NAICS Code Appeals Allowed On 8(a) Set-Asides, Says SBA OHA

A NAICS code appeal can be filed even after a SBA District Office accepts the procurement for competition in the 8(a) Business Development (BD) Program.

In a recent decision, SBA Office of Hearings and Appeals rejected the argument that acceptance of a procurement into the 8(a) Program results in the approval of the NAICS code assigned to that procurement, thus preventing subsequent NAICS code appeals.  Had SBA OHA reached the opposite conclusion, the decision might have effectively excluded 8(a) contracts from the reach of traditional NAICS code appeals.

SBA OHA’s decision in NAICS Appeal of eScience & Technology Solutions, Inc., SBA No. NAICS-5586 (2014) involved a procurement that was set aside entirely for 8(a) BD participants. NAICS code 644130 was initially assigned to the procurement, however, the contracting officer later changed the NAICS code to 541519. eScience & Technology Solutions, Inc. filed the NAICS appeal asserting that the NAICS code originally assigned to the procurement was correct.

In response to eScience’s arguments, the contracting officer argued that SBA’s Georgia District Office accepted the procurement for competition in the 8(a) BD program and did not object to the choice of NAICS code. Therefore, according to the contracting officer, the NAICS code had already been reviewed, and tacitly approved by the SBA.

SBA OHA rejected the contracting officer’s arguments. “SBA regulations . . . expressly permit private parties to bring NAICS code appeals on competitive 8(a) procurements,” SBA OHA wrote.  Further, “OHA has held that opinions or guidance provided by other SBA officials are noting binding on OHA in a NAICS code proceeding.” Accordingly, OHA could not “conclude that review by an SBA District Office insulates a procurement from any subsequent NAICS code appeal.”

In a footnote, SBA OHA noted that the SBA District Office’s standard of review for NAICS codes is different than that which OHA must apply in a NAICS code appeal. A District Office will accept a contracting officer’s choice of NAICS code “as long as it is reasonable even if [] other NAICS codes may also be reasonable.” SBA OHA’s review of a NAICS appeal, however, “considers whether the CO selected ‘the single NAICS code which best describes the principal purpose of the product or service being acquired.'” In other words, SBA OHA has a stricter review standard than the District Office.

SBA OHA’s decision in eScience & Technology Solutions, Inc. demonstrates that a NAICS code appeal can still be filed after the procurement has been accepted for competition in the 8(a) Program. Simply because the SBA District Office did not object to the contracting officer’s choice of NAICS code does not mean that it is the NAICS code which best describes the principle purpose of the product or services being described.

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