PROTEST PROCEDURES FOR CONTESTING
A PROSPECTIVE AWARDEE'S SMALL BUSINESS SIZE STATUS
By Ralph L. Kissick and Heather J. LoPresti*

Federal Acquisition Regulation (FAR) 19.302 "Protesting a small business representation," authorizes an offeror, the Small Business Administration (SBA), or some other interested party to protest the small business representation of a prospective awardee. The Government’s policy reason for implementing FAR 19.302 is to ensure that small businesses have the maximum practicable opportunity to contract with the Government. These procedures provide a check on the system to help ensure that contracts are appropriately being awarded to small businesses. The below outline of the protest procedures for contesting a prospective awardee’s small business size status is designed to provide general information and is not a substitute for the advice of legal counsel pertaining to individual situations.

Upon completion of negotiations and evaluation of proposals, but prior to contract award, the contracting officer must notify each offeror of the name and location of the apparent successful offeror. FAR 15.503(a)(2).

Any protest challenging whether the prospective awardee is a small business must be received by the contracting officer within 5 business days after receipt of the contracting officer’s written notice of intent to award. FAR 19.302.¹

The protest must be in writing, but may first be made orally if it is confirmed in writing within the 5-day period or by letter postmarked no later than 1 business day after the oral protest. FAR 19.302(d)(1)(i).

The protest must contain specific, detailed evidence to support the allegation that the prospective awardee is not a small business. FAR 19.302(c)(2); 13 C.F.R. ง 134.305(a)(3); See McCarty Corp. v. Secretary of the AirForce, 35 Cont. Cas. Fed. (CCH) ถ 75,742 (D.D.C. October 27, 1989).

In McCarty Corp., a contracting officer protested the small business size of a prospective awardee. The SBA determined that the prospective awardee was not a small business, and did not qualify for the award. The only notice of the protest that prospective awardee received was addressed to the SBA Regional Office (R.O.) from the Dept. of Air Force Small Business Office stating that the status of the low bidder and prospective awardee was questionable. The SBA R.O. determined that the letter was legally insufficient and requested a revised protest letter. SBA R.O. received an adequate letter from the Air Force Small Business Office stating that the protests was "based on the knowledge of number and value of contracts awarded to that firm [prospective awardee] over the past three years." This final letter was never forwarded to the prospective awardee. The court held that the first protest letter received by prospective awardee was legally insufficient because it did not state with specificity the grounds of the size protest. The court found that SBA regulations require that a prospective awardee receive notice of the specific grounds of the size protest so that they may properly answer the allegations as required by regulation.

Important: After receiving the protest, the contracting officer shall not award a contract until (a) the SBA has made a size determination or (b) 10 business days have expired since SBA’s receipt of the protest, whichever occurs first. FAR 19.302(h)(1).

Note: However, an award can be made within this period if the contracting officer determines in writing that an award must be made to protect the public interest. FAR 19.302(h)(1).

Note also: After the 10-day period, the contracting officer may continue to withhold award pending SBA’s size determination, unless the contracting officer determines that further delay would be disadvantageous to the Government. FAR 19.302(h)(2).

The contracting officer shall promptly forward the protest to the appropriate SBA area office where the prospective awardee is located. FAR 19.302(a).

The SBA area office will then notify the protestor and the prospective awardee that it has received the protest, and will furnish the prospective awardee with a copy of the protest and an SBA Form 355, Application for Small Business Determination. FAR 19.302(e).

Within 3 business days (or such extension as SBA may allow) after receiving a copy of the protest and the Form, the prospective awardee must submit to the SBA area office the completed Form 355 and a statement answering the allegations in the protest, with supporting evidence. FAR 19.302(f).

The SBA may assume that the disclosure would be contrary to the prospective awardee’s interest if they fail to timely file the completed Form 355. FAR 19.302(f).

SBA’s procedural rules do not provide for discovery. A protestor could file a Freedom of Information Act (FOIA) request to obtain copies of documents submitted by the prospective awardee concerning their self-certification as a small business.

Within 10 business days after receiving the prospective awardee’s response, the SBA area office will determine the size status of the challenged concern. FAR 19.302(g)(1).

The SBA area office will notify the contracting officer, the protestor and the prospective awardee of the size determination by certified mail. FAR 19.302(g)(1).

The SBA area office’s determination is final, unless a timely appeal is made to the SBA Office of Hearings and Appeals within 15 days2 of service of the SBA area office’s size determination decision.³ FAR 19.302(g)(2); 13 C.F.R. งง 134.304(a)(1) and 121.1101 (1999).

A copy of the appeal must also be served on the SBA official who issued the decision, the contracting officer, prospective awardee, all persons who filed a protest, and the SBA Office of General Counsel. 13 C.F.R. ง 134.305 (1999).

There is no absolute right of appeal from the SBA area office’s determination. The SBA Office of Hearings and Appeals has discretion in deciding whether to grant an appeal. 13 C.F.R. ง 134.303 (1999).

Note: If contract award is made before the contracting officer receives a notice of appeal, the contract award shall be presumed valid and contract performance may proceed. FAR 19.302(g)(2).

Note also: The contract award also may go forward if it has been 10 days since initial receipt of the protest and the contracting officer determines that further delay would be disadvantageous to the Government. FAR 19.302(h)(2).

The Comptroller General will not review size determinations made by the SBA. See Independent Metal Strap Co., Inc., Comp. Gen. Dec. No. B-240033.3 (12 Dec. 1990), 90-2 CPD ถ 481.

In Independent Metal Strap Co., an offeror challenged a prospective awardee’s size status as a small business, alleging that prospective awardee dishonestly represented it was a small business. After review of the records, the SBA Regional Office found that the prospective awardee was a small business. The offeror appealed the SBA Regional Office decision to the SBA Office of Hearings and Appeals (OHA). OHA affirmed the SBA Regional Office decision. The offeror protested to the General Accounting Office (GAO). The Comptroller General dismissed the protest holding that the "SBA has conclusive authority to determine matters of size status for federal procurement purposes. Consequently, our Office will neither make nor review size status determinations."

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^*^{Heather
LoPresti was an associate at ZS&R from 2000-2001. [Back
to text]}

¹The term "business day" excludes Saturdays, Sundays and legal holidays. 13 C.F.R. ง 121.1004(a) (1999). [Back to text]

²The term "day" means a calendar day, unless a Judge specifies otherwise. [Back to text]

³The 15-day time computation excludes the day used as the benchmark for computing the 15 days. If the 15^th day falls on a Saturday, Sunday, or Federal holiday then the next business day is the final day for submitting an appeal to the SBA Office of Hearings and Appeals. 13 C.F.R. ง 134.103 (1999). [Back to text]

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