When a disappointed offeror wants to challenge the award of a contract to a small business, there are two potential types of protests that it can make depending upon the circumstances of the case: a bid protest or a size protest. The bases of protest, where the protest can be filed, and the timing for filing each protest are different. As a recent decision of the Court of Appeals for the Federal Circuit reminds us, the protester needs to be careful in how it characterizes its protest or it may face challenges that the protest is untimely or filed in the wrong forum.
Bid protests are challenges to the Government’s solicitation, evaluation, or award of a contract . Pre-award bid protests generally are filed when the protester believes there are improprieties in the solicitation, such as unduly restrictive requirements and ambiguities in the terms of the solicitation. Post-award bid protests, on the other hand, are challenges to the agency’s evaluation of the bid/proposals and/or selection of the awardee. Essentially, in a bid protest the protester is alleging that the agency’s decision lacked a rational basis or the agency violated a regulation or procedure.
Both types of protests can be filed with the agency, the Government Accountability Office (GAO), or the Court of Federal Claims (COFC). The deadline by which a bid protest has to be filed depends upon whether it is a pre-award protest or a post-award protest and where the protest is being filed.
Size protests are challenges about whether the awardee is in fact a small business. There are size standards – either employee based or revenue based – that are used to determine whether a company is a small business. The size standards are based on the NAICS Code assigned to the solicitation. The company, together will all of its affiliates, must have fewer employees or average annual revenue than the applicable size standard in order to be small. Size protests often involve allegations that the awardee is affiliated with another company and thus does not qualify as small.
Protesters file size protests with the contracting officer for the procurement. The contracting officer, in turn, is required to forward the protest to the Small Business Administration (SBA) Government Contracting Area Office for the area in which the awardee is located. Size protests must be filed prior to the close of business on the fifth working day after bid opening for sealed bid procurements or after the contracting officer notified the protester of the identity of the prospective awardee for negotiated procurements.
The Area Office will request that the awardee complete SBA Form 355, Information for Small Business Size Determination, which collects detailed information about the company. The Area Office then will make a size determination. That size determination can be appealed to the SBA Office of Hearings and Appeals (OHA). OHA’s decision is subject to judicial review.
Importance of Characterizing Protest Properly
A protester needs to be careful in how it characterizes its protest or it may face arguments that the protest is untimely or filed in the wrong forum. This is what recently happened to the protester in Harmonia Holdings Group, LLC v. United States, Case No. 2020-1703 (Fed. Cir. June 8, 2021). In that case, the Census Bureau issued an RFQ for data support services. The RFQ was set aside for women-owned small businesses. The contract was awarded to Alethix, LLC and Harmonia filed a bid protest challenging the award at the COFC. One of Harmonia’s protest grounds was that the Contracting Officer failed to comply with FAR 19.301-1(b) by not referring Alethix to SBA for a size determination. The COFC dismissed this protest ground, concluding that Harmonia’s protest ground was a size protest and Harmonia failed to exhaust its administrative remedies because it did not file a size protest with SBA. Harmonia appealed to the Federal Circuit.
The Federal Circuit agreed with the proposition that a protester must generally exhaust its administrative remedies at SBA before seeking judicial review of a size protest, citing 13 CFR § 121.1101. However, the Federal Circuit concluded that the COFC misapprehended Harmonia’s protest and blurred the distinction between a size protest and a bid protest. It found that Harmonia did not assert a size protest because Harmonia did not ask the COFC to make any determination as to Alethix’s size. Rather, Harmonia was alleging that the contracting officer failed to follow a required regulation, which was a bid protest. Therefore, the Federal Circuit found that the COFC erred in dismissing this ground of protest. Nevertheless, the Federal Circuit affirmed the COFC’s decision because the Federal Circuit concluded that Harmonia’s protest ground lacked sufficient facts to state a plausible claim that the contracting officer violated FAR 19.301-1 or otherwise abused his discretion by failing to refer Alethix to SBA for a size determination.
When protesting an award to a small business, the protester needs to understand the different types of protests that can be filed and make sure that it files a timely protest in the appropriate forum. The protester also must clearly indicate in its protest whether it is filing a bid protest or a size protest. If the protest is unclear, it may end up being dismissed.