SBA Turns Spotlight on its Size and Status Protest Process

The Small Business Administration’s (SBA) Office of Inspector General (OIG) recently took a look at SBA’s recent small business size and status protests to determine “whether the SBA had effective controls in place to (1) ensure protest decisions were properly enforced and to (2) monitor the protest process.” Overall, the OIG had positive things to say about the the protest process. What’s interesting for small business federal contractors are some of the numbers from this report, detailed below.

The SBA’s September 30, 2022 OIG Report found that the SBA did have effective controls in place to ensure proper enforcement of protest decisions but discovered that the SBA did not consistently document extensions, impacting management’s ability to monitor and assess timeliness. Note that this report apparently does not cover appeals of determinations made by SBA.

The OIG recommended the SBA “strengthen controls to consistently document and monitor required protest information” so that the agency can ensure decisions are made in a timely manner. The SBA agreed with the recommendation and has already updated internal guidance to streamline tracking procedures for size and status protests. The SBA also plans to implement a new process for all size protest record logs to be maintained in a centralized location which management can view. Size determinations are made separately by each Area Office, so this centralized location for all size logs may have been lacking before. Additionally, officials will “reinforce guidance that any written documentation to support extensions must be retained in the protest file.”

Also of interest, there were a total of 364 decisions reviewed for fiscal year 2021. That covers all sorts of protests handled by SBA, including HUBZone, size, and WOSB. However, the report doesn’t include SDVOSB protests, which are currently handled by SBA Office of Hearings and Appeals (OHA). Also, there are no 8(a) Program protests because those aren’t allowed under the rules. Even still, that number of 364, out of all the small business awards where a protest could be lodged, is a fairly small percentage of overall contract awards.

Of that total of 364, there were 327 size protests and 37 status protests (again, not including OHA SDVOSB protests). Broken down, there were 18 SDVOSB protests (not including at OHA), 12 HUBZone, and 7 WOSB. But still, this is quite a low number for status protests involving HUBZone and WOSB. This shows that most small business awards are not protested, and status protests are particularly low. Federal contractors need to be aware of their protest rights in the HUBZone and WOSB world, as well as small business protests. Within this amount, about 50% of protests were dismissed, and in close to 20% of cases companies were found ineligible. This means, over a third of protests that were not dismissed resulted in a finding of ineligibility, which is a fairly high number.

Of that amount, only 4 percent of the small businesses protested did not update their proper status in their company profile after SBA found they did not qualify for set-aside awards. All firms are required to represent their small business status on their company profile in the General Services Administration’s System for Award Management ( database. Since this is a self-certifying process, “contracting officers must review and accept a firm’s representation of its size status in the applicable database unless they have reason to question it, or unless the status is challenged by another offeror in a protest.” False or inaccurate status representations are a serious concern because if a contract recipient is determined ineligible by an adverse decision, “the contracting officer must then terminate the contract, resulting in significant delays in the agency’s ability to acquire goods and services.” The fact that only 4 percent of protests concerned an inaccurate status shows that enforcement of adverse decisions is building trust in the small business protest process and is preventing contract opportunities to ineligible offerors.

The OIG also found program officials monitored most protests effectively. They decided 80 percent of small business protests within the required 15 business days, or within extension dates approved by the contracting officer. However, the SBA did not decide on a protest within required timeframes for 20 percent of the protests reviewed. The report revealed that the SBA did not have uniform guidelines for documenting extension decisions and so these decisions were not consistently documented. The SBA challenged this finding by explaining that tracking logs are not the only tool used to monitor the protest process, because some programs record extensions in emails or have routine meetings to track progress. The OIG felt the SBA did not provide documentation to support this conclusion and maintained their position that the process for documenting protest progress needed to improve.

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