Small Business Wins SBA OHA Size Appeal–But Contract Not Reinstated

A SBA size protest can be a matter of life and death for a small business, which may find it impossible to effectively compete if it is found “other than small.”  If a protested contractor loses a size protest, it is not necessarily the end of the road: it has the option of filing a size appeal with the SBA Office of Hearings and Appeals.

Winning a SBA OHA size appeal often results in “small” status once again, but a SBA OHA victory may have its limits.  As one contractor recently discovered, if the procuring agency terminates a contract award following an adverse SBA size protest decision, the agency is not required to reinstate the contract if the contractor subsequently prevails in its SBA OHA size appeal.

The GAO’s decision in GAO Protest of Trident3, LLC, B-405781.3 (July 5, 2012), involved a Navy procurement for weather observation and forecasting services.  The Navy initially awarded the contract to Trident3.  However, competitors filed SBA size protests challenging Trident3’s small business status.

The SBA Area Office issued a size determination finding Trident3 to be “other than small,” and ineligible for the procurement.  Eleven days later, the Navy decided to terminate the contract.  The following day, Trident3 filed a size appeal with SBA OHA.

While the size appeal was pending, the Navy reopened the procurement and issued two amendments to the solicitation.  Subsequently, SBA OHA issued its size appeal decision, reversing the SBA Area Office and declaring Trident3 to be an eligible small business for the procurement.

Trident3 contacted the Navy, informing it of its successful SBA OHA size appeal, and demanding that its contract be reinstated.  The Navy refused, but based on the SBA OHA decision, readmitted Trident3 to the competition.  Trident3 then filed a GAO bid protest, arguing that the Navy’s refusal to reinstate Trident3’s contract was improper.

The GAO denied Trident3’s bid protest.  It wrote, “we are not aware of, nor has Trident cited, any statute or regulation that expressly requires an agency to reinstate a terminated contract on the basis of an SBA OHA reversal of a negative size status determination.”  The GAO continued, “in the absence of any such regulation, the agency did not err in simply readmitting Trident to the ongoing procurement . . ..”

The Trident3 GAO bid protest decision demonstrates the potential limits of a successful SBA OHA size appeal decision.  Small contractors should defend SBA size protests vigorously, and not count on a successful SBA OHA size appeal decision to “save the day” if a size protest goes awry.

In addition, even though SBA size appeals may be filed within fifteen days, small contractors should consider filing them sooner.  In this case, Trident3 allowed 12 days to elapse before it filed its SBA size appeal.  By then, the Navy had already terminated the underlying contract.  Had Trident3 filed its SBA size appeal earlier–and sent a copy to the Navy–the Navy might have been impressed by Trident3’s ultimately successful argument, and agreed to suspend a termination decision until after SBA OHA ruled.

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