Agency Doesn’t Make SBA COC Referral; GAO Sustains Protest

A procuring agency erred by essentially assigning a small business a failing past performance score without referring the matter to the SBA.

In a recent bid protest decision, the GAO held that the assignment of a failing past performance score under a past/fail system constituted a non-responsibility determination–and that the SBA was entitled to review the agency’s determination under the SBA’s Certificate of Competency procedures.

The GAO’s decision in FitNet Purchasing Alliance, B-410263 (Nov. 26, 2014) involved a Bureau of Indian Affairs solicitation for gym floor racks, covers, and accessories.  The solicitation was posted on the FedBid reverse auction website and was set aside for small businesses.

FitNet Purchasing Alliance submitted the lowest price.  However, the Contracting Officer elected to make award to the second-lowest bidder, Nationwide Supplies.  A single-page document in the agency’s file stated that the Contracting Officer had declined FitNet’s bid because of adverse past performance information about FitNet.  The agency’s file did not mention Nationwide’s past performance, or indicate that the Contracting Officer had considered Nationwide’s past performance in making the award decision.

FitNet filed a bid protest with the GAO.  FitNet argued, in part, that the BIA’s evaluation of FitNet’s past performance constituted a non-responsibility determination, which the agency was required to refer to the SBA under its Certificate of Competency procedures.

The GAO agreed.  It wrote that “[u]nder the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures.”

Past performance, in turn, “traditionally is considered a responsibility factor, that is, a matter related to the offeror’s ability to perform the contract.”  Traditional responsibility factors such as past performance may be used as technical evaluation factors in a negotiated procurement, “but only when a comparative evaluation of those areas is to be made.”  A comparative evaluation occurs when “competing proposals will be rated on a scale, relative to each other, as opposed to a pass/fail basis.”

In this case, “[t]here is no indication in the agency’s evaluation, or elsewhere in the record . . . that the agency performed a ‘comparative evaluation'” of offerors’ past performance.  Instead, “it appears that the agency evaluated FitNet’s past performance for the sole purpose of making an assessment of Fitnet’s ability to perform. i.e., to deliver.”  Because the record demonstrated that the agency “evaluated FitNet’s past performance on a pass/fail basis,” the agency’s decision  not to award the contract to Fitnet “amounted to a determination of nonresponsibility, which required referral to the SBA for a COC determination.”  The GAO sustained FitNet’s protest.

The FitNet Purchasing Alliance bid protest decision is a good example of how the Certificate of Competency procedures can benefit small businesses.  If an agency deems a small business to be nonresponsible–which may include a failing score under a pass/fail past performance evaluation–the small business might be entitled to a SBA review.  And if the agency fails to refer the matter to the SBA, as it did in this case, the GAO will sustain a protest.

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