When it comes to meeting the size standards, the normal rule for a set-aside contract is simple: If you’re small at the time you submitted your initial offer for the contract, you’re small for the life of the contract. So says 13 C.F.R. § 121.404–although this could be changing in the future based on a proposed SBA rule. Furthermore, this is the general rule with set-aside IDIQs as well: If you’re small at the time of initial offer for the IDIQ, you’re small for all orders under that IDIQ. (Not so with set-aside task orders under otherwise unrestricted IDIQs, there it very much is time of offer for the task order rather than the IDIQ for the date to determine size). However, there are a couple of exceptions. The biggest one is where the contracting officer explicitly requests size recertification for the given task order. In that case, an offeror must show it is still a small business as of when it submits its offer for that task order. One contractor recently protested when the contracting officer did just that. Here, we’ll explore that GAO decision.
In Radiance Techs., Inc., B-422615 (Aug. 30, 2024), the protester, Radiance Technologies, Inc. (Radiance) was an awardee under the OASIS small business IDIQ procurement in 2014, holding an OASIS small business IDIQ contract. In May 2024, GSA issued a task order under this IDIQ. GSA had further decided that it would require offerors to recertify their sizes. Radiance was a small business when GSA awarded it the OASIS IDIQ back in 2014, but, by this point, it was no longer small under the given size standard. After unsuccessfully attempting to persuade the agency to get rid of the requirement, Radiance filed a protest with GAO.
Radiance’s argument against the size recertification requirement had two parts. First, it argued that the requirement was unduly restrictive of competition. Second, it argued that the requirement was not authorized by the law as the regulation giving agencies such authority did not exist in 2014, when Radiance received the OASIS contract.
GAO first turned to the authorization argument and rejected it. “[T]he applicable provision here is the SBA’s regulation at 13 C.F.R. § 121.404(g)(3), which was promulgated in 2006 and became effective in 2007, well before the award of Radiance’s OASIS contract.” Radiance responded with an interesting argument. It asserted that, back in 2013, 13 C.F.R. § 121.404 simply “contemplated situations where the contracting officer might require recertification,” but “it never granted the contracting officer ‘the right to require recertification generally.’” Although SBA pointed out that its then-existing comments on the rule expressly stated that agencies had the discretion to ask for recertification, Radiance took its boldest move. It argued that SBA shouldn’t be granted deference in interpreting its own regulations in light of the striking down of Chevron deference in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024) earlier this year.
As we noted in our own post on Loper Bright, Chevron was about agency interpretation of federal statutes, not its own regulations. A different case, Auer v. Robbins, addresses that. That case holds that courts will defer to agencies’ reasonable interpretations of their own regulations, and that case is still good law. (In fairness to Radiance, it did attempt to address this). All the same, GAO decided it was pretty clear: The agency had the discretion to require size recertification for the task order. It also noted that “under FAR section 1.102(d), an agency’s chosen procurement procedure that is not prohibited by law or regulation is assumed to be permissible.”
Turning then to the argument that the requirement was unduly restrictive on competition, GAO also rejected that argument. Radiance argued that it was unduly restrictive as it was an unnecessary restriction on who could compete for the task order that was already set aside anyways. Furthermore, award to a company like Radiance would still count as a small business award. As such, Radiance argued, the size certification requirement did nothing for the agency’s own interests.
GAO didn’t buy this argument. It noted that “the contracting officer’s decision to require a size recertification is part and parcel of the decision to set aside the task order to small businesses.” The law gave the contracting officer the authority to do the same. Furthermore, it did further the agency’s interest, an interest in ensuring that small businesses get small business awards. GAO explained: “As we have previously noted, a solicitation recertification requirement is consistent with the purpose of the Small Business Act, according to which procurements intended for small businesses should be awarded to small businesses… this basis–awarding the work to a firm that is small at the time of task order issuance–was reasonable and within the discretion of the contracting officer.”
Thoughts
This was an unusual GAO case, as the law is fairly well-settled on this matter. Looking at GAO’s analysis, it appears clear that GAO considered the law to be well settled in this area too. All the same, this serves as a good reminder to contractors to pay close attention to task orders for small business set-aside IDIQs. Your business may have been small at the time you got the IDIQ, and that usually means you’ll qualify for any task order under the same. But, pay attention. If a contracting officer wants to require size recertification under a task order, they can, and there’s no real room for argument otherwise. Furthermore, this also shows that agencies are going to hold onto that Auer deference we discussed in our review of the Loper Bright decision, and understandably so: Agencies still hold a lot of power when it comes to their own regulations.
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