Offeror With “Relatively Weak Proposal” Can File Size Protest, Says SBA OHA

An offeror with a “relatively weak proposal” can nonetheless file a size protest challenging the small business eligibility of the prospective awardee, provided that the protester was not found technically unacceptable or otherwise incapable of being selected for award.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the mere fact that the protester was evaluated as “less than satisfactory” on four out of five non-price factors did not justify dismissing the protester’s size protest for lack of standing.

OHA’s decision in Size Appeal of TMC Global Professional Services, SBA No. SIZ-5792 (2016) involved a DOE NNSA solicitation for the Design, Integration, Construction, Communication, and Engineering 2 (DICCE2) procurement in support of DOE’s nuclear smuggling detection and deterrence efforts.  The solicitation was issued as a small business set-aside under NAICS code 237990 (Other Heavy and Civil Engineering Construction), with a corresponding $36.5 million size standard.

The solicitation called for a “best value” trade-off, under which DOE would consider cost and five non-cost factors.  For four of the non-cost factors, DOE was to assign an adjectival rating of Excellent, Good, Satisfactory, or Less than Satisfactory.  The fifth non-price factor, Past Performance, was to be assigned an adjectival rating of Exceptional, Very Good, Marginal, Unsatisfactory, or Neutral.  In addition to setting forth this ratings system, the solicitation stated that “[a] proposal will be eliminated from further consideration if the proposal is so grossly deficient as to be totally unacceptable on its face or the Offeror does not meet any Pass/Fail criteria.”

TMC Global Professional Services submitted a proposal.  In its evaluation, DOE assigned TMC’s proposal “Less Than Satisfactory” ratings for the first four non-cost factors and a “Neutral” rating for past performance.  However, DOE did not rate TMC as unacceptable or exclude TMC from the competition.  DOE named two competitors as the apparent awardees.

After receiving a pre-award notification, TMC filed a size protest challenging the small business eligibility of one of the awardees.  TMC asserted that the awardee, Tech 2 Solutions, was ineligible because of various alleged affiliations.

The SBA Area Office asked the DOE Contracting Officer to clarify whether TMC “has a reasonable chance to be selected for award” if its size protest were successful.  The Contracting Officer responded that, because TMC was found “Less Than Satisfactory” in four criteria, TMC was not considered for award “when compared to the other offerors’ superior proposals.”

After receiving this response, the SBA Area Office dismissed TMC’s protest for lack of standing.  The Area Office wrote that, according to the Contracting Officer, TMC would not have a reasonable chance of receiving the award if it prevailed in its size protest.  The SBA Area Office reasoned that the purpose of the SBA’s size protest system is to “give standing to those concerns whose successful [size] challenge would enable them to compete for award.”

TMC appealed to OHA.  TMC argued that the SBA erred by dismissing the size protest, and asked OHA to remand the matter for a full size determination of the awardee.

OHA wrote that under the SBA’s regulations, a size protest may be filed by “any offeror that the contracting officer has not eliminated from consideration for any procurement-related reason, such as non-responsiveness, technical unacceptability, or outside the competitive range.”

In this case, “although DOE rated [TMC’s] proposal ‘Less than Satisfactory’ for four of the evaluation factors, such a rating does not necessarily connote that the proposal was technically unacceptable.”  Rather, under the solicitation’s evaluation scheme, “a ‘Less than Satisfactory’ rating indicated that the proposal contained ‘weaknesses that outweigh strengths,’ as opposed to ‘strengths and weaknesses that are generally offsetting,’ which would be needed in order for the proposal to achieve a ‘Satisfactory’ rating.”  And although the solicitation provided that DOE could eliminate an offeror from consideration, DOE “did not eliminate [TMC’s] proposal from the competition and did not discontinue its evaluation of [TMC’s] proposal.”

OHA continued:

The CO’s remark that [TMC] ‘would not have a reasonable chance’ to be selected for award does not compel a contrary result.  Read in context, the CO merely opined that [TMC’s] proposal was unlikely to be chosen ‘when compared to the other offerors’ superior proposals.’  In other words, DOE evaluated proposals and selected the offerors that, in DOE’s judgment, had the strongest proposals.  It does not follow, though, that [TMC] was excluded from the competition or was ineligible for award, simply because [TMC] ultimately was unsuccessful.  Indeed, OHA has recognized that an unsuccessful offeror with a relatively weak proposal still does have standing to protest, if the offeror was not excluded from the competition and could be selected for award if the apparent awardee were disqualified as a result of a size protest.

OHA granted TMC’s size appeal and remanded the case to the SBA Area Office for a full size determination.

There is a common misconception that, in order to file a viable size protest, the protester must be “next in line” for award, or at least–as the SBA Area Office in this case seemed to believe–likely to win the contract if the size protest is successful.  But as the TMC Global Professional Services size appeal demonstrates, the SBA’s size protest regulations don’t impose such requirements.  So long as a company submitted a proposal and was not eliminated from consideration, the company likely will have standing to file a size protest, even if the company’s proposal was “relatively weak.”