Federal Court Enjoins Contract Award Pending SBA OHA Size Appeal

If a contractor ends up on the losing end of a SBA size protest, the contractor has the right to appeal to the SBA Office of Hearings and Appeals.  The problem is that SBA OHA size appeals can take months.  A contracting officer may be unwilling to wait, and simply award the contract to the next company in line.

Neither the FAR nor the SBA’s regulations require the contracting officer to suspend award or performance pending SBA OHA’s decision.  However, as a recent case demonstrates, if the SBA OHA appeal has a reasonable likelihood of success, the U.S. Court of Federal Claims may issue an injunction prohibiting the procuring agency from awarding the contract pending the result of the SBA OHA size appeal.

The Court’s decision in Metters Industries,  Inc. v. United States, No. 13-116C (2013) involved a task order for logistics support services to be issued by the U.S. Army Aviation and Missile Command.  The task order was set aside for small businesses.

In November 2012, AMCOM  announced that Metters Industries, Inc. was the apparent awardee.  A competitor filed a SBA size protest, asserting that Metters was ineligible.  The SBA Area Office subsequently issued a size determination finding that Metters was not a small business for the task order procurement.

Metters filed a size appeal with SBA OHA.  Metters conceded that it had outgrown the $35.5 million size standard applicable to the task order.  However, Metters argued that under the SBA’s regulations, a firm that qualified as a small business at the time it receives a contract is considered a small business throughout the life of the contract.  The rule applies to task order contracts, except when the contracting officer requests size recertification in connection with a task order.  Under this standard, Metters contended, it qualified as small, because it did not exceed the $35.5 million size standard when it received the underlying multiple-award contract.

The Court appeared to agree with Metters’ legal argument, and wrote that the question of whether Metters was an eligible small business turned upon whether AMCOM had requested size recertification in connection with the logistics support services task order.  Examining the procurement record, the Court expressed skepticism that any of AMCOM’s statements to offerors constituted a request for a recertification of size (although the Court did not formally decide that AMCOM had not requested recertification).

Based on its review of the record, the Court concluded that Metters’ “likelihood of success is at least sufficient to make it eligible for the injunctive relief it seeks.”  The Court then determined that Metters would suffer irreparable injury without an injunction because the task order would be awarded to another offeror.  And, because the work in question could be performed under a bridge contract pending SBA OHA’s decision, the Court found that an injunction would not unduly harm AMCOM.

Given its findings, the Court determined that Metters was entitled to an injunction, albeit one of limited duration.  The Court issued a preliminary injunction prohibiting AMCOM from awarding the contract until the earlier of (1) the issuance of a SBA OHA decision on Metters’ appeal, or (2) April 23, 2013.

The Metters Industries case illustrates the difficult predicament that a contractor can face when it loses a SBA size protest.  Although the contractor has the right to appeal to SBA OHA, nothing in the law prevents the agency from proceeding with an award to another contractor while the appeal is pending.  As Metters Industries discovered, the potential answer to this problem is to file a motion for an injunction with the U.S. Court of Federal Claims.

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