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FAR 19.602:  Certificate of Competency

Comptroller General - Key Excerpts

New CRS contends that the agency’s exclusion of its proposal based on its failure to have sufficient capabilities in health-related missions amounted to a nonresponsibility determination that should have been referred to the SBA under SBA’s COC procedures. See Protest at 7.

In response, the agency explains that the agency reasonably found CRS’s proposal unacceptable under the management approach, domain-specific capability in a health-related mission subfactor. See AR, MOL at 7; see also AR, Supplemental (Supp.) MOL at 1-2. The agency further argues that this assessment was not a determination that CRS lacked the requisite capabilities to perform health-related missions, and therefore was not a responsibility determination. See AR, MOL at 8-9. In this regard, the agency contends offerors eliminated under the management approach, domain-specific capability in a health-related mission subfactor were eliminated because their proposals were not responsive to the solicitation as reflected in the agency’s evaluation. Id.

The Small Business Act provides that it is the SBA’s duty to certify to government procurement officers with respect to all the elements of contractor responsibility (including capability, competency, capacity, credit, integrity, perseverance, and tenacity) of any one or group of small business concerns to receive and perform a specific government contract. 15 U.S.C. § 637(b)(7)(A). SBA’s implementing regulations specifically require a contracting officer to refer a small business concern to SBA for consideration for a COC when the contracting officer “[r]efuses to consider a small business concern for award of a contract or order after evaluating the concern’s offer on a non-comparative basis (e.g., a pass/fail, go/no-go, or acceptable/unacceptable) under one or more responsibility type evaluation factors (such as experience of the company or key personnel or past performance).” 13 C.F.R. § 125.5(a)(2)(ii).

Here, the solicitation provided that in phase 1 of the evaluation, proposals were to be evaluated on a go/no-go basis, i.e., non-comparative basis. See RFP at M-3, M-4. The solicitation further provided that if rated unacceptable under any factor in phase 1, the entire proposal would be rendered unacceptable and ineligible for award. See id. at M-4. Further, the record provides no support for the agency’s argument that CRS’s proposal was eliminated because it was not responsive to the solicitation. Contrary to the agency’s arguments, the record shows that the agency found that the examples provided by CRS in its proposal were “not sufficient to demonstrate inherent capabilities in health-related missions” and that CRS’s proposal did not demonstrate that it possessed the requisite capability through “internal resources with substantial relevant experience.” See AR, Tab 7, Go/No-Go Assessment at 10. On this record, we find that the agency’s conclusion relates to CRS’s capability to perform the contract, not simply the adequacy or completeness of its proposal submission. See 22nd Century Team, LLC--Costs, B-412742.4, Dec. 15, 2016, 2016 CPD ¶ 369 at 6. Accordingly, the Small Business Act requires that the agency should have referred CRS to the SBA for a COC review in accordance with 13 C.F.R. § 125.5(a)(2)(ii). Cascadian Am. Enters., B-412208.3, B-412208.4, Feb. 5, 2016, 2016 CPD ¶ 29 at 7-8.

In sum, the agency evaluated the small business offerors on an acceptable/unacceptable basis, as opposed to a comparative basis, with respect to relevant experience, a responsibility-type evaluation factor, and found CRS’s proposal unacceptable under that factor. See 13 C.F.R. § 125.5(a)(2)(ii). As such, rejection of CRS’s proposal based on its rating of unacceptable under the management approach, domain-specific capability in a health-related mission subfactor, without first referring the matter to the SBA for a COC determination, was improper. Accordingly, we sustain the protest.  (Competitive Range Solutions, LLC B-413104.10: Apr 18, 2017)

Both protesters essentially argue that the agency’s exclusion of their proposals based on their failure to submit documentation verifying an adequate cost accounting system for all CTA members amounted to a non-responsibility determination that should have been referred to the SBA for a COC. We disagree.

We have long held that the evaluation of proposals is a matter within the discretion of the procuring agency; we will question the agency’s evaluation only where the record shows that the evaluation does not have a reasonable basis or is inconsistent with the RFP. Hardiman Remediation Servs., Inc., B-402838, Aug. 16, 2010, 2010 CPD ¶ 195 at 3.

Under the SBA’s COC program, agencies must refer to SBA a determination that a small business is not responsible if that determination would preclude the small business from receiving an award. 15 U.S.C. § 637(b)(7); 13 C.F.R. § 125.5; FAR subpart 19.6. SBA’s regulations specifically require a contracting officer (CO) to refer a small business concern to SBA for a COC determination when the CO has refused to consider a small business concern for award of a contract or order “after evaluating the concern’s offer on a non-comparative basis (e.g., pass/fail, go/no go, or acceptable/unacceptable) under one or more responsibility-type evaluation factors (such as experience of the company or key personnel or past performance).” 13 C.F.R. § 125.5(a)(2)(ii).

On this record, we do not agree that the agency’s evaluation involved a nonresponsibility determination requiring referral to SBA. While the protesters argue that our Office has found that an agency’s rejection of a proposal due to evaluated problems in the offeror’s accounting system is a matter of responsibility, not technical acceptability, see PMO Partnership Joint Venture, B-401973.3, B-401973.5, Jan. 14, 2010, 2010 CPD ¶ 29 at 5, we find this argument inapposite here. In this instance, the agency’s elimination of these two proposals from further consideration was not based on any evaluated problems with the accounting systems of the respective CTA members. See AttainX Protest at 10; AttainX Comments at 5; FreeAlliance.com Protest at 8, FreeAlliance.com Comments at 2. Rather, the record shows that NIH rated the proposals unacceptable based on the fact that both protesters failed to submit the specific documentation required by the solicitation, given their reliance on a third-party CPA firm to verify their adequacy of accounting systems. In other words, both protesters’ proposals were found unacceptable because they did not include the expressly required verification “on the [letterhead] of the third-party CPA firm” attesting to the fact that the CTA members’ accounting systems had been “audited and determined adequate for determining costs applicable to [the] contract in accordance with FAR § 16.301-3(a)(1).” See RFP at L-17. Clearly stated RFP requirements are considered material to the needs of the government, and a proposal that fails to conform to such material terms is unacceptable and may not form the basis for award. TYBRIN Corp., B-298364.6, B-298364.7, Mar. 13, 2007, 2007 CPD ¶ 51 at 5; National Shower Express, Inc.; Rickaby Fire Support, B-293970, B-293970.2, July 15, 2004, 2004 CPD ¶ 140 at 4-5.

It is an offeror’s responsibility to submit a well-written proposal, with adequately detailed information that clearly demonstrates compliance with the solicitation requirements and allows a meaningful review by the procuring agency. See, e.g., International Med. Corps, B-403688, Dec. 6, 2010, 2010 CPD ¶ 292 at 7. An offeror runs the risk that a procuring agency will evaluate its proposal unfavorably where it fails to do so. Recon Optical, Inc., B-310436, B-310436.2, Dec. 27, 2007, 2008 CPD ¶ 10 at 6. Accordingly, we find no merit to the protesters’ arguments.  (AttainX, Inc.; FreeAlliance.com, LLC B-413104.5, B-413104.6: Nov 10, 2016)


Certificate of Competency Requirement

Finally, DA Defense argues that, even assuming the confidence assessment assigned to its past performance was reasonable, under the solicitation’s modified best value evaluation scheme, which required a substantial confidence rating to be eligible for award, the satisfactory confidence assessment was tantamount to a nonresponsibility determination. The protester contends that because the Army made a de facto nonresponsibility determination and the protester is a small business, the agency was required to refer the matter to the SBA for review under the SBA’s certificate of competency program pursuant to 13 C.F.R. § 125.5 and FAR subpart 19.6. See Protest (Sept. 8, 2015) at 8-10. The Army and Marton respond that no referral to the SBA was necessary because the agency did not make a responsibility determination with respect to the protester, and the protester was not otherwise the apparent successful offeror. See AR at 9 (citing Rice Servs., Inc., B-411540, B‑411540.2, Aug. 20, 2015, 2015 CPD ¶ 260 at 4 n.2); Intervenor’s Comments (Oct. 19, 2015) at 1-2.

We find no merit to DA Defense’s argument that the Army was required, based on the protester’s satisfactory confidence past performance assessment, to refer the matter to the SBA for a certificate of competency review. An agency may use traditional responsibility factors, such as past performance, as technical evaluation factors where, as here, a comparative evaluation of those areas is to be performed. Source Diversified, Inc., B-403437.2, Dec. 16, 2010, 2010 CPD ¶ 297 at 8 n.11; Zolon Tech, Inc., B‑299904.2, Sept. 18, 2007, 2007 CPD ¶ 183 at 8; T. Head & Co., Inc., B‑275783, Mar. 27, 1997, 97-1 CPD ¶ 169 at 3-4. No SBA referral is required where a small business offeror’s technically-acceptable proposal is not selected for award because another offeror’s proposal is evaluated as superior under a comparative analysis or because of a cost/technical tradeoff analysis. Zolon Tech, Inc., supra; CMC & Maint., Inc., B-292081, May 19, 2003, 2003 CPD ¶ 107 at 4.

There was no pass/fail evaluation of past performance here. The record shows that, consistent with the RFP’s anticipated qualitative assessment of past performance, DA Defense’s past performance was evaluated as satisfactory as part of a comparative, best-value evaluation, not a responsibility determination. AR, Tab 14A, SSEB Report (Aug. 17, 2015), at 21-25; Tab 14B, Source Selection Decision (Aug. 19, 2015), at 4-5. Moreover, the RFP did not preclude award to an offeror with a satisfactory confidence rating. Instead, as discussed above, the solicitation provided for award to the offeror that submitted the lowest-priced proposal that was technically acceptable, and had a substantial confidence rating for past performance; in the event no offeror had a substantial confidence rating, offerors who had satisfactory confidence ratings would be considered. On this record, we agree with the Army that it had no obligation to refer its qualitative assessment of DA Defense’s satisfactory past performance to the SBA for a certificate of competency.  (DA Defense Logistics HQ B-411153.3: Dec 2, 2015)  (pdf)


[N3 Government Solutions, LLC] N3GS does not dispute that, as stated in its proposal, it possessed an interim top secret security clearance, rather than a final one, and that this remained the case through at least June 12. Nevertheless, the protester argues that [Defense Threat Reduction Agency] DTRA failed to fulfill the corrective action announced in response to N3GS’s earlier protest because the contracting officer lacked a valid basis to deny the SBA additional time to consider issuing a COC. Protest at 6-7.

