GAO Bid Protests: No Small Business Size Challenges (Usually)

To regular SmallGovCon readers this may seem obvious, but protesters keep doing it, so it deserves a post.

By “it,” I mean filing small business size challenges as part of GAO bid protests.  As demonstrated once again in a recent GAO bid protest decision, the GAO typically lacks jurisdiction over size challenges, which must be filed with the SBA.

The GAO’s decision in McGoldrick Construction Services Corp., B-409252.2 (Mar. 28, 2014) involved an Army Corps of Engineers solicitation for construction services at Fort Hood, Texas.  The solicitation was issued as a small business set-aside under FAR subpart 36.3, which establishes selection procedures for two-phase, design-build procurements.

The Corps received Phase 1 proposals from 56 offerors, including McGoldrick Construction Company.  After evaluating Phase 1 proposals, the Corps selected a group of 12 to advance to Phase 2.  McGoldrick’s proposal was not included in that group.

McGoldrick filed a GAO bid protest challenging its exclusion from Phase 2.  McGoldrick argued, among other allegations, that the Corps unreasonably permitted three offerors to proceed to phase 2 of the competition when the agency knew, or should have known, that the offerors were not eligible small businesses.  McGoldrick argued that information from the website concerning contract awards to these firms showed that they exceeded the $33.5 million small business threshold applicable to the solicitation.

The GAO wrote that “[t]he Small Business Act gives the [SBA], not our Office, the conclusive authority to determine matters of small business status for federal procurements.”  A “limited exception applies where a protester argues that the awardee’s quotation shows, on its face, that the awardee is not eligible for award as a small business.  In such a case, the GAO will “review the reasonableness of the contracting officer’s decision not to refer the matter to SBA.”

In this case, “the contracting officer states that the offerors represented on the System for Award Management that they were small businesses,” and McGoldrick “does not allege anything on the face of these offerors’ proposals that should have led the contracting officer to question these representations.”  The GAO dismissed this basis of McGoldrick’s protest.  (The GAO did sustain another basis of the protest and recommended that the Corps re-evaluate McGoldrick’s proposal).

As the McGoldrick Construction Services case demonstrates, the GAO ordinarily will not decide a protest allegation regarding an offeror’s size, because determinations of size status are within the exclusive jurisdiction of the SBA under its size protest process.  The exception for information on the “face of the proposal” is limited indeed, because most offerors are savvy enough not to clearly indicate in their proposals that they do not qualify as small.

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