Busy Employee “Skims” SBA Size Protest Email–What Could Go Wrong?

A contractor’s “frantically busy” employee, who was listed as the firm’s contact in SAM, skimmed through an email from the SBA containing a size protest, and took no action to respond.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the SBA had properly issued an adverse size determination against the contractor in question after receiving no reply to the size protest–and the fact that the employee who received it was “frantically busy” was no excuse.

OHA’s decision in Oxyheal Medical Systems, Inc., SBA No. SIZ-5707 (2016) involved an Air Force RFQ for hyperbaric chamber maintenance support services.  The solicitation was issued as a small business set-aside under NAICS code 811219 (Other Electronic and Precision Equipment Repair and Maintenance).

After evaluating competitive proposals, the Air Force awarded the contract to Oxyheal Medical Systems, Inc.  An unsuccessful competitor then filed a SBA size protest, challenging Oxyheal’s small business status.

An individual known as “Employee 1” was apparently listed as Oxyheal’s primary point of contact on SAM.  The SBA Area Office notified Oxyheal of the size protest by next-day UPS and by email to Employee 1.  The SBA Area Office requested a response to the protester’s allegations, a completed SBA Form 355, and other documents.  The SBA requested that Oxyheal provide those documents by November 2, 2015.

On October 27, the SBA Area Office received confirmation that Employee 1 had received and read the email.  UPS delivered the hard copy of the SBA’s notification to Oxyheal on October 28, and provided confirmation of delivery to the SBA Area Office.

November 2 came and went without a response.  On November 3, the SBA Area Office sent Employee 1 an email.  It stated that no response had been received, and warned, “If I don’t receive your response by 3 p.m. today, I will assume that your firm is not responding to the protest.”  The email also noted that, under the SBA’s “adverse inference” rule, the SBA may issue an adverse size determination if the protested company does not respond to a size protest (or fails to provide a complete response).

Oxyheal still did not respond.  On November 12, the SBA Area Office issued a size determination finding Oxyheal to be ineligible for award of the Air Force contract.  The size determination stated that, under the adverse inference rule, the SBA had presumed that Oxyheal’s failure to respond meant that it was not small.

After receiving the size determination, Oxyheal contacted the SBA Area Office in an effort to belatedly respond to the size protest.  The SBA Area Office refused to retract its size determination.  Oxyheal then filed a size appeal with OHA.

Oxyheal alleged, in part, that Employee 1 was filling multiple roles due to recent vacancies in those positions.  She was “frantically busy, and was only skimming emails sent to the three accounts for the three full-time positions she held.”  She took action only on those emails flagged “high importance,” which apparently was not the case with the SBA Area Office’s email transmittal of the size protest.

Oxyheal pointed out that its SAM profile listed two other individuals as alternate points of contact.  Oxyheal argued that the SBA Area Office had acted improperly by not reaching out to these other points of contact when it did not receive a response from Employee 1.

OHA disagreed.  It noted that, in its prior size appeal decisions, it has held that an SBA Area Office may not apply the adverse inference rule where “the challenged concern’s failure to respond was due to some error by the area office,” such as a case in which the SBA Area Office typed in the wrong email address.

However, “that was not the case here.”  Rather, “there is no question [Oxyheal] received the Area Office’s communications.  The problem was that [Employee 1] was too overwhelmed to respond to them.”  OHA continued:

[Oxyheal’s] argument that the Area Office should have done more is also wrong as a policy matter.  It is worth emphasizing that the Area Office properly addressed its communications to [Oxyheal] and [Oxyheal] received them.  To hold that the Area Office erred here would be to require area offices to go on extended rounds of contacting official after official at challenged concerns when they do no receive a response to their communications.  This is neither required by due process nor practical.  The real error here was [Oxyheal’s], in failing to properly monitor its communications.

OHA denied Oxyheal’s size appeal, and upheld the SBA Area Office’s adverse size determination.

In the modern world, it’s not unusual for a busy professional to become temporarily overwhelmed with the volume of email traffic in his or her email accounts.  But, as the Oxyheal case demonstrates, that’s no excuse for not reading and responding to a communication from the SBA.  When an individual is listed as a company’s point of contact in SAM, the company must be prepared for the government to contact the company through that individual–and must be prepared to face the consequences if that individual doesn’t respond.

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