(a) Prior intent to award as a small business set-aside, or use the HUBZone, Service Disabled Veteran-Owned Small Business, or Women-Owned Small Business programs. The procuring activity issued a solicitation for or otherwise expressed publicly a clear intent to award the contract as a small business set-aside, or to use the HUBZone, Service Disabled Veteran-Owned Small Business, or Women-Owned Small Business programs prior to offering the requirement to SBA for award as an 8(a) contract. However, the AA/BD [Associate Administrator/Business Development] may permit the acceptance of the requirement under extraordinary circumstances.

Id. SKC asserts that the SBA improperly accepted the contract into the 8(a) program because during the industry day presentations, the agency expressed a clear intent to award a follow-on contract as a small business set-aside. SKC specifically notes that the agency distributed a document to attendees which identified SKC as the incumbent contractor for the services, and indicated that the services would be solicited using small business set-aside procedures. The forecast also gave the period of performance, and the month and year the agency expected to release the solicitation and award the contract. According to the protester, the purpose of these materials was to inform the public regarding the agency’s plans to set aside the facility services contract for small business concerns, and was not ambiguous.

DIA acknowledges that during the industry days it identified SKC as the incumbent contractor and represented that the upcoming procurement would be conducted as a small business set-aside. The agency notes, however, that during the presentations participants were also advised that the information being presented was a draft and subject to change. COS at 7; AR, Tab 2.2, Decl. of Director, DIA Small Business Programs, Sept. 22, 2017, at 2; Tab 2.3, Decl. of Deputy, Head of Contracting Activity, at 1. DIA further notes that it never issued a pre-solicitation notice, a synopsis, or a solicitation for the requirement. MOL at 4.

At our request, the SBA provided its comments on the issue. The SBA reports that it does not consider the draft forecast of the upcoming procurements for fiscal years 2017 and 2018, with multiple disclaimers that the information is subject to change, as a clear public expression of intent to award the requirement as a small business set-aside. SBA MOL at 5. The SBA also considered in this regard that there was no pre-solicitation notice, synopsis, or solicitation issued for the lKun contract which indicated that the procurement would be set aside for small business concerns. Id. The SBA concludes that DIA did not express a clear intent to award the requirement using a small business set-aside and that SBA therefore properly accepted the procurement into the 8(a) program. Id.

As the agency responsible for promulgating the applicable regulations, the SBA’s interpretation of its regulations is accorded great weight; we defer to the SBA’s interpretation so long as that interpretation is reasonable. See NANA Servs., LLC, B‑297177.3, B-297177.4, Jan. 3, 2006, 2006 CPD ¶ 4 at 10. SKC has provided no basis for us to disagree with the SBA’s interpretation that 13 C.F.R. § 124.504(a) does not limit SBA’s ability to accept a procurement into the 8(a) program when a procuring agency does not issue a pre-solicitation notice, synopsis, or solicitation to procure the requirement as a small business set-aside, but simply states that the requirement will be issued as a set-aside as part of a forecast with multiple disclaimers that the information is subject to change. In this regard, the SBA concludes that the agency has not expressed a clear intent to set aside this requirement for small businesses. Accordingly, we deny this protest allegation.

SKC also asserts that since it was currently performing the contract, the SBA was required to, but did not perform an adverse impact analysis to determine if accepting the contract into the 8(a) program would have an adverse impact on SKC.

The SBA is precluded from accepting a procurement for award under the 8(a) program if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c). The adverse impact concept is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. Id. However, no adverse impact analysis is required where a new requirement is offered to the 8(a) program because “no small business could have previously performed the requirement and, thus, SBA’s acceptance of the requirement for the 8(a) BD program will not adversely impact any small business.” 13 C.F.R. § 124.504(c)(1)(ii)(A). As relevant here, the SBA’s regulations provide that “[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation) or to require significant additional or different types of capabilities or work.” Id. § 124.504(c)(1)(ii)(C).

DIA and the SBA assert that an adverse impact analysis was not required here because the DLOC requirement was a new requirement. MOL at 9; SBA MOL at 5-6; Decl. of SBA Business Opportunity Specialist; Decl. of Branch Chief, Contracting Officer; Decl. of Director, DIA Small Business Programs, Oct. 12, 2017; Decl. of Business Manager, Office of Logistic and Global Readiness. In this regard, the agency explains that the value of the SKC contract (including all four option years), which was awarded as a small business set-aside, was $49,545,651, while the estimated value of the lKun 8(a) sole-source award was $17,221,933. COS at 8. The agency asserts, and the SBA agrees, that since the difference between the two contracts is greater than 25 percent, the lKun LLC 8(a) sole-source award represents a new requirement. Id.; SBA MOL at 6. The SBA concludes that it was therefore not required to perform an adverse impact analysis before it accepted the requirement into the 8(a) program.

SKC asserts that whether the contract awarded to lKun was a new requirement should have been determined based on the value of the latest bridge contract it performed, with a value of $16.6 million, rather than on the value of the contract that SKC was initially awarded and performed. SKC notes that if the bridge contract is used as the basis of comparison, the change in value from the bridge contract to the lKun 8(a) sole-source contract is less than 25 percent, and the SBA therefore could not accept the contract into the 8(a) program without performing an adverse impact analysis.

The SBA reports that the value