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.

The GAO’s decision in Eagle Home Medical Corp., B-402387 (Mar. 29, 2010), arose from a Department of Veterans Affairs small business set-aside solicitation.  The contracting officer designated NAICS code 339112 (Surgical and Medical Instrument Manufacturing), which carries a size standard of 500 employees.

Eagle Home Medical Corporation filed a NAICS code appeal with the SBA’s Office of Hearings and Appeals, arguing that NAICS code 339112 was inappropriate and that another code—with a much lower size standard—should be assigned.  SBA OHA agreed, and issued a decision changing the NAICS code.

That should have ended the story.  Instead, the VA’s contracting officer simply ignored the SBA OHA NAICS code appeal decision and moved forward with the original NAICS code.

Eagle filed a GAO bid protest, asking the GAO to, in essence, enforce SBA OHA’s decision.  GAO did just that.  GAO wrote that under the applicable regulations, an agency is required to amend the solicitation to incorporate SBA OHA’s designated NAICS code, so long as SBA OHA’s decision is received before offers are due.  Here, the agency timely received SBA OHA’s decision, and accordingly, “the VA was required to comply with the decision of OHA . . ..”   The GAO held that the VA should have amended the solicitation, and its failure to do so was improper.  The GAO sustained Eagle’s protest.

Eagle’s saga shows how a savvy small business contractor can use the regulatory tools available to it to ensure that it receives a fair shake in the federal procurement process.  Eagle not only filed a successful NAICS appeal—a mechanism many small business contractors do not know about or understand—but followed up with a GAO protest to enforce SBA OHA’s decision.  And because Eagle prevailed at GAO, it was entitled to be awarded its reasonable attorneys fees and expenses, greatly reducing its expenditures in pursuing its remedies.