Agency May Request SDVOSB Recertification on MATOC Orders, Says GAO

In a recent decision, GAO determined an agency could reasonably amend a solicitation for a task order issued under a set-side base contract to require offerors to recertify their size and SDVOSB status at the task order level.

The Oryza Group, LLC, B-416719 et al. (Comp, Gen. Nov. 26, 2018), involved a task order procurement by the United States Army Reserve Command for “sustainment information system” support (the “Task Order”). The task order was competed among holders of the Veterans Technology Services 2 (“VETS 2”) government wide acquisition contract.

The VETS 2 base contract is set aside for SDVOSB concerns. Consequently, any firm competing for the VETS 2 base contract was required to certify as an eligible SDVOSB firm at the time it submitted its proposal for the base IDIQ contract award.

At this juncture, a bit of regulatory background is helpful. Pursuant to 13 C.F.R. § 125.18(e), an SDVOSB firm will be considered eligible for the life of a contract (including multiple award contracts), even if the firm’s circumstances change during performance of the contract that would undermine its SDVOSB status.

There are two notable exceptions to this general rule. First, the contracting officer may require competitors to recertify their SDVOSB eligibility at the time each firm submits a proposal in response to a task order Solicitation. Second, if the performance of the contract, inclusive of option years, will exceed 5 years, the SDVOSB firm will be required to recertify its SDVOSB status at the conclusion of the 5th year, and every year thereafter until the end of the contract.

When the VETS 2 base contract was competed, Oryza was an eligible SDVOSB concern. It was subsequently named an awardee. Between the award of the VETS 2 base contract and competing for the Task Order, however, Oryza outgrew the applicable size standard. While Oryza had yet to reach the 5-year performance deadline requiring mandatory recertification, it would no longer be able to recertify as small under any task order procurements requesting recertification.

Unfortunately for Oryza, the VA attempted to include such a recertification requirement in the solicitation for the Task Order. Specifically, the Task Order solicitation included a somewhat ambiguous provision regarding SDVOSB and small business eligibility at the time of proposal submission. Specifically, the Task Order instructed as follows:

[Task order proposals] received from concerns that are not SDVOSB concerns in accordance with NAICS [North American Industry Classification System] Code 541513 and small business size standard applied for this requirement shall be considered nonresponsive and will be rejected in accordance with FAR Clause 52.219-6. Offerors must represent in good faith that at the time of their written representations, they are a SDVOSB in accordance with the NAICS Code and small business size standard applied for this requirement.

While not clear from GAO’s decision, Oryza apparently interpreted this provision to refer to the written representations submitted with the VETS 2 base contract, so Oryza submitted a proposal in response to the Task Order solicitation.

Oryza was subsequently evaluated by the Army and determined to be the lowest priced technically acceptable offeror. Before awarding the Task Order, however, the Contracting Officer reviewed SAM and noticed Oryza was no longer listed as an eligible SDVOSB concern because it had grown beyond the applicable size standard. Believing the Task Order solicitation had required offerors to recertify their SDVOSB status at the time of proposal submission, the Contracting Officer declined to make an award.

In an effort to eliminate any ambiguity, the Army subsequently revised the Task Order Solicitation to clarify that offerors were to recertify both their size and SDVOSB status for competition under the Task Order. Offerors were then given the opportunity to re-certify their size and status for the Task Order bids.

Unable to certify it was small under the NAICS code assigned to the Task Order, Oryza protested the terms of the solicitation. The principal argument advanced by Orzya was somewhat convoluted. According to Oryza, the Army’s amendment to the Task Order solicitation to explicitly require recertification of both size and SDVOSB status amounted to unequal treatment because the Task Order solicitation had not expressly required such certification, as it was originally drafted.

The Army responded that the Solicitation had always required recertification of SDVOSB status, and its amendment to the Solicitation merely clarified this requirement. The Army further alleged that the decision of whether to request SDVOSB recertification was a matter firmly within the discretion of the contracting officer.

GAO agreed with the Armry. As GAO explained, “the Army had the discretion to request that VETS 2 contract holders recertify their SDVOSB status.” As such, GAO concluded that it found “nothing objectionable with the agency’s request that offerors recertify their SDVOSB status.” Turning to the manner in which the Agency clarified its requirements, GAO also found nothing objectionable. GAO explained as follows:

[R]ather than cancel the solicitation and resolicit the requirement, the agency amended the TOR, as provided for by the FAR. Notably, the protester has not cited to any law, regulation, or legal authority that precluded this approach to requesting size recertification. Further, we find reasonable the agency’s explanation that cancelling the solicitation and reopening the procurement, as the protester would prefer, would be “tremendously wasteful, unnecessarily delay the procurement process, and harm the other offerors who meet the Army’s requirements.”

As such, GAO denied Oryza protest.

GAO’s decision in Oryza demonstrates the extraordinary amount of discretion afforded to contracting officers with respect to having offerors recertify size, status, or both. This discretion places formally small businesses with large multiple award task order contract portfolios in a difficult position. Since the value of multiple award task order contracts is only realized through the competition and award of task orders, requiring recertification on a task order basis can curtail or eliminate the value of these contracts for formerly small businesses.

As GAO explained in Oryza, however, policy considerations aside, contracting officers are well within their rights to require recertification.