8(a) Company Misses Key Personnel Requirements–But Wins Contract Anyway

An 8(a) company failed to satisfy a solicitation’s experience and key personnel requirements, but the 8(a) company walked away with a $23.9 million contract anyway–thanks to the SBA.

The GAO’s bid protest decision in Coastal Environmental Group, Inc., B-407563, B-407563.3, B-407563.4 (Jan. 14, 2013) demonstrates the power of the SBA under its certificate of competency program to second-guess procuring agencies’ determinations with respect to corporate experience, the resumes of key personnel, and other responsibility matters.

The Coastal Environmental Group GAO bid protest involved an EPA solicitation for environmental remediation services for residential properties in Omaha, Nebraska.  The solicitation called for award to “the lowest bidder who is deemed to be both a responsible and responsive bidder.”

The solicitation required bidders to submit resumes for key personnel responsible for performing the work, and provided that resumes were to demonstrate compliance with specific experience requirements.  For example, the Project Manager was required to have a minimum of three years of residential remediation or cleanup experience, with at least two years spent in managing such activities.

In addition, the solicitation required bidders to submit three client references for contracts of a similar size and complexity.  These references were to demonstrate bidders’ experience in removing hazardous materials from soil in residential yards and the transportation of hazardous materials.

PK Management Group was the apparent low bidder, with a total bid price of approximately $23.9 million.  However, the EPA determined that PK did not meet the solicitation’s requirements.  The EPA noted that PK was a real estate management company with no experience in removing hazardous materials in soils in residential yards and that the resumes for PK’s proposed key personnel did not demonstrate the required experience.  The EPA also identified other problems with PK’s bid, such that PK’s proposed subcontractor appeared to be performing more than half of the effort.

The EPA concluded that PK was non-responsible.  But that did not end the story.  The EPA referred the matter to the SBA under the certificate of competency program described in FAR 19.6.  The SBA subsequently notified the EPA that it considered PK responsible and that the EPA was required to let the award to PK stand.

The EPA appealed the SBA’s certificate of competency finding, using an internal SBA appeal procedure, but lost.  The EPA then made award to PK.

Coastal Environmental Group, Inc., the second-lowest bidder, filed a GAO bid protest.  Coastal alleged, in part, that PK’s offer should have been rejected as non-responsive for failing to submit key personnel resumes demonstrating the requisite experience.  In short, Coastal argued that the solicitation’s resume requirement was not a “responsibility” issue, and thus was not properly within the scope of a SBA certificate of competency review.

The GAO first summarized the SBA’s broad authority under the certificate of competency program. “Under the Small Business Act, the SBA has conclusive authority to determine the responsibility of small business concerns,”  the GAO wrote.  Where a procuring agency finds that a small business is not eligibility for award based on a nonresponsibility determination or failure to satisfy definitive responsibility criteria, “the agency is required to refer the matter to SBA for a final determination under its certificate of competency procedures.”

In this case, the GAO held that the key personnel requirements were, in fact, responsibility criteria within the SBA’s jurisdiction.  Citing a previous bid protest decision, the GAO wrote, “[i]t is well-settled that solicitation provisions requiring the submission of information necessary to determine compliance with specified bidder requirements pertain solely to the bidder’s responsibility, i.e., the overall capacity to perform the prospective contract, and that such information need not be submitted with the bid but may be furnished up to the time of award.”  The GAO denied the protest.

The Coastal Environmental Group GAO bid protest decision demonstrates the power of the SBA, under its Certificate of Competency program, to overturn agency judgments regarding responsibility matters.  In this case, the SBA and EPA disagreed about whether a real estate management firm was up to the task of residential environmental remediation.  For better or for worse, the SBA had the last word.

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