A recent decision by the Small Business Administration (SBA)’s Office of Hearings and Appeals (OHA) provides a good reminder that concerns filing size protests need to do their homework and submit supporting evidence with their protests. Protestors should not rely on the SBA to investigate or look for materials that might be relevant to the issues raised in the protest, much less look for and investigate other issues. Moreover, OHA typically will not consider new evidence – information not provided to the Area Office – even where it goes to the credibility of statements by the protested concern to the Area Office. Size Appeal of Wescott Electric Co., SBA No. SIZ-5691, Nov. 5, 2015.
Wescott filed the instant size protest, challenging a proposed award to Innovative Support Solutions, Inc. (ISS), which had identified Broadway Electric, Inc. (BEI) as a subcontractor. Wescott alleged that ISS was “a Small Business front for [BEI],” which actually would perform the work and provide assets to obtain the required bonding. Wescott alleged that the two companies were affiliated through common management and the newly-organized concern rule, and asserted that the two companies had shared the same address and phone numbers in 2013. Wescott, however, did not submit any evidence supporting these allegations.
The Area Office found the allegations sufficiently specific, and processed the size protest, requiring ISS to respond. ISS provided its completed SBA Form 355, its proposal and other documents, and a sworn declaration from its President. Based thereon, the Area Office concluded that ISS was small. In so doing, the Area Office addressed each of Wescott’s allegations and legal theories, as well as the ostensible subcontractor rule, and found that none provided a basis for finding ISS other than small, and that any bonding assistance being provided was not sufficient to find affiliation in the absence of other factors.
Wescott appealed to OHA, complaining that the Area Office’s analysis was “restricted to available records on hand and obtained from [ISS and BEI] as opposed to other outside sources.” Wescott argued that, as a result, the Area Office “failed to uncover and consider relevant information that would have shown the affiliation between [ISS and BEI],” and that ISS and BEI had “a long-standing business relationship in the nature of a joint venture,” and raised questions as to the accuracy of information in the Area Office’s decision.
In support of these arguments, Wescott provided new evidence, showing that ISS’s President previously was employed by BEI, that ISS and BEI shared the same business address until April 2013, and that ISS and BEI together had won seven contracts in the last two years. Wescott, however, did not file a motion for leave to submit this new evidence, nor did Wescott explain why it had not provided this evidence to the Area Office with the size protest or during the Area Office’s size review.
Naturally, ISS opposed admission of the new evidence.
OHA, predictably, excluded the new evidence on two grounds. First, Wescott did not have “good cause,” because the evidence was available at the time Westcott filed the protest, and Wescott had not offered any rationale as to why it did not provide the information to the Area Office. Second, Wescott had not filed the required motion, which omission typically is “fatal” to an attempt at introducing new evidence. OHA reiterated that its review is based on the evidence in the record at the time the Area Office made its determination. New evidence will be admitted on appeal only on a motion establishing good cause, and demonstrating that the new evidence (1) is relevant to the issues on appeal, (2) does not unduly enlarge the issues, and (3) clarifies facts as to the issues.
Turning to the merits, OHA stated that Westcott’s arguments reflected “a misunderstanding of the legal process governing size protests and size determinations. SBA regulations provide that a size protest ‘must include specific facts,’ and that ‘[w]here materials supporting the protest are available, they should be submitted with the protest.’ An area office will base its decision ‘primarily on the information supplied by the protestor or the entity requesting the size determination and that provided by the concern whose size status is at issue.’ In addition, ‘SBA will give greater weight to specific, signed, factual evidence than to general, unsupported allegations or opinions.’” Here, the Area Office considered Wescott’s various allegations, but properly gave greater weight to ISS’s sworn statements.
OHA further stated that “[t]he Area Office was not required to, and did not, expand the scope of its review beyond the issues raised by [Wescott],” and “reasonably chose to confine its review to the issues raised in the protest.”
The lesson for erstwhile size protestors is to do some homework before filing. First, undertake at least a rudimentary internet search of the usual sources, including SAM, SBA’s Small Business Dynamic System and FPDS-NextGen, as well as the relevant state corporation records and the protested company’s website, and Facebook and Linked-In pages. Second, state the protest allegations specifically and broadly to cover all possible justifiable protest grounds based on the information found and any other known information. Third, submit copies of all pertinent materials supporting the stated protest grounds with the initial size protest.
While the threshold for filing a size protest is low, and the five business-day filing time is tight, you need to do your homework and support your protest if you want to win. Do not rely on SBA to investigate and do your work for you. As Wescott demonstrates, the Area Office is not required to go beyond the issues raised in the protest, and does not have to independently investigate and go beyond what the parties provide. Therefore, help the Area Office do its job by doing your homework up-front, and give the Area Office the information it needs to ask the right questions and rule in your favor.
Hopewell Darneille is responsible for the contents of this Article.
© Jackson Kelly PLLC 2015