GAO: On Unrestricted Solictitation, No Extra Credit For Small Business Status

An offeror on an unrestricted solicitation was not entitled to “extra credit” in the evaluation on account of its small business status.

In a recent bid protest decision, the GAO held that an agency, during its evaluation of proposals under an unrestricted solicitation, had no obligation award extra credit to the protester just because the protester was a small business.  In its decision, the GAO rejected the protester’s argument that a FAR clause establishing a policy of maximizing small business participation required the agency to give an evaluation preference to a prospective small business prime contractor.

GAO’s decision in Bannum Inc., B-411586.2 (Jan. 6, 2016) involved a Department of Justice solicitation for a residential re-entry center and home confinement services.  Before issuing the solicitation, the DOJ conducted market research and concluded that it was unlikely to receive offers from two or more small businesses.  Based on its market research, the DOJ issued the solicitation on an unrestricted basis.

The solicitation included the clause at FAR 52.219-8 (Utilization of Small Business Concerns).  FAR 52.219-8, which is required to be included in most solicitations exceeding the simplified acquisition threshold, states that it is the government’s policy to maximize the opportunities for small businesses to participate in performing federal contracts.  The solicitation did not include any provisions stating that small businesses would receive an evaluation preference.

Bannum Inc. was one of two offerors.  After reviewing proposals, the DOJ awarded the contract to the Bannum’s competitor, which was higher-rated and lower-priced.

Bannum filed a GAO bid protest challenging the award decision.  Among its arguments, Bannum contended that the agency erred by failed to “credit” Bannum for being a small business.  Bannum’s argument relied on FAR 52.219-8, which Bannum said required the DOJ to consider Bannum’s small business status as part of its evaluation.

The GAO disagreed.  It wrote that FAR 52.219-8 “sets out the federal policy of providing small business concerns with the maximum practicable opportunity to participate in performing contracts, but requires only that the ultimate contractor agree to award subcontracts consistent with that federal policy.”  However, the clause “does not state that any firm will receive an evaluation preference based on its small business status.”

The GAO wrote that “[t]he protester’s conclusion that inclusion of FAR clause 52.219-8 in the RFP required the agency to give Bannum an evaluation preference because it is a small business is incorrect, and does not provide any basis to sustain the protest.”  Further, the GAO concluded, “there is nothing in the RFP’s evaluation scheme that requires–or would permit–consideration of an offeror’s size status, or the application of a preference for small business concerns.”  The GAO denied the protest.

The federal contracting regulations have many policies to benefit small businesses.  But those policies only go so far.  As the Bannum case demonstrates, unless the solicitation says otherwise, an agency evaluating proposals for an unrestricted solicitation need not give an evaluation preference to a small business.

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