DTRA argues that the unacceptability of a small business offeror’s facility security clearance should not be a matter for which referral to the SBA is required. Agency Report at 5. Even if referral is required, DTRA argues that the contracting officer had broad discretion whether to allow additional time for the SBA to consider N3GS’s COC, and properly declined the extension request here. Id. at 6.

Our Office invited the SBA to provide its views on the protest issues. The SBA argues that questions over whether a small business has met a pass/fail requirement for a facility security clearance, as here, are properly matters of responsibility that must be referred to the SBA for consideration of a COC, as DTRA did when it took corrective action in response to N3GS’s first protest. SBA Brief at 4‑5. On the other hand, the SBA argues that the contracting officer’s decision not to grant an extension to the SBA to further consider the COC referral was a matter within the contracting officer’s discretion, and that N3GS could not have received a COC in any event because the firm did not have the required final facility security clearance. Id. at 6-7.

Under SBA regulations, when an agency refers a question over the responsibility of a small business to the SBA to consider issuing a COC, the contracting officer must withhold the contract award “for a period of 15 working days (or longer if agreed to by SBA and the contracting officer).” 13 C.F.R. § 125.5(c)(2) (2014); see also Federal Acquisition Regulation (FAR) § 19.602-2 (“15 business days,” or longer by agreement). If no COC is issued in the 15-day period (or longer period agreed between SBA and the contracting officer), the contracting officer is directed to make award to the next firm in line. FAR § 19.602-4(c).

Although the SBA asked the contracting officer to agree to more time to consider issuing a COC, there was no agreement by the contracting officer to do so. Our Office has held that “the granting of such extensions is entirely discretionary with [the contracting agency].” Eagle Sec., Inc., B-242397, Apr. 29, 1991, 91‑1 CPD ¶ 415 at 4. We will not review the contracting officer’s discretion in denying an extension absent a showing that the decision to deny the request may have been influenced by fraud or bad faith. Worthy Indus. Corp., B-240489, Nov. 27, 1990, 90‑2 CPD ¶ 428 at 3. Here, N3GS has not shown, or even alleged, that the failure of the SBA to complete the COC process within 15 days, or the contracting officer’s decision not to extend that time, was caused by fraud or bad faith. To the contrary, N3GS describes the delay as being caused by “an admitted clerical or process error and through no fault of the Agency and no fault of [N3GS].” Protester’s Opposition to Dismissal, at 2.

In short, the record here shows that DTRA referred the question of N3GS’s responsibility to the SBA for consideration under its COC process, as DTRA agreed to do as corrective action in response to N3GS’s earlier protest. The SBA sought, but was denied, an extension of the 15-day period to consider the COC, as to which there is no allegation that fraud or bad faith played any role. As a result, we have no basis to question the contracting officer’s decision to proceed with the contract award to VSI, as provided in FAR § 19.602-4.  (N3 Government Solutions, LLC B-411303.2: Sep 9, 2015)  (pdf)
 


JS&A contends that GSA had determined that JS&A was in line to receive one of the awards, as evidenced by its referral of the firm’s responsibility to the SBA for a COC review. JS&A argues therefore that because the SBA subsequently issued a COC to the protester, GSA “had an obligation” to make the award to the protester. Protester’s Comments (April 8, 2015), Attach. A, at 14. For the reasons discussed below, we find no merit to this argument. (sentence deleted).

A contracting officer may not make an award to an offeror unless it is found to be responsible. FAR § 9.103(a). In making a responsibility determination, the contracting office must determine, among other things, that the contractor has “adequate financial resources to perform the contract, or the ability to obtain them.” FAR § 9.104-1(a). Where a small business concern’s offer would otherwise be accepted for award, but the firm is found by the contracting officer to be nonresponsible, the contracting officer must refer the matter to the SBA for consideration of a COC. FAR §§ 9.104-3(d); 19.601(c). Where the SBA issues a COC, agencies are required to make award to the concern, without requiring it to meet any other responsibility or eligibility requirement. 15 U.S.C. § 637(b)(7)(C); FAR § 19.602-4.

Our Office has held, however, that while the SBA’s COC provisions and the FAR preclude an agency from denying award to an offeror that has received a COC based on responsibility matters, an agency is not required to make award to that offeror if there are other reasons for denying the award that are not related to its responsibility. See Tenderfoot Sock Co., Inc., B-293088.2, July 30, 2004, 2004 CPD ¶ 147 at 3 (although protester was issued a COC, the agency reasonably awarded a contract to a different offeror because the COC request was premature, as the agency had not yet determined whether the protester was in line for award); The Gerard Co., B-274051, Nov. 8, 1996, 96-2 CPD ¶ 177 at 3 (agency properly obtained best and final offers--due to issuance of amendment--after COC was issued to protester); Mechanical Equip. Co. Inc., B-239208, Apr. 25, 1990, 90-1 CPD ¶ 428 (in a solicitation restricted to qualified sources, the agency reasonably considered another offeror as a source of supply after the SBA had issued a COC for the protester).

Here, as stated above, the RFP provided for award of contracts on a best-value basis. Based on the issuance of a COC to the protester, GSA could not deny the protester the award based on matters relating to its responsibility. Consistent with our Office’s decisions, however, the agency could select offerors other than JS&A, provided the basis for doing so was unrelated to the protester’s responsibility. The record here shows that the agency conducted a best-value tradeoff between JS&A and the three offerors who proposed higher prices than the protester: Hill, Heery, and URS. AR, Tab 14, Source Selection Decision (Jan. 26, 2015), at 4, 7, 9; Tab 16, GSA Debriefing for JS&A (Feb. 20, 2015), at 2. In each instance, the agency concluded that the three awardee’s proposals provided strengths under the non-price factors which merited award despite JS&A’s lower price. Id. On this record, we conclude that the agency was not required to award the contract to JS&A based solely on the issuance of the COC.  (Jay Shapiro & Associates, Inc. B-411174: Jun 5, 2015)  (pdf)


Latvian Connection argues that its exclusion from the competition constituted a negative responsibility determination with respect to a small business, which therefore should have been referred to the SBA under its Certificate of Competency (COC) procedures. Protest at 14. The SBA, which submitted comments to our Office in response to the protest, likewise asserts that the actions of DOS and FedBid constituted a de facto nonresponsibility determination, which should have been referred to the SBA under its COC procedures. SBA Comments, Feb. 26, 2015, at 2-5. DOS, however, responds that there was no responsibility determination by the agency here since Latvian Connection never submitted a response to the solicitation and, in any case, FedBid acted to suspend Latvian Connection without direction or encouragement from DOS. AR at 9; Agency Response to SBA’s Comments at 2.

Under the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures. 15 U.S.C. § 637(b)(7); FAR subpart 19.6; FitNet Purchasing Alliance, B‑410263, Nov. 26, 2014, 2014 CPD ¶ 344 at 6-7. In this regard, the Small Business Act provides that it is the SBA’s duty:

To certify to Government procurement officers . . . with respect to all elements of responsibility, including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, and tenacity, of any small business concern or group of such concerns to receive and perform a specific Government contract.

15 U.S.C. § 637(b)(7)(A) (emphasis added). Importantly, this section of the Act also provides that a “Government procurement officer . . . may not, for any reason specified in the preceding sentence preclude any small business concern or group of such concerns from being awarded such contract without referring the matter for a final disposition to the Administration.” Id.

Here, Latvian Connection was suspended from use of FedBid. Under FedBid’s rules, therefore, Latvian Connection was ineligible to respond to DOS’s solicitation, and thereby precluded from competing or being awarded a contract. The basis of Latvian’s suspension was the firm’s lack of “System and Business Integrity.” FedBid Suspension E-mail, July 8, 2014, at 1. Although FedBid, a private company, was the entity that precluded Latvian’s ability to compete for the contract, we have previously held that when FedBid hosts a reverse auction on its website, it acts as an agent for the agency conducting the procurement. AeroSage LLC, B-409627, July 2, 2014, 2014 CPD ¶ 192 at 4. As a result, we conclude that the DOS, through its agent, FedBid, precluded Latvian Connection, a small business, from competing for, and potentially being awarded, a contract on the basis of the firm’s integrity, without referring the matter to the SBA. This amounted to a determination of nonresponsibility, which the agency should have referred to the SBA for a COC determination. Therefore, we sustain the protest on this basis.  (Latvian Connection, LLC B-410947: Mar 31, 2015)  (pdf)  Also see Latvian Connection, LLC B-410981: Apr 6, 2015)  (pdf)
 


Failure to Refer to SBA

MTA asserts that the requirement that intermittent interpreters possess TS/SCI clearances was a classic responsibility factor, and since it was evaluated on a “pass/fail” basis, the agency was required to refer the rejection of its proposal for failure to meet that requirement to the SBA under its Certificate of Competency (COC) procedures.

Our Office has held that the ability to obtain a security clearance is generally a matter of responsibility, absent an express requirement in the solicitation to demonstrate the clearance prior to award, which would indicate that the requirement was a definitive responsibility criterion. See TMG Constr. Corp., B-407190, Nov. 19, 2012, 2012 CPD ¶ 343 at 5; Rohmann Servs., Inc., B-405171, B-405171.2, Sept. 8, 2011, 2011 CPD ¶ 177 at 8; Waterfront Techs., Inc.--Protest and Costs, B-401948.16, B-401948.18, June 24, 2011, 2011 CPD ¶ 123 at 6. Under the Small Business Act, 15 U.S.C. § 637(b)(7) (2006), the SBA has conclusive authority to determine the responsibility of small business concerns. Thus, when a procuring agency finds that a small business is not eligible for award based on a nonresponsibility determination or a failure to satisfy definitive responsibility criteria, the agency is required to refer the matter to the SBA for a final determination under its COC procedures. TMG Constr. Corp., supra, at 5 n.4; Waterfront Techs., Inc.--Protest and Costs, supra.

