NAICS Code Appeal Cannot Be Based On Sources Sought Notice

A NAICS code appeal cannot be based on a sources sought notice, according to a recent NAICS appeal decision issued by the SBA Office of Hearings and Appeals.

In NAICS Appeal of Integrated Laboratory Systems, Inc., SBA No. NAICS-5406 (2012), SBA OHA held that under the FAR and SBA’s regulations, a viable NAICS code appeal cannot be filed until the solicitation itself is issued.

The Integrated Laboratory Systems NAICS appeal involved a potential NIH acquisition involving support for the National Toxicology Program.  On September 10, 2012, NIH published a sources sought notice on the FedBizOpps website, requesting capability statements from qualified small businesses. The notice indicated that the potential acquisition would fall under NAICS code 541690 (Other Scientific and Technical Consulting Services), which has a $14 million size standard.

On September 20, 2012, Integrated Laboratory Systems, Inc. filed a NAICS code appeal with SBA OHA.  In its NAICS appeal, ILS contended that the correct NAICS code was 541712 (Research and Development in the Physical, Engineering, and Life Sciences), which carries a 500 employee size standard.

The Contracting Officer responded to the NAICS appeal by informing SBA OHA that the document containing NAICS code 541690 was a source sought notice.  “This is not a solicitation for proposals,” she wrote.

SBA OHA agreed with the Contracting Officer’s characterization of the notice, and held that it could not consider ILS’s appeal.  Quoting prior NAICS appeal decisions, SBA OHA wrote that “OHA’s NAICS code appeal  jurisdiction extends only to the issuance of solicitations.”  SBA OHA explained, “[m]ere publication of a notice guarantees neither that the CO will issue a procurement nor that the CO will assign the NAICS code anticipated in the notice.”

SBA OHA concluded, “[a]bsent a formally issued solicitation, the instant appeal is premature, and OHA has no jurisdiction to consider it.”  SBA OHA dismissed ILS’s NAICS code appeal.  However, SBA OHA wrote that the dismissal was “without prejudice” and “[i]f the procuring agency issues a solicitation for the same procurement, [ILS] may file a NAICS code appeal,” provided that it is timely filed within 10 calendar days after the solicitation’s issuance.

The Integrated Laboratory Systems decision demonstrates that the window in which to file a viable NAICS code appeal is narrow: the appeal cannot be filed until the solicitation is issued, and once the solicitation is issued, the appeal must be filed within 10 calendar days.

That is not to say that a sources sought or other pre-solicitation notice is necessarily meaningless in the NAICS appeal process.  If a contractor believes that a NAICS code specified in a pre-solicitation notice is incorrect, the contractor may be able to lobby the agency to change the code.  If the agency refuses, the contractor can get a head start on its NAICS code appeal and have the appeal ready to file by the time the solicitation is issued.

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