As we will discuss in our next installment, the early time as of which size is determined, the tight protest deadlines and the affirmative burden of proof, all place a high premium upon small businesses doing their homework and being prepared well in advance to defend a potential size protest.
Hopewell Darneille is the attorney responsible for the content of this article.
© Jackson Kelly PLLC 2014