Here, we find that the agency was not required to refer the matter to the SBA for COC consideration. Where a proposal, on its face, should lead an agency to the conclusion that an offeror has not agreed to comply with a material term or condition of the solicitation, the matter is one of the proposal’s acceptability, and not a matter of the offeror’s responsibility. TYBRIN Corp., B-298364.6, B-298364.7, Mar. 13, 2007, 2007 CPD ¶ 51 at 6 (proposal that on its face does not satisfy a solicitation's limitation on subcontracting clause concerns the acceptability of the proposal, and not the offeror's responsibility). Further, a proposal that fails to conform to a material term or condition of the solicitation is unacceptable and may not form the basis for an award. Id. In this regard, MTA’s final proposal, as timely revised prior to the final closing time, identified only four intermittent interpreters, none of whom had an TS/SCI clearance as required by the solicitation. In these circumstances, the agency could reasonably conclude that, notwithstanding MTA’s assurances that it was working on obtaining certain unidentified intermittent interpreters with the requisite clearance, the fact that its timely submitted proposal identified interpreters without the requisite clearance called into question MTA’s commitment to comply with this requirement, thus furnishing a basis for rejecting the proposal as unacceptable.  (MT & Associates, LLC, B-410066: Oct 17, 2014)  (pdf)
 


Construct has alleged that the SBA's initial decision denying the firm's [certificate of competency] COC request was improper. In this regard, the protester argues that the denial stemmed from SBA's application of an incorrect limitation on subcontracting standard. Although SBA subsequently reversed the initial decision, and granted Construct a COC for this procurement, Construct has not received the award due to the initial COC denial. Because we conclude that the initial COC denial stemmed from SBA's misapplication of its regulations, we sustain Construct's protest on that basis.

Under the Small Business Act, 15 U.S.C. sect. 637(b)(7), agencies may not find a small business non-responsible without referring the matter to the SBA, which has final authority to determine the responsibility of small business concerns. Joanell Labs., Inc.; Nu-Way Mfg. Co., Inc., B-242415.8, et al., Apr. 15, 1922, 92-1 CPD para. 369. With regard to consideration of SBA COC determinations, the Small Business Act gives the SBA the conclusive authority to review a contracting officer's determination that a small business is not responsible. 15 U.S.C. sect. 637(b)(7). Therefore, our Office does not review challenges to the SBA's decision not to issue a COC unless there is a showing that the COC denial resulted from possible bad faith, or the SBA's failure to follow its own regulations or to consider vital information because of how information was presented to, or withheld from, the SBA by the procuring agency. Bid Protest Regulations, 4 C.F.R. sect. 21.5(b)(2). In this context, the subject for our review is limited to examining whether SBA applied the correct regulations when it denied Construct a COC. See McNeil Technologies, Inc., B-254909, Jan. 25, 1994, 94-1 CPD para. 40.

In order for SBA to issue a COC, a referred company must, preliminarily, demonstrate that it is eligible to apply for a COC. See SBA letter, June 22, at 1. In this case, the SBA concluded that Construct was not eligible. Specifically, the SBA stated that:

SBA regulations require that for any procurement that is set aside for small business, the small business must perform minimum percentage of work with its own employees. This provision, which is included in both SBA's regulations and in the Federal Acquisition Regulation, is known as the "limitations on subcontracting clause." 13 C.F.R sect. 125.6; FAR sect. 19.508(e) and FAR sect. 52.219-14. The clause requires that you perform a minimum of 15% of the cost of the contract with your own employees, not including the cost of materials. Based on the figures provided by Construct Solutions, it proposed to perform about half that, or less than 8%. For that reasons [sic], SBA cannot issue a Certificate of Competency.

Id. (Emphasis added).

The SBA regulation cited in the SBA's June 22 letter, 13 C.F.R sect. 125.6, consists of several distinct provisions. As relevant, 13 C.F.R. sect. 125.6(a), applies to small businesses and requires in part that, "[i]n the case of a contract for general construction, the concern will perform at least 15 percent of the cost of the contract with its own employees (not including the costs of materials)." Id. at sect. 125.6(a)(3) (emphasis added). This provision, the requirements of which were cited in SBA's refusal to issue the COC, does not, however, apply to SDVOSBs. Rather, the subcontracting limitations forth in 13 C.F.R. sect. 125.6(b) apply to SDVOSBs and establish a less stringent subcontracting threshold. Specifically, the regulation states that an SDVOSB prime contractor can subcontract a portion of the work, provided that "[i]n the case of a contract for general construction, the [SDVOSB] spends at least 15% of the cost of contract performance incurred for personnel on the concern's employees or the employees of other [SDVOSBs]." Id. at sect. 125.6(b)(2) (emphasis added). Construct asserts that when analyzed under the appropriate standard, its COC application demonstrates that 26.21 percent of the work will be performed by its employees or the employees of another SDVOSBC.

In sum, the record reflects that SBA incorrectly applied the limitation on subcontracting found at 13 C.F.R. sect. 125.6(a), to Construct, a SDVOSB subject to the limitation on subcontracting at 13 C.F.R. sect. 125.6(b). We therefore sustain the protest where SBA refused to issue a COC to Construct due to failure to properly follow its own regulations.

RECOMMENDATION

Where our Office has sustained a protest of the SBA's refusal to issue a COC, we have recommended that the procuring agency resubmit the matter of the small business firm's responsibility to SBA for further consideration. See COSTAR, B‑240980, Dec. 20, 1990, 90-2 CPD para. 509. In that context, we have also further recommended that, if the SBA should issue a COC on behalf of the firm, that the agency should then take corrective action up to and including changing the award decision. For example, in COSTAR, supra, our Office recommended that, if the SBA issued a COC to the protester, the agency should terminate a previously awarded contract under the solicitation for convenience of the government and make a new award to the protester.

In the current protest, as noted above, the SBA has acknowledged that its initial refusal to issue a COC to the protester was in error, and has issued Construct a COC related to this procurement. SBA Letter, July 25, at 1. Therefore, we conclude that the appropriate remedy in this protest, as in COSTAR, is to recommend that the agency terminate the award to Ironclad and make a new award to Construct. We also find that Construct is entitled to recover its costs of filing and pursuing the protest, including reasonable attorney's fees. 4 C.F.R. sect. 21.8(d)(1). Construct should submit its claim for such costs directly to the VA within 60 days.  (Construct Solutions, Inc.--Protest and Reconsideration, B-405288; B-405288.2, October 11, 2011)  (pdf)


Zolon asserts that the agency’s determination that its revised price was unrealistic and risky constituted a finding that the firm was not responsible. In this regard, Zolon notes that, in making the best value determination, the agency found that the firm’s pricing structure would make it very difficult or impossible to transition a large percentage of the incumbent personnel to a new contract, and was highly unlikely to allow the firm to meet the government’s performance standards. Zolon also notes that the agency considered its past performance and experience to be deficiencies that it could not overcome. Zolon concludes that since it is a small business, the agency was required to refer the matter of its responsibility to the Small Business Administration (SBA) for review under its certificate of competency procedures. See Federal Acquisition Regulation sect. 19.602-1(a). Zolon’s assertions are without merit. An agency may use traditional responsibility factors, such as personnel competencies and capabilities, as technical evaluation factors where, as here, a comparative evaluation of those areas is to be performed. Advanced Resources Int’l, Inc.-Recon., B-249679.2, Apr. 29, 1993, 93-1 CPD para. 348 at 2. A comparative evaluation means that competing proposals will be rated on a scale relative to each other rather than on a pass/fail basis. Dynamic Aviation Helicopters, B-274122, Nov. 1, 1996, 96-2 CPD para. 166 at 3. No SBA referral is required where a small business offeror’s proposal, while evaluated as acceptable, is not selected for award because another offeror’s proposal is evaluated as superior under a comparative analysis or because of a cost/technical tradeoff analysis. Capitol CREAG LLC, B-294958.4, Jan. 31, 2005, 2005 CPD para. 31 at 6-8. There was no pass/fail evaluation here; the record shows that evaluation of Zolon’s past performance and experience, as well as the price realism and risk assessment based on the firm’s low proposed labor rates, were all part of a comparative, best value evaluation, not a responsibility determination. Best Value Determination at 00385, 00389-390. (Zolon Tech, Inc., B-299904.2, September 18, 2007) (pdf)


As indicated, JAF’s proposal was not considered for award because its proposed price was considered unreasonably low. However, there was no technical or price evaluation factor under the RFP providing for the evaluation of price realism or the offerors’ understanding of the requirements. The price evaluation provided only for the evaluation of the “reasonableness” of the proposed price, that is, whether the price was unreasonably high. Thus, the agency’s concern that JAF’s price was too low was a matter of the firm’s responsibility. Since JAF is a small business, if the Air Force believed that JAF could not satisfactorily perform the contract at its proposed price, it was required to refer this finding of nonresponsibility to the SBA for that agency’s review under its certificate of competency procedures. Accordingly, we sustain JAF’s protest on this basis. (J.A. Farrington Janitorial Services, B-296875, October 18, 2005) (pdf)


As set forth in the regulations and explained by SBA, until 1998, SBA's regulations specifically provided that the COC procedures did not apply to contracts awarded under SBA's section 8(a) program. 13 C.F.R. 124.313 (1998). SBA's regulations were amended on June 30, 1998, to provide (as they do now) that if, in the conduct of "competitive 8(a) procurements," the "procuring activity contracting officer believes that the apparent successful offeror is not responsible to perform the contract, he or she must refer the concern to the SBA for a possible Certificate of Competency." 63Fed. Reg. 35726, 35758 (1998); 13C.F.R. 124.507(b)(5) (2004). In making this regulatory change, SBA explained that it wanted "to make competitive 8(a)procurements as similar as possible to non8(a) Government contracting procedures." 62 Fed. Reg. 43583, 43592 (1997); SBA Supplemental Report at 1. SBA emphasizes, however, that as provided in the regulatory history of 13 C.F.R. 124.507(b)(5), and as indicated by SBA's current regulations, the availability of the COC process to an 8(a) participant is limited to nonresponsibility determinations made during competitive 8(a) acquisitions. With regard to noncompetitive acquisitions, such as the one here, SBA, in amending its regulations to provide for the applicability of the COC process to nonresponsibility determinations made in the context of competitive 8(a) acquisitions, stated as follows:

COC procedures would not, however, be available for sole source 8(a) procurements. In most cases, the procuring agency would have selected the Participant for the sole source contract by assessing the firm's capabilities prior to offering the procurement to SBA. It is unlikely that the procuring agency would select a Participant, go through negotiations with the firm, and then find the firm not to be responsible. If that does happen, or if the procuring agency determines that a firm nominated by SBA for an open requirement cannot perform the contract, SBA would review the situation to determine whether it agrees with the procuring agency. If SBA agrees, it can nominate another Participant to perform the contract, if one exists that is found to be eligible and responsible for the requirement, or it can permit the agency to withdraw the requirement from the 8(a) program if an eligible and responsible Participant is not found. If SBA does not agree, it can appeal the procuring agency's decision to the head of the procuring agency pursuant to 124.505. 62 Fed. Reg. 43583, 43592 (1997).

