GAO Says SBA Certificate of Competency is (Usually) Outside its Jurisdiction

The breadth and depth of protests heard by GAO may lead even a seasoned government contractor to overlook the limitations of GAO’s jurisdiction.

As one contractor recently found, the GAO generally will not consider protests based on an allegation that the agency should not have referred an adverse responsibility determination to the SBA for a certificate of competency review.

We must lay the foundation for the Certificate of Competency (“COC”) procedure before adequately analyzing the case before us. COCs are authorized and regulated by 15 U.S.C. § 637(b)(7), 13 C.F.R. § 125.5, and FAR 19.6. While they each address COCs in their own language, the core idea is that “[a] COC is a written instrument issued by SBA to a Government contracting officer, certifying that one or more named small business concerns possess the responsibility to perform a specific Government procurement contract[.]”

A contracting officer is obligated to refer a small business concern to SBA for possible COC when the contracting officer determines that a small business is not responsible, and that determination would preclude the small business from receiving an award. When the SBA issues a COC, as in the circumstances presented in the case before us, it effectively overturns the non-responsibility determination.

With that background, let us refocus on the case at issue – Lawson Envtl. Servs. LLC, B-416892.

The EPA named Eagle Eye-Enviroworks Joint Venture awardee under RFP No. 68HE0718R0009. Eagle Eye was one of ten offerors who submitted a proposal. Eagle Eye, however, was the only offeror referred to the SBA for a COC. The contracting officer was concerned that “Eagle Eye did not meet the minimum corporate experience requirements, and that its project manager and site superintendent did not meet the minimum key personnel experience requirements.”

In its review, “the SBA found that Eagle Eye’s COC application included information demonstrating that the offeror met the RFP’s corporate experience and key personnel requirements.” The SBA granted Eagle Eye a COC.

Following this SBA action, the EPA awarded the contract to Eagle Eye. Lawson Environmental Services LLC, an offeror and interested party, protested the award. Lawson argued that the EPA erred by referring Eagle Eye to the SBA for a COC in the first place.

GAO spent some time reaffirming the core concepts we set forth in our foundation earlier. Mainly that the EPA “must refer to the SBA a determination that a small business is not responsible if that determination would preclude the small business from receiving an award.” GAO also stated that regulations require a contracting officer to refer a concern to the SBA for a COC determination when the contracting officer refused to consider a concern for award “after evaluating the concern’s offer on a non-comparative basis . . . such as experience of the company or key personnel or past performance[.]”

While the text of the solicitation is not provided, we can infer that reviewing experience and past performance on a “non-comparative basis” equates to offerors receiving a pass/fail in these areas. Had experience and past performance been evaluated on a comparative basis, Eagle Eye would not have been eligible for a COC review, and the GAO would not have seen this case.

The regulations and GAO statements so far would lead one to believe that the GAO would allow the protest to proceed and evaluate the merits of the protest. GAO’s next statement, however, is key to this protest.

GAO dismissed the protest because “15 U.S.C. §637(b)(7) gives the SBA, not [the GAO], the conclusive authority to review a contracting officer’s determination that a small business concern is not responsible.” GAO goes further to specifically state that Bid Protest Regulations mandate that “a [COC] under [15 U.S.C. § 637(b)(7)] will generally not be reviewed by GAO.” The only exceptions are if the protests can show “possible bad faith on the part of the government,” that “SBA failed to follow its own regulations,” or that SBA “failed to consider vital information bearing on the firm’s responsibility.”

GAO found that “Lawson raises none of the exceptions that would allow [GAO] to review the contracting agency’s action.” In a footnote, GAO acknowledged that Lawson tried to differentiate between responsiveness of a proposal and the responsibility of that same proposal. However, this argument was a non-starter as GAO stated that “both corporate experience and key personnel, when evaluated on a non-comparative basis, are matters of responsibility.” Because Lawson failed to claim any of the exceptions, GAO lacked jurisdiction.

Keep this case in mind if you are considering protesting an award that involves a COC. At the same time, remember that each solicitation and award may have any number of errors which give rise to a valid protest. Our office is always happy to help you evaluate the merits of an award or possible protest.