Category Archives: NAICS Code Appeals

Posts dealing with appeals of North American Industry Classification System Codes, decided by the SBA Office of Hearings and Appeals.

Successful NAICS Code Appeal Turns Large Company Into Small Business

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A little more than a week ago, I blogged about the SBA Office of Hearings and Appeals decision in NAICS Appeal of Delphi Research Inc., SBA No. NAICS-5377 (2012), in which a small business used the NAICS code appeal process to change the relevant size standard from 1,500 employees to $25.5 million.  The Delphi NAICS code appeal decision effectively lowered the solicitation’s size standard, increasing the ability of smaller companies like the protester to compete.

However, it is important to remember that the NAICS code appeal process works both ways.  If a company is too large for the size standard the procuring agency assigns to a solicitation, it may be able to use the NAICS code appeal process to replace the agency’s preferred NAICS code with a NAICS code carrying a higher size standard.  This is precisely what happened in a recently-decided SBA OHA case, NAICS Appeal of CHP International, Inc., SBA No. NAICS-5367 (2012).

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From 1,500 Employees To $25.5 Million: Successful NAICS Code Appeal Shakes Up Competition

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A successful NAICS code appeal can be a powerful competitive game changer.  Case in point: the recent decision of the SBA Office of Hearings and Appeals in NAICS Appeal of Delphi Research, Inc., SBA No. NAICS-5377 (2012).

In the Delphi Research NAICS code appeal, a contractor questioned the procuring agency’s decision to assign a NAICS code carrying a 1,500-employee size standard.  SBA OHA agreed with the appellant, rewriting the solicitation to exclude companies with more than $25.5 million in average annual receipts–in essence, a much lower size standard.

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Agency Gets SBA Size Standard Wrong; SBA OHA Dismisses Late NAICS Code Appeal

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Know your SBA size standards.  That’s the lesson to be drawn from the decision of the SBA Office of Hearings and Appeals in NAICS Appeal of Ash Stevens, Inc., SBA No. NAICS-5368 (July 12, 2012).

In the Ash Stevens NAICS code appeal, the solicitation erroneously stated that the SBA size standard associated with a particular NAICS code was much larger than is actually the case.  By the time the agency corrected its mistake, SBA OHA held that it was too late for a contractor to challenge the NAICS code.

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SBA Proposal: Allow NAICS Appeals on Unrestricted Procurements

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Size always matters–even on unrestricted procurements.   That’s the message coming from SBA in light of a proposed rule making a number of changes to its size regulations, primarily to address small business set-asides within the context of multiple-award award contracts.  Buried in the proposed regulation is an interesting change: the SBA intends to give the SBA Office of Hearings and Appeals the right to hear challenges to NAICS code designations, even when a procurement is not set-aside for small businesses.

For many years, SBA OHA has dismissed NAICS appeals on unrestricted procurements, stating, in essence, that there is no purpose in appealing the NAICS code when no set-aside is involved.  Although the SBA’s proposed rule doesn’t go into great detail, it seems to me that size can be advantageous, even on an unrestricted procurement.  For instance, a small business generally is exempt from the subcontracting plan requirement, but an “other than small” business typically must submit a subcontracting plan.  Likewise, a HUBZone-certified company will only qualify for the HUBZone price preference if it qualifies as small for the procurement.

Kudos to SBA for recognizing that size always matters, and proposing to amend the NAICS appeal rules accordingly.  Let’s hope that this proposal sticks in the final regulation.

GAO: Agencies Cannot Ignore SBA OHA’s NAICS Code Designations

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My daughter isn’t even eight months old yet, but she has developed a case of selective hearing.  If she’s doing something she shouldn’t (like tugging on the blinds), and I tell her to stop, she often pretends not to hear and keeps right on going.  By the time she’s two, she’ll probably be sticking her fingers in her ears and chanting, “la la la, I can’t hear you,” when she doesn’t want to acknowledge me.

Selective hearing isn’t limited to children.  In one case, the Department of Veterans Affairs ignored the SBA’s designation of a new NAICS code for the solicitation.  But, like my daughter, the VA didn’t get away with it for long.

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NAICS Code Appeals: A Quick Timeliness Reminder

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If you Google the simple phrase “10 days,” the top result is the IMDb page for the movie How to Lose a Guy in 10 Days.   I haven’t seen this 2003 Matthew McConaughey/Kate Hudson romantic comedy, and Lord willing, never will (though I recall that my 80-something grandmother thoroughly enjoyed it).

Even though NAICS code appeals didn’t pop up first on the Google rankings, actors with a penchant for the Texas Longhorns aren’t the only thing that can be lost in 10 days.   If you want to file a NAICS code appeal with the SBA Office of Hearings and Appeals, act quickly.  Under the SBA OHA regulations, NAICS code appeals must be filed and served within 10 days after the issuance of the solicitation.  Any later, and you will lose your right to appeal, as one would-be appellant recently learned.

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SBA OHA, Not GAO, Decides NAICS Code Appeals

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Appealing the NAICS code a procuring agency assigns to a set-aside solicitation can be a powerful tool: after all, if the NAICS code and corresponding size standard change, it can dramatically alter the competitive playing field.  But if a company wants to file a  NAICS code appeal, it must file with the SBA Office of Hearings and Appeals, not the GAO, which lacks jurisdiction to hear challenges to NAICS code designations—something the protester in BlueStar Energy Solutions, B-405690 (Dec. 12, 2011) learned too late.

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