The procedures referenced above are implemented through 13 C.F.R. 124.505(a)(2), which provides that the "Administrator of SBA may appeal . . . to the head of the procuring agency" the procuring agency's "decision to reject a specific [8(a)] Participant for award of an 8(a) contract." As such, here, once CNCS determined that UEA was nonresponsible, and informed SBA of that determination, SBA, if it agreed with CNCS, should have allowed for the replacement of UEA with another 8(a) vendor, such as the vendor identified by CNCS, or should have permitted CNCS to withdraw the requirement from the 8(a) program if no qualified 8(a) vendor was available. See DLS Servs., Inc. , supra , at 3. If SBA disagreed with CNCS regarding its determination that UEA was nonresponsible, the Administrator of SBA could have appealed the CNCS contracting officer's responsibility determination to the head of the procuring agency. 13 C.F.R. 124.505(a)(2). In short, we agree with SBA that it erred in considering UEA for a COC because the COC process is not applicable to noncompetitive 8(a) acquisitions. SBA Report at 2; SBA Supplemental Report at 1-2. (United Enterprise & Associates, B-295742, April 4, 2005)  (pdf)


GSA and Pepco assert that Liberty's proposal evidenced a defective commitment to complying with the subcontracting limitation, and that this therefore was a matter of acceptability, and not responsibility. See Ecompex, Inc. , B-292865.4 et al., June 18, 2004, 2004 CPD 149 at 5; Mechanical Equip. Co., Inc.; Highland Eng., Inc.; Etnyre Int'l, Ltd.; Kara Aerospace, Inc. , supra ; KIRA Inc. , B287573.4, B-287573.5, Aug.29, 2001, 2001 CPD 153 at 3. We disagree. As an initial matter, the contracting officer in fact determined that Liberty's proposal was acceptable; the only question was whether Liberty was entitled to the SDB preference. Further, while GSA asserts that the generating asset in [DELETED] for which Liberty submitted an expired letter of intent could not generate sufficient power to meet the 50percent rule, the agency fails to take into account the fact that Liberty stated that it had "been in negotiations with several plant owners in the PJM territory to acquire the necessary manufacturing capability," Letter from Liberty to GSA, Nov.16, 2004, and not merely with the owner of the generating asset in [DELETED]. Consequently, this is not an instance where the offeror's proposal, on its face, reasonably indicated that the offeror would not comply with a subcontracting limitation, see , e.g. , Orincon Corp. , B276704, July 18, 1997, 97-2 CPD 26 at 4; rather, it involves a question of the offeror's capability to comply with a subcontracting limitation and, thus, its responsibility. As such, this was a matter for the SBA. GSA now asserts that Liberty also failed to meet the requirement set forth in FAR 52.21923(d)(2) that states: "A small disadvantaged business concern submitting an offer in its own name shall furnish in performing this contract only end items manufactured or produced by small disadvantaged business concerns in the United States or its outlying areas." The agency notes in this regard that in its November 11 response to the agency's inquiries, Liberty stated that it would obtain supplemental electricity from one or more firms on a list of its existing suppliers, which includes large businesses. However, as noted by the SBA in its comments on this matter, SBA Comments, Feb. 2, 2005, at 3, while the provisions of FAR 52.21923(d)(1) apply to manufacturers, those of FAR 52.21923(d)(2) clearly apply to SDBs that are nonmanufacturers, that is, SDBs that intend to furnish the products of other SDB concerns. See distinction between manufacturer and nonmanufacturer in 15 U.S.C. 637(a)(17)(A); 13 C.F.R. 121.406; FAR 19.001, 19.102(f), 19.601(d). Here, Liberty essentially claimed that it would qualify as a manufacturer under FAR 52.21923(d)(1); thus, FAR 52.21923(d)(2) was irrelevant to determining Liberty's SDB status and entitlement to the preference, and the final determination as to whether that in fact is the case is for the SBA, as discussed above. Accordingly, we sustain the protest. (Liberty Power Corporation, B-295502, March 14, 2005) (pdf)


It is true that the reasons for GSA's concern about CREAG arose in connection with the evaluation under the solicitation (not post-evaluation, when a responsibility review is normally conducted). This, however, is not determinative. We have long recognized that agencies may use responsibility-type factors as evaluation criteria. See , e.g. , Nomura Enters., Inc. , B-277768, Nov. 19, 1997, 97-2 CPD 148 at 3. Here, the evaluation criteria related to management and staffing are at issue, and both can be viewed as "traditional" responsibility factors. See Clegg Indus., Inc. , B242204.3, Aug. 14, 1991, 91-2 CPD 145 at 2. Where a solicitation uses traditional responsibility factors as technical evaluation criteria and where the proposal of a small business concern which otherwise would be in line for award is found ineligible for award based on an agency's evaluation under those criteria, the agency has effectively made a determination that the small business offeror is not a responsible contractor capable of performing the solicitation requirements. In those circumstances, because of the offeror's small business size status, the agency must refer the matter of the firm's responsibility to the SBA for the possible issuance of a COC. Here, however, we conclude that the basis for GSA's ultimate decision not to make award to CREAG was not a responsibility determination. As noted above, management and staffing are sometimes responsibility criteria. In this procurement, though, GSA's concern was not that CREAG lacked adequate management and staffing (which might well have been a responsibility concern), but rather that CREAG's proposed management and staffing plan--CREAG's approach to performing the contract work--created a high risk of unacceptable performance. This was not due to doubt about CREAG's ability or capability to perform (again, potentially a responsibility concern), but rather to the decentralized approach that CREAG proposed to use to perform GSA's requirements. As the SSEB wrote, "The offeror did not present an adequate resolution to adequately managing the scope of the contract." Final SSEB Report to the SSA at 59. Because GSA's negative assessment was based on the way that CREAG proposed to perform, rather than on CREAG's capabilities, we conclude that what occurred was not tantamount to a nonresponsibility determination, and we therefore find that no referral to the SBA was required. (Capitol CREAG LLC, B-294958.4, January 31, 2005) (pdf)


The award to Southern was unobjectionable. The FAR requirement that agencies make award to a concern where SBA issues a COC presumes that the COC referral will occur after the concern has been determined to be otherwise in line for the award. FAR 9.104-3(d). The record in this case shows that, at the time of the referral, the contracting specialist had not yet determined that Tenderfoot was in line for the award; she had determined only that Tenderfoot was one of several firms that could receive the award. Contracting Officers Statement at1. Nevertheless, apparently not fully understanding the COC process, and having questions about Tenderfoots financial capability, the contracting specialist (prematurely) submitted the matter to SBA for a COC review. AR at 3. Although SBA acted on the referral and issued a COC to Tenderfoot, VA was not required to make award to Tenderfoot at that juncture, since it had not yet determined that Tenderfoot was otherwise in line for the award. The agency could not deny Tenderfoot the award based on matters of responsibility, but nothing prohibited it from selecting another offeror for award based on a price/technical tradeoff in accordance with the RFPs evaluation scheme. See The Gerard Co. , B274051, Nov. 8, 1996, 962 CPD 177 at 3 (agency properly obtained best and final offers--due to issuance of amendment--after COC was issued to protester).  (Tenderfoot Sock Company, Inc., B-293088.2, July 30, 2004)


Under the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures. 15 U.S.C. § 637(b)(7) (2000); FAR Subpart 19.6; Federal Support Corp., B-245573, Jan. 16, 1992, 92-1 CPD ¶ 81 at 4. Past performance traditionally is considered a responsibility factor, that is, a matter relating to the offeror's ability to perform the contract. See FAR § 9.104-1(c); Sanford and Sons Co., B-231607, Sept. 20, 1988, 88-2 CPD ¶ 266 at 2. Traditional responsibility factors may be used as technical evaluation factors in a negotiated procurement, but only when a comparative evaluation of those areas is to be made. See, e.g., Medical Info. Servs., B‑287824, July 10, 2002, 2001 CPD ¶ 122 at 5; Nomura Enter., Inc., B-277768, Nov. 19, 1997, 97‑2 CPD ¶ 148 at 3. Comparative evaluation in this context means that competing proposals will be rated on a scale, relative to each other, as opposed to a pass/fail basis. Ducosort, Inc., B‑254852, Jan. 25, 1994, 94-1 CPD ¶ 38 at 6. We have cautioned that an agency may not find a small business nonresponsible under the guise of a relative assessment of responsibility-based technical factors in an attempt to avoid referral to the SBA. Federal Support Corp., supra, at 4; Sanford and Sons Co., supra, at 3. That appears to be what occurred here.  Here, the agency did not, and could not, perform a “comparative evaluation.” The only technical evaluation factor, past performance, a traditional responsibility factor, was evaluated for the sole “purpose” of making an “assessment of the Offeror's ability to perform.”[8] RFP § 00120 ¶ 2.2.2.1.1. As essentially conceded by the agency, PHC's proposal was rejected because PHC allegedly failed to meet the RFP requirements that the offeror have past performance experience in medical construction on projects of 50 to 100 bed hospitals or large clinics valued at between $5 and $10 million. Because of this, past performance was clearly evaluated on a “pass/fail” basis. Under the circumstances, the agency's rejection of PHC's proposal amounted to a determination of nonresponsibility, which required referral to the SBA for a possible COC. See Federal Support Corp., supra, at 4 (protest sustained where “regardless of how the evaluation criteria was characterized in either the RFP or in the evaluation,” determination of technical unacceptability was nonresponsibility determination); Modern Sanitation Sys. Corp., B-245469, Jan. 2, 1992, 92-1 CPD ¶ 9 at 3 (technical unacceptability based on “go-no go” evaluation of responsibility criteria, without regard to how the rest of the proposal was judged, constitutes nonresponsibility determination that must be referred to the SBA); Clegg Indus., Inc., B‑242204.3, Aug. 14, 1991, 91-2 CPD ¶ 145 at 3 (same).  (Phil Howry Company, B-291402.3; B-291402.4, February 6, 2003)  (txt version)


