Here at SmallGovCon, we have often discussed the federal government’s small business “Rule of Two” and the basis it provides small business contractors for protesting an agency’s decision not to set aside a procurement for small businesses. One essential component of that rule is a requirement that agencies conduct market research when determining whether or not two or more responsible small businesses are likely to submit offers on the pending solicitation. That market research has always been a loosely-defined, broad concept, one which allows agencies a fair amount of discretion in how they go about assessing the number of potentially-responsible small businesses in a given industry. As a result, agencies have some leeway in how they conduct their market research. Unfortunately, this makes it difficult for contractors to assess what constitutes satisfactory market research—in other words, how can a small business determine whether the agency properly chose an unrestricted procurement?
A potential common-sense approach one might consider would be to look at examples of market research that have been found acceptable under judicial review before. That provides a baseline threshold, and if the agency you are assessing falls short, it might seem reasonable to think that the agency did not carry its burden—i.e., there might be a successful Rule of Two protest basis on hand. This approach was applied by the protester in a recent Court of Federal Claims decision, but as explained below, it was not a successful one. The Court essentially stated that, just because one agency had gone to specific lengths in the past to conduct its market research, this did not mean that other agencies were required to go to similar lengths in order to satisfy their market research requirements. Rather than establish a standard to adhere to, the original agency had instead gone above the minimum.
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