SBA Certificate Of Competency Cannot Cure Incomplete Proposal

The SBA’s Certificate of Competency procedures cannot be used to cure a small business’s incomplete proposal.

In a recent bid protest decision, the U.S. Court of Federal Claims held that the procuring agency could not lawfully cure a firm’s omission of mandatory proposal information by submitting the matter to the SBA for a Certificate of Competency.

The Court’s decision in Manus Medical, LLC v. The United States, No. 14-26C (2014) involved a VA procurement for custom surgical packs.  The solicitation was issued as a SDVOSB set-aside.

The VA was to make award to the lowest priced, technically acceptable offeror.  The solicitation contained nine components for determining technical acceptability, each of which would be evaluated on a pass/fail basis.  In order to be deemed technically acceptable, an offeror had to receive a “pass” grade for all nine components.

One of the nine pass/fail components stated that the offeror must identify at least three customers for whom the offeror had provided custom surgical packs, and provide references for all such customers.  A second component required the offeror to demonstrate that it had received ratings of at least “satisfactory” from each reference.

Six offerors submitted proposals.   After evaluating proposals, the VA determined that Marathon Medical, LLC had submitted the lowest price.  However, Marathon received a “fail” rating for the two experience factors because Marathon did not provide any past performance information or references.  The VA awarded the contract to Manus Medical, LLC, which had offered the second-lowest price.

After receiving a debriefing, Marathon filed a GAO bid protest.  The GAO ruled in Marathon’s favor and recommended that the VA re-open discussions with Marathon and Manus and allow both firms to submit revised proposals.  However, instead of following the GAO’s recommendation, the VA submitted the question of Marathon’s eligibility for award to the SBA under the Certificate of Competency procedures.  Explaining its action to the GAO, the VA stated that where a small business offeror is found unacceptable under a pass/fail evaluation of responsibility-type criteria (such as past performance), the agency’s decision constitutes a nonresponsbility determination and must be referred to the SBA for a Certificate of Competency determination.

The SBA subsequently issued a Certificate of Competency for Marathon, making Marathon eligible for award.  The VA then accepted Marathon’s proposal for award, subject to review by the VA’s Contract Review Board.  Before that review occurred, Manus filed a bid protest with the Court, arguing that the referral to the SBA for a Certificate of Competency had been improper.

The Court agreed with Manus.  Citing the FAR, it wrote that “referral to the SBA is necessary only ‘[u]pon determining and documenting that an apparent successful small business offeror lacks certain elements of responsibility.'”  (Emphasis by the Court).  In this case, however, “Marathon’s lack of success was determined by its deficient proposal, and the merits of its past performance were never evaluated because it neglected to provide the information for evaluation.”

The Court concluded, “[t]hus, the critical distinction is between between failing a past performance evaluation and failing to submit the information necessary for the agency to conduct such an evaluation.”  The Court granted Manus’s motion for judgment and enjoined the VA from awarding the contract to Marathon.

The Manus Medical decision illustrates the limits of the Certificate of Competency process.  As the case demonstrates, a Certificate of Competency is used to evaluate an offeror’s responsibility, but cannot cure a deficient proposal.

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