Global argues that, since it is a small business, the agency was required to refer the rejection of its proposal to the Small Business Administration (SBA) for Certificate of Competency (COC) review. Protester's Comments at 6. However, traditional responsibility factors, such as experience, may be used for the comparative evaluation of proposals in relevant areas; where a proposal is determined to be deficient pursuant to such an evaluation, the matter is one of relative technical merit, not responsibility, and does not require a referral to the SBA. See Advanced Resources Int'l, Inc.--Recon., B-249679.2, Apr. 29, 1993, 93-1 CPD ¶ 348 at 2. The agency here found that Global lacked adequate required expertise, and downgraded its proposal in the technical evaluation. Since this was not a nonresponsibility determination, no referral to SBA was required. See Micronesia Media Distributors, Inc., B-222443, July 16, 1986, 86-2 CPD ¶ 72 at 2.  (Global Business and Legal Services, B-290381.2, December 26, 2002)  (pdf)


Here, since the SBA has declined to issue a COC and since none of the limited exceptions exist for our Office to review the SBA's decision, the essential issue for our consideration raised by this protest is whether new information requiring reversal of the nonresponsibility determination was presented to the contracting officer after the denial of the COC. The information presented by the protester following the SBA's denial of a COC was not new information.  (Quality Trust, Inc., B-289445, February 14, 2002)


In considering the applicable standard here, we note first that despite DLC's status as a small business concern, this nonresponsibility determination was not required to be referred to the Small Business Administration (SBA) for review under that agency's certificate of competency procedures, as GPO is not subject to the referral requirements of the Small Business Act, 15 U.S.C. sect. 637(b)(7) (1994).  (Downtown Legal Copies, B-289432, January 7, 2002)


A proposal found deficient following a comparative evaluation of proposals (rather than on a pass/fail basis) under traditional responsibility factors such as experience, past performance, and personnel qualifications is not a matter of responsibility subject to the Small Business Administration's certificate of competency procedures.  (Medical Information Services, B-287824, July 10, 2001)


Our Office will review the SBA's determinations regarding the issuance of, or failure to issue, a COC, only where there is a showing of possible bad faith on the part of government officials or a failure to consider vital information bearing on the firm's responsibility. 4 C.F.R. sect. 21.5(b)(2). Where, as here, one offeror protests the issuance of a COC to a competitor on the ground that the SBA failed to consider "vital information," we will consider the protest only where the solicitation contains definitive responsibility criteria and the issue raised concerns the competitor's compliance with those criteria. [3] Eastern Marine, Inc., B-212444.2, Aug. 28, 1984, 84-2 CPD para. 232 at 4; Surgical Instrument Co. of Am., B-212653, Nov. 30, 1983, 83-2 CPD para. 628 at 2; Uniflite, Inc., B-197365, Jan. 23, 1980, 80-1 CPD para. 67 at 2. Here, since neither bad faith nor a failure to comply with a definitive responsibility criterion has been alleged, we will not consider the matter.  (Integrity Management Services, Inc., B-283094.2, May 3, 2000)

Comptroller General - Listing of Decisions

For the Government For the Protester
AttainX, Inc.; FreeAlliance.com, LLC B-413104.5, B-413104.6: Nov 10, 2016 New Competitive Range Solutions, LLC B-413104.10: Apr 18, 2017
DA Defense Logistics HQ B-411153.3: Dec 2, 2015  (pdf) Latvian Connection, LLC B-410947: Mar 31, 2015  (pdf)  Also see Latvian Connection, LLC B-410981: Apr 6, 2015)  (pdf)
N3 Government Solutions, LLC B-411303.2: Sep 9, 2015  (pdf) Construct Solutions, Inc.--Protest and Reconsideration, B-405288; B-405288.2, October 11, 2011  (pdf)
Jay Shapiro & Associates, Inc. B-411174: Jun 5, 2015  (pdf) J.A. Farrington Janitorial Services, B-296875, October 18, 2005 (pdf)
MT & Associates, LLC, B-410066: Oct 17, 2014  (pdf) United Enterprise & Associates, B-295742, April 4, 2005 (pdf)
Zolon Tech, Inc., B-299904.2, September 18, 2007 (pdf) Liberty Power Corporation, B-295502, March 14, 2005 (pdf)
Capitol CREAG LLC, B-294958.4, January 31, 2005 (pdf) Phil Howry Company, B-291402.3; B-291402.4, February 6, 2003  (txt version)
Tenderfoot Sock Company, Inc., B-293088.2, July 30, 2004 (pdf)  
Global Business and Legal Services, B-290381.2, December 26, 2002  (pdf)  
Brickwood Contractors, Inc., B-290444, July 3, 2002  (pdf)  
Quality Trust, Inc., B-289445, February 14, 2002  (Pdf version)  
E. F. Felt Company, Inc., B-289295, February 6, 2002  
Downtown Legal Copies, B-289432, January 7, 2002  
Medical Information Services, B-287824, July 10, 2001  
Integrity Management Services, Inc., B-283094.2, May 3, 2000  

Court of Federal Claims - Key Excerpts

B. The SBA's Decision to Deny the COC was not Arbitrary or Capricious.

After the BOP determined that JRS lacked capacity to perform and was thus nonresponsible, the BOP was required to refer the matter to the SBA. FAR§ 19.602-1. When issued, a COC represents the SBA' s detennination that the applicant "is responsible (with respect to all elements of responsibility, including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, tenacity, and limitations on subcontracting) for the purpose of receiving and performing a specific Government contract." FAR§ 19.601. The SBA's determination of responsibility is governed by the same factors listed in FAR § 9 .104-1 that guide the procuring agency's decision. See CSE Const. Co. v. United States, 58 Fed. Cl. 230, 250 (2003). Further, the "SBA may deny a COC for reasons of nonresponsibility not originally cited by the contracting officer." FAR§ 125.5(£)(1).

JRS argues that the SBA's decision not to issue a COC must be set aside because it was cursory, conclusory, and based on non-relevant or erroneous factual allegations. First, JRS argues that the SBA impermissibly imposed a requirement that JRS have a qualified instructor on staff when there was no such requirement in the solicitation. Second, JRS argues that it was improper for the SBA to consider other contracts it and JRS Management were awarded but did not perform. Third, JRS argues that the SBA improperly contacted references as part of its investigation when the SBA knew that JRS did not have contracts of a related nature, size, and scope and therefore none of the references were relevant. Finally, JRS argues that the SBA erred by not giving sufficient consideration to the horticulture instruction contracts that JRS Management successfully managed.

For the reasons that follow, the court finds that JRS's arguments are insufficient to meet the arbitrary and capricious standard applied to this court's review of agency action.

1. The SBA Reasonably Considered that JRS did not have a Horticulture Instructor Committed to Perform.

JRS argues that the SBA erred in denying the COC on the grounds that JRS did not have an instructor ready to perform the contract. According to JRS, the solicitation did not require it to have an instructor on staff. Rather, JRS argues the solicitation only requires bidder to list candidates potentially available. JRS further argues that FAR § 52.222-17, which requires new contractors to offer continued employment to an incumbent's "service employees" under certain circumstances, required JRS to first offer the instructor position to the incumbent and thus it could not commit another instructor. The government counters that FAR § 52.222-17 is not applicable because it exempts professionals including instructors of this type, and further asserts that the SBA correctly considered JRS 's failure to identify a specific instructor when it denied the COC.

The court agrees with the government that the SBA' s denial of a COC based in part on JRS 's failure to identify a committed instructor was rational. As an initial matter, it appears that JRS's reliance on FAR§ 52.222-17 to suggest that it could rely on the incumbent serve as the instructor is misplaced. The FAR states that only "service employees" of the predecessor contractor shall be offered the right of first refusal by the successor contractor, and exempts individuals employed in a "professional capacity" as defined in 29 C.F.R. § 541. FAR§ 52.222-17(a). A teacher is a "professional" for the purpose of the regulations when the teacher's "primary duty" is "teaching, tutoring, instructing or lecturing in the activity of imparting knowledge and who is employed and engaged in this activity as a teacher in an educational establishment .... " 29 C.F.R. § 54 l .303(a). Teachers "of skilled and semi-skilled trades and occupations" are classified as professionals. Id. An "educational establishment" is defined to include "an institution of higher education or other educational institution" and may include "post-secondary career programs." 29 C.F.R. § 541.204(b).

In this case, the solicitation specified that the instructor was to teach an "established horticulture program" that was "approved through the New River Community College." BOP AR 49. The instructor was required to have a degree in horticulture or agriculture. BOP AR 50. In Wilks v. District of Columbia the court found that a prison's Office of Educational Services was an educational establishment for the purposes of the regulations because instructors were certified by D.C. Public Schools and conducted formal classes. 721 F. Supp. 1383, 1386 (D.D.C. 1989); see Astor v. United States, 79 Fed. Cl. 303, 316 (2007) (citing Wilks with approval). Therefore, it appears that this position also meets the standard for teacher under the regulations. However, even if JRS was required to give Mr. Arbaugh a right of first refusal under FAR § 52.222-17, nothing in the regulation prohibited JRS from making a tentative or conditional offer to other instructors in the event that Mr. Arbaugh declined its offer. Given JRS's extensive history of being unable to perform contracts when it did not have a committed instructor, the SBA reasonably suggested that JRS obtain letters of intent from either or both of the two potential other instructors. SBA AR 759. When JRS elected not to pursue that request and provide the necessary assurance, JRS ran the risk that the SBA would find that JRS might not be able to provide an instructor on the effective date of the contract..

In this regard, the court agrees with the government that the SBA did not deny the COC on the grounds that JRS did not have an instructor on the payroll. Rather, given JRS' s history of failing to secure instructors under similar circumstances, the SBA sought assurance that JRS would be able to provide an instructor on the effective date of the contract. Because JRS did not address this issue even after the SBA expressed concerns and gave JRS instructions that would have alleviated the problem, it was not irrational for the SBA to conclude that without a commitment from another instructor, JRS might lack the capacity to perform.

2. The SBA Reasonably Considered JRS's History of not Performing after being Awarded a Contract

JRS argues that SBA should not have considered the approximately twenty-five percent rate of unaccepted awards in making its decision because JRS had well-founded reasons for declining those awards. According to JRS, "JRS heeded the SBA's advice with regard to being cautious before entering into contracts with the federal government" and points to the SBA's website to show that the SBA ignored its own advice in using the unaccepted offers of award as a basis for denying the COC. Pl.'s Reply 27. The government responds by pointing out that "[r]egardless of JRS's reasons for refusing awards, the fact remains that the SBA's decision to consider this information was both rational and reasonable[.]" Def. 's Reply 15.

The court finds, given the extensive number of contracts that JRS has acknowledged being awarded but not performing, that the SBA's consideration of this history was not arbitrary or capricious. This is not a case where the SBA ignored JRS's reasons for declining those contracts. To the contrary, JRS's reasons are clearly reflected in the record. However, the SBA could reasonably conclude that JRS engaged in a pattern of bidding and receiving contract awards even where JRS was aware that it might not have the capacity to begin or complete them. In addition, the record shows that in a number of instances, the contracts were not declined but were accepted by JRS but then closed without any work being performed, or the agency was forced to rescind the offer after JRS's delays in meeting the contract's requirements.

JRS's reliance on the SBA website is also misguided. The website states that "a prospective contractor's response to an RFQ is not an offer that can be accepted to form a binding contract" and the SBA "cautions small businesses to carefully and completely read solicitations, to use a pricing strategy that considers all costs allowing for sufficient overhead/profit, and to read a proposed contract carefully before signing." Pl.' s Reply 27. However, the fact that the SBA recommends that contractors carefully review the terms of a contract before signing it does not imply that the SBA encourages prospective offerors to submit bids for contracts that they do not think they will be able to perform. As discussed above, JRS' s failure to accept approximately a quarter of the bids accepted by the government is a significant number. In addition, its failure to take on the work it was offered has caused delays in programing. Therefore, it was rational for the SBA to consider JRS 's history.

3. The SBA Reasonably Considered JRS's References.

JRS argues that the SBA's decision should also be set aside because the SBA improperly relied on comments from three of JRS 's references when the references worked with JRS on contracts other than horticulture instruction, and are therefore not relevant. The government responds that it was rational for the SBA to consider information received from JRS 's references when determining whether to issue a COC.

The SBA was required to conduct a comprehensive investigation as to whether JRS was responsible, and the investigation properly included contacting third parties with knowledge of JRS's performance on other contracts. See FAR§ 125.5(d)(3) ("SBA personnel may obtain clarification or confirmation of information provided by the applicant by directly contacting suppliers ... and other third parties upon whom the applicant's responsibility depends."). Regardless of whether the references offered insights into JRS' s performance on a horticulture contract, the references offered insights into how JRS approaches its commitments under its other instructional contracts. Accordingly, the court finds that the SBA decision denying the COC need not be set aside on this basis.

JRS also argues that the SBA improperly denied the COC because of JRS's history of filing bid protests. However, the SBA decision document does not rely on this history. To the contrary, the decision document focused on JRS's history of not performing on awarded contracts, JRS's failure to identify a committed instructor, and JRS's difficulty with resolving issues with contracting officers. SBA AR 760.

4. The SBA's Decision not to Credit JRS Management's Experience does not make its Decision Unreasonable.

Although JRS acknowledges that it did not have prior horticulture instruction contracts, it argues that the SBA "erred when it concluded that JRS' s expertise was limited to finding and filling teaching positions related to religious education." Pl.' s Rep. 20. According to JRS, the record shows that one of JRS's active contracts is for an HV AC instructor at FCI La Tuna, Texas, and therefore "the record shows that JRS' s experience is not limited to religious education." Id. JRS further argues that the SBA failed to take into account that Ms. Sims has over 11 years of experience in managing five horticulture instruction contracts through JRS Management, and that she had experience within the last three years in managing a horticulture contract.

The government responds that "the SBA procurement analyst did refer to the FCI La Tuna contract as being a non-religious contract, but noted that the work has not started yet on that contract." Def.' s Reply 12. The government also argues that, regardless of whether JRS Management had horticulture instruction experience, it is undisputed that JRS did not have experience with horticultural instruction and thus the SBA analyst was not incorrect.

JRS' s COC application indicates that JRS Management did have experience fulfilling horticulture contracts within the three years prior to JRS' s bid in this case. SBA AR 413-64. However, assuming that the SBA was required to consider these contracts, the court finds that the error was harmless. The record shows that JRS Management's horticulture instruction contracts were in a different geographic area and involved different instructors who were not available to perform the contract in this case.

Ultimately, it is the court's duty to consider whether the evidence in the record supported the SBA's decision to deny the COC, not to hold the agency to a standard of perfection. Am. Auto Logistics, LP v. United States, 117 Fed. Cl. 137, 205 (2014), aff d, 599 F. App'x 958 (Fed. Cir. 2015) ("It is not the court's role to determine whether the evaluations were perfect or even as good as they could be . ... "). Here, the evidence supports the SBA's conclusion. It is undisputed that JRS had a repeated history of failing to provide a qualified instructor for contracts it was awarded when JRS did not have that personnel available. The record shows that JRS did not have a committed instructor for the subject contract, and the record also showed that JRS had a history of strained relations with contracting officers. In light of JRS's track record, the court finds that the SBA's conclusion regarding JRS's lack of capacity with regard to the subject contract was reasonable.   (Jacqueline R. Sims d/b/a JRS Staffing Services v. U. S. No. 15-367C, February 3, 2016)  (pdf)


B. Analysis of the Merits

This is a relatively simple case made more complicated by some curious agency actions following receipt of a GAO bid protest decision. Broadly speaking, the question presented is whether the VA’s corrective action was reasonable. More specifically, the question is whether the VA’s referral of Marathon’s incomplete proposal to the SBA for a Certificate of Competency determination was proper, given the agency’s original decision to exclude that proposal for failing to provide information explicitly required by the solicitation. The answer, as explained below, is that there was nothing improper about the VA’s original decision, and without any impropriety to remedy, the VA’s corrective action cannot be defined as reasonable, nor can it be upheld.

1. The Original Procurement Decision

The starting point of this analysis is the VA’s original decision, which it previously defended in the GAO protest as follows:

MMC acknowledged in its response to the EN sent to it that it had overlooked [the past performance evaluation] requirement. It is an offeror’s responsibility to submit a well-written proposal, which clearly demonstrates compliance with the solicitation and allows a meaningful review by the agency. International Med. Corps., B-403688, Dec. 6, 2010, 2010 CPD ¶ 292 at 8. Further, with respect to VA’s refusal to consider MMC’s late submittal of past performance references . . . the solicitation clearly stated that failure to submit complete information . . . may exclude the proposal from further consideration.

. . . .


MMC contends the FAR 15.305(a)(2)(iv) instructs that in cases where past performance information is not available, “the offeror may not be evaluated favorably or unfavorably on past performance.” This FAR subsection is not applicable here because MMC was not evaluated favorably or unfavorably, it was appropriately found nonresponsive. Furthermore, the past performance information would have been available had it been submitted in a timely manner pursuant to the solicitation. Then, and only then, could MMC receive an evaluation of its past performance. Proposals with significant informational deficiencies may be excluded, whether the deficiencies are attributable to either being omitted or merely inadequate information addressing fundamental factors. American Med. Depot, B-285060 et al., July 12, 2000, 2002 CPD ¶ 7 at 6-7.

AR 1621-22. The unfortunate reality here is that the VA’s first decision in this procurement was correct, and the subsequent “corrective” actions have served only to introduce error and confusion into an otherwise straightforward circumstance. Understanding why this is so requires a review of the solicitation, Marathon’s proposal, and the range of proper agency discretion upon receiving that proposal.

a. The Solicitation and Marathon’s Proposal

In general, when using the LPTA source selection process, award is “made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.” FAR 15.101-2(b). Whether to include past performance among these non-cost evaluation factors is left to the discretion of the contracting officer. Id. In this specific case, the VA elected to include past performance. AR 82-83, 86, 89. In addition, the solicitation clearly stated that the “Government intend[ed] to evaluate offers and award a contract without discussions with offerors” (AR 84), and warned that failure to submit complete information “may exclude the proposal from further consideration” (AR 87). That is precisely what occurred. When Marathon failed to include the required proposal information, it was eliminated from the competition. AR 1444.

b. Agency Discretion

Discretion, by definition, involves the freedom to choose between certain options. Here, the issue is which options were available when the VA received Marathon’s incomplete proposal. On the one hand, “where, in a negotiated procurement, an offeror’s proposal does not comply with the solicitation’s requirements, ‘an agency is not required to eliminate the awardee from the competition, but may permit it to correct its proposal.’” ManTech Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 71 (2001) (quoting D & M Gen. Contracting, Inc., B–252282 et al., 93-2 CPD ¶ 104, at 2 (Comp. Gen. Aug. 19, 1993)), aff’d, 30 F. App’x 995 (Fed. Cir. 2002). On the other hand, an agency is also not obligated to open discussions to obtain missing information when it discovers an offeror’s omission. Orion Tech., Inc. v. United States, 102 Fed. Cl. 218, 232 (2011), aff’d, 704 F.3d 1344 (Fed. Cir. 2013). Accordingly, Marathon “could not have had any expectation when it submitted its proposal that it would have the opportunity to rectify proposal deficiencies through discussions.” Id.

Nonetheless, the Government’s and Marathon’s arguments rest on the notion that factors “H” and “I” are responsibility factors and, therefore, Marathon’s failure to submit the required information mandates referral to the SBA. However, referral to the SBA is necessary only “[u]pon determining and documenting that an apparent successful small business offeror lacks certain elements of responsibility.” FAR 19.602-1 (emphasis added). Such was not the case here, as 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. Thus, the critical distinction is between failing a past performance evaluation and failing to submit the information necessary for the agency to conduct such an evaluation.

Instructive in understanding this distinction is another GAO decision, Menendez–Donnell & Assocs., B-286599, 2001 CPD ¶ 15 (Comp. Gen. Jan. 16, 2001). The protestor, MDA, submitted a proposal that omitted some required information about its experience and past performance, resulting in the rejection of its proposal as unacceptable. One of MDA’s arguments was that the agency “should have referred its technical unacceptability to the Small Business Administration (SBA) for review under that agency’s certificate of competency program, citing Federal Acquisition Regulation (FAR) § 15.101-2(b)(1).” Id. at 3. In denying MDA’s protest, the GAO “conclude[d] that the agency reasonably found that MDA’s proposal failed to provide the information required by the RFP to enable it to evaluate MDA’s key subcontractors”:

The information . . . was available, but MDA chose not to present the information in its proposal, in direct contravention of the terms of the RFP. In our view, an offeror cannot simply choose to withhold past performance information . . . where the solicitation expressly requires that the information be furnished, and where the information is readily available to the offeror.

. . . .

[T]he reasons the agency found MDA’s proposal unacceptable concerned only MDA’s failure to submit information establishing its and its subcontractors’ experience and past performance, and did not constitute a finding that MDA is not a responsible prospective contractor.

Id. at 3 & n.1. This Court agrees with the GAO’s reasoning in the Menendez decision and finds that two principles guiding that decision are worthy of amplification. First, offerors have an affirmative duty to submit a proposal that conforms to the explicit requirements outlined in the solicitation. Second, submitting a proposal and evaluating a proposal are two distinct steps, and failure at one step does not equal failure at the other. In other words, finding that an offeror failed to submit required information for a past performance evaluation is different from finding that an offeror is not a responsible contractor. Applying those principles to this case, it is clear that the VA was well within its discretion to reject Marathon’s incomplete proposal.

Moreover, even though Menendez involved a comparative evaluation of past performance as part of a “best value” procurement, not an LPTA procurement, the reasoning behind that decision is equally applicable here. When using the LPTA source selection process, the contracting officer may “elect[] to consider past performance as an evaluation factor.” FAR 15.101-2(b). Such an election, however, does not eliminate the general contracting requirement to make an affirmative determination of responsibility prior to every award. FAR 9.103(a)-(b). In addition to past performance, this determination requires consideration of, among other things, a prospective contractor’s financial resources, business ethics, organization, experience, accounting and operational controls, and technical skills. FAR 9.104–1. Thus, an LPTA award can be understood as proceeding in two broad steps: (1) evaluation and identification of the lowest priced, technically acceptable proposal, which may include past performance as an evaluation factor; and (2) determination of the apparent awardee’s responsibility, which must include past performance along with other responsibility factors. That the evaluation is made on a Pass/Fail basis does not alter the fact that it is a discrete step, or that information is necessary to take that step. Accordingly, an offeror cannot reach the second hurdle until it passes the first, and it cannot even reach the first unless it submits a proposal that conforms to the solicitation’s requirements. Indeed, when an agency cannot evaluate information because the offeror fails to provide it, the agency does not reach the question of responsibility, and thus is not required to refer the matter to the SBA. Pacific Sky Supply, Inc., B-215189 et al., 85-1 CPD ¶ 53, at 4 (Comp. Gen. Jan. 18, 1985).

In sum, Marathon failed to submit a complete proposal, and the VA retained discretion to either reject the proposal or allow Marathon to correct its deficiencies. The VA chose the former option, and, because this choice was a proper exercise of its discretion, this proposal evaluation should have ended there. Unfortunately, resolution would not come so easily.

2. The Corrective Actions

The logic of the VA’s actions began to unravel when the GAO sustained Marathon’s protest of the initial award to Manus, and the VA took corrective action by “allowing Marathon to provide the references it initially omitted.” AR 1972. Manus filed a protest in the Court of Federal Claims, but that protest was rendered moot when the VA implemented its second corrective action. See Manus Medical, LLC v. United States, No. 1:13-cv-428 (Fed. Cl. Sep. 13, 2013) (“Manus I”). During oral argument, counsel for the Government conceded that the first corrective action was erroneous, and the Court concurs with that assessment.

Unfortunately, the second action turned out to be no more rational than the first. As noted above, corrective action must be “‘reasonable under the circumstances’ and ‘appropriate to remedy the impropriety.’” ManTech Telecomms., 49 Fed. Cl. at 65 (citations omitted). In this case, there was no impropriety with the original award. Marathon submitted incomplete information, and the VA properly exercised its discretion in rejecting Marathon’s proposal because of its omissions. The agency error did not occur until later, for referring an incomplete proposal to the SBA for a Certificate of Competency determination does not constitute a proper exercise of discretion. Thus, the irony of this procurement is that the VA’s only correct decision was its first one, and the “corrective” actions it has taken since then have served only to lead matters further astray.

(sections deleted)

The VA is hereby enjoined from awarding Marathon a contract, or permitting any performance of a contract by Marathon, under Solicitation VA259-12-R-0078 based on the VA’s prior corrective actions.  (Manus Medical, LLC v. U. S. and Marathon Medical, LLC, No. 14-26C, March 19, 2014)  (pdf)


E. Referral to SBA for Nonresponsibility Determination Not Required

OCI objects that its technical evaluation ratings by the NGB amounted to a determination of nonresponsibility, which, by statute, requires referral to the Small Business Administration (“SBA”) for a conclusive finding. “The Agency’s determination that OCI lacks the requisite management and resources to perform the contract is tantamount to a non-responsibility determination.” Pl.’s Mem. at 31. Because no SBA finding was made in this respect, Plaintiff argues, it was improperly excluded from the competitive range.

As decisions of the United States Government Accountability Organization (“GAO”) have noted, “Under the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses . . .” Capitol CREAG LLC, B-294958.4, 2005 CPD P 31 at 6 (citing 15 U.S.C. § 637(b)(7). The statute specifies that the SBS is empowered:

To certify to Government procurement officers, and officers engaged in the sale and disposal of Federal property, with respect to all elements of responsibility, including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, and tenacity, of any small business concern or group of such concerns to receive and perform a specific Government contract.

15 U.S.C § 637(b)(7)(A). “Responsibility concerns, among other factors, whether a prospective contractor will be able to comply with the required or proposed delivery or performance schedule, and whether it has the necessary organization, experience, and technical skills (or the ability to obtain them).” Capitol CREAG at 6-7 (citing FAR § 9.104-1(b), (e).

OCI cites three examples of what it characterizes as nonresponsibility determinations by the SSA relating to OCI’s ability to perform: 1) that OCI had “issues with MIS, data capture, lack of SOP and counselor placement which the board feels is indicative of a lack of relevant experience necessary to proactively address potential performance challenges” (AR 5625); 2) that its “description of corporate management appears weak, as the offeror proposes email and weekly activity reports where the board feels a simple conference call would be timelier for issues resolution as well as in keeping communication channels open” (AR 5625); and 3) that OCI’s past project management and personnel handling experiences and the “no significant similar past performance” other than the ANG PHP program gave the board “limited confidence that 09C4 can successfully perform in a significantly expanded contract” (AR 5633). Pl.’s Mem. at 31.

Defendant responds that referrals to the SBA under section 637 are triggered only when there must be a determination of “all” of the elements of responsibility and that, per the implementing provisions of 48 C.F.R. (FAR) 19.602.1, “a contracting officer only makes a responsibility determination after a small business firm is determined to be an apparently successful offeror.” Def.’s Mot. at 30 (emphasis added); see also Capitol CREAG at 7 (responsibility review normally conducted post-evaluation).

The court does not find the Government’s position here initially dispositive. It agrees with the GAO that, where traditional “responsibility” factors are employed as technical evaluation criteria and the evaluation renders an offeror’s proposal flatly ineligible for award, “the agency has effectively made a determination that the small business offeror is not a responsible contractor capable of performing the solicitation requirements.” Id. On the other hand, where the “responsibility-type criterion” is applied in a “comparative or tradeoff analysis,” it is not “tantamount to a nonresponsibility determination.” Id.

Thus, for example, in Capitol CREAG, the offeror’s approach to management and staffing factors, which may sometimes be considered responsibility criteria, was found to create “a high risk of unacceptable performance” even though it was not technically “inadequate.” The offeror’s proposal was rated “marginal,” rather than “unacceptable.” The GAO re-emphasized that “no SBA referral is needed where the small business offeror is not selected for award merely because, while its proposal is evaluated as acceptable, another offeror’s proposal is evaluated as superior under a comparative analysis or because of a cost/technical tradeoff analysis.” Id. n.6. Similarly, in Nomura Enterprise, Inc., B-277768, 97-2 CPD ¶ 148 at 3 (Nov. 19, 1997), GAO noted the general rule that “[a]n agency may use traditional responsibility factors [where] a comparative evaluation of those areas is to be made.” A “comparative evaluation” is one with “competing proposals [that] will be rated on a scale relative to each other, as opposed to a pass/fail basis.” Id. Similarly, in Medical Info. Servs., B-287824, 2001 CPD ¶ 122 at 5 (July 10, 2010), GAO observed that “[w]here a proposal is determined to be deficient pursuant to a [comparative] evaluation, the matter is one of relative technical merit, not unacceptability, which would require a referral to the SBA.”

Accordingly, the question is whether OCI’s ratings – and exclusion from the competitive range – were the result of a comparative evaluation or the result of a “pass/fail” test. On the Solicitation’s adjective rating scale, “Marginal” signified that a “proposal does not clearly meet requirements and has not demonstrated an adequate approach and understanding of the requirements. The proposal has one or more weaknesses which are not offset by strengths. Risk of unsuccessful performance is high.” AR 5575. By contrast, “Unacceptable” meant that the “proposal does not meet the requirements and contains one or more deficiencies. Proposal is unawardable.” Id. Likewise, the definitions for “Limited Confidence” and “No Confidence” under the Past Performance factor demonstrate that, in the first instance, the agency retains some, albeit limited, confidence in the offeror’s ability to perform, while it has none for a recipient of the lowest technical rating. AR 5576-77. OCI, clearly therefore, was not ruled out of consideration on a pass/fail basis as it would have been had it received an “Unacceptable” or “No Confidence” rating (and as other offerors had been, AR 5580). Rather, its deficiencies related to how it proposed to perform. See, e.g., Capitol CREAG at 8.

Three of the 10 offerors did receive “Unacceptable” ratings on one or more factors or subfactors, AR 5762, and were deemed “unawardable as submitted.” AR 5881. Of the remaining seven offerors, four were determined to qualify for the competitive range. Goldbelt Glacier, for example, received ratings of “Outstanding” for the most important factor, Mission Capability, and both of its subfactors. The other three in the competitive range all were rated “Good” for Mission Capability and both its subfactors. OCI, however, was rated “Marginal” for this factor and subfactors, while the other two offers who did not make it into the competitive range were rated “Acceptable,” slightly higher even than OCI. The “Competitive Range Determination,” signed by the Contracting Officer and the Source Selection Authority, is extensive in its comparative evaluation of the four offerors selected as within the competitive range with the three offerors, among them OCI, that were not deemed “unawardable” but which, nonetheless, were eliminated from the competitive range. See, e.g., AR 5890 (“Comparison of 36D6 [Goldbelt Glacier] to 09C4 [OCI]”).

There is thus no basis for finding that OCI was entitled at that stage of the Solicitation process to a referral to the SBA for a responsibility determination.  (Optimization Consulting Inc., v. U. S. and Goldbelt Glacier Health Services, LLC, No 13-103C, Feb. 28, 2014) (pdf)

Court of Federal Claim - Listing of Decisions

For the Government For the Protester
Jacqueline R. Sims d/b/a JRS Staffing Services v. U. S. No. 15-367C, February 3, 2016  (pdf) Manus Medical, LLC v. U. S. and Marathon Medical, LLC, No. 14-26C, March 19, 2014  (pdf)
Optimization Consulting Inc., v. U. S. and Goldbelt Glacier Health Services, LLC, No 13-103C, Feb. 28, 2014 (pdf)  

Court of Appeals for the Federal Circuit - Key Excerpts

The GPO Was Not Required to Refer the Responsibility Determination to the SBA

We begin with the language of that part of the Small Business Act that relates to this question:

It shall also be the duty of the [Small Business] Administration and it is empowered, whenever it determines such action is necessary— . . . (7)(A) To certify to Government procurement officers, and officers engaged in the sale and disposal of Federal property, with respect to all elements of responsibility, including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, and tenacity, of any small business concern or group of such concerns to receive and perform a specific Government contract. A Government procurement officer or an officer engaged in the sale and disposal of Federal property may not, for any reason specified in the preceding sentence preclude any small business concern or group of such concerns from being awarded such contract without referring the matter for a final disposition to the [SBA].

15 U.S.C. § 637(b)(7) (italics added).

The question of whether the GPO was required to refer the responsibility determination to the SBA turns upon the definitions of “Government procurement officer” and “Government contract.”

If these terms are defined broadly, then § 637(b) could require any government procurement officer, including officers in the Legislative and Judicial branches, to refer responsibility determinations to the SBA. If these terms are defined narrowly, then § 637(b) could be limited to certain categories of government procurement officers, specifically those in the Executive Branch, and, as a result, only certain officers would be required to refer responsibility determinations to the SBA.

We do not construe statutes in a vacuum, and “the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989); accord FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132–33 (2000).

Similarly, we do not read the Small Business Act as “a series of unrelated and isolated provisions,” Gustafson v. Alloyd Co., 513 U.S. 561, 570 (1995). We “must consider not only the bare meaning of each word but also the placement and purpose of the language within the statutory scheme.” Barela v. Shinseki, 584 F.3d 1379, 1383 (Fed. Cir. 2009) (quoting Bailey v. United States, 516 U.S. 137, 145 (1995)). “Statutory interpretation is ‘not guided by a single sentence or member of a sentence, but look[s] to the provisions of the whole law.’” Hawkins v. United States, 469 F.3d 993, 1000-01 (Fed. Cir. 2006) (quoting Dole v. United Steelworkers of Am., 494 U.S. 26, 35, (1990)).

We observe that neither of the specific terms “Government procurement officer” nor “Government contract” is defined in § 637(b) or in any section of the Small Business Act. However, an examination of the statutory scheme reveals that Congress defined related terms that cast light on how these particular terms should be understood.

In 15 U.S.C. § 637c(3), a “Government procurement contract” is defined as “any contract for the procurement of any goods or services by any Federal agency.” A “Federal agency” has “the meaning given the term ‘agency’ by section 551(1) of Title 5, but does not include the United States Postal Service or the Government Accountability Office.” Id. § 637c(2). The terms “Federal agency” and “agency” are also separately defined in § 632(b):

For purposes of this chapter [(Ch. 14A of U.S. Code, Title 15, which includes § 637(b)(7))], any reference to an agency or department of the United States, and the term “Federal agency”, shall have the meaning given the term “agency” by section 551(1) of Title 5, but does not include the United States Postal Service or the Government Accountability Office.

In turn, 5 U.S.C. § 551(1) provides that:

For the purpose of this subchapter [(Subch. II of Ch. 5 of U.S. Code, Title 5)]— (1) “agency” means each authority of the Government of the United States, whether or not it is within or subject to review by another agency, but does not include— (A) the Congress . . . .

The GPO is a legislative agency under the direction and control of Congressional administration. See United States v. IBM Corp., 892 F.2d 1006, 1009 (Fed. Cir. 1989). Although we have not previously examined the issue, we agree with our sister circuit that “Congress” in § 551(1) refers to legislative agencies and departments generally. See Mayo v. United States Gov. Printing Office, 9 F.3d 1450, 1451 (9th Cir. 1993) (determining the GPO is a unit of Congress and therefore contained within the term “Congress” in § 551(1)).

Therefore, we agree with both parties that the GPO, as a legislative agency, is excluded from the definition of ‘agency’ in 5 U.S.C. § 551(1).

Colonial Press takes exception to the above analysis and contends that the definitions of “Government procurement contract,” “Federal agency,” and “agency” are irrelevant because those terms do not appear in § 637(b)(7). Colonial Press also argues that § 637c does not apply to the Small Business Act as a whole. Instead, Colonial Press believes that § 637c only applies to the act which contained it—An Act to Amend the Small Business Act and the Small Business Investment Act of 1958, Pub. L. 95-507, 92 Stat. 1757 (1978) (“1978 Amendments”). Colonial Press argues that § 637c’s language “[f]or purposes of this Act” limits its applicability to the 1978 Amendments only—and not § 637(b)(7).

However, if we were to adopt Colonial Press’s reasoning, we would interpret “Government procurement contracts” to exclude contracts solicited by legislative agencies in some portions of the Act, while interpreting “Government procurement officers” to include contracting officers of those same legislative agencies in another portion of the Act—namely, § 637(b)(7). We agree with the Government and the trial court that this is an unreasonable and untenable construction.

Colonial Press’s analysis clashes with our “fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Mich. Dep’t of Treasury, 489 U.S. at 809; accord Brown & Williamson Tobacco Corp., 529 U.S. at 132-33.

In this light, we construe “Government contract” and “Government procurement officer” to limit those terms to exclude contracts and contracting on behalf of legislative agencies such as the GPO, regardless of whether such agencies are contracting for executive agencies. (See note 3, supra.)

Moreover, though not dispositive, we note that the GAO, GPO, and SBA have interpreted the Small Business Act consistently since 1983 with our interpretation, i.e., that the GPO is not subject to the SBA’s COC Program referral requirements. See J.A. 38–40, 388; Fry Commc’ns, Inc., 62 Comp. Gen. 164, 167 (1983) (finding the GPO was not subject to the Small Business Act).

Similarly, in Gray Graphics Corp. v. United States Government Printing Office, No. 82-2890, 1982 U.S. Dist. Lexis 18378, at *8 (D.D.C. Dec. 20, 1982), the district court, relying in no small part on an affidavit from SBA Associate General Counsel, held that the GPO is not subject to the Small Business Act because the SBA “itself does not now and has never regarded the GPO to be subject to its jurisdiction.” See also Udall v. Tallman, 380 U.S. 1, 18 (1965) (“‘[T]he practical constructions given to an act of Congress, fairly susceptible of different constructions, by those charged with the duty of executing it is entitled to great respect and, if acted upon for a number of years will not be disturbed except for cogent reasons.’”) (quoting McLaren v. Fleischer, 256 U.S. 477, 480–81 (1921)).

The SBA’s memorandum, cited above and written in the context of the GAO bid protest, that the COC referral process “could, arguably” apply to the GPO does not affect our analysis. J.A. 324. The statement as thus qualified by the SBA is true; it does not aid, however, in the ultimate determination of the question of whether it should be so interpreted.   (Colonial Press International, Inc. v. U. S., No. 2014-5036, June 10, 2015)  (pdf)

Court of Appeals for the Federal Circuit - Listing of Decisions

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Colonial Press International, Inc. v. U. S., No. 2014-5036, June 10, 2015  (pdf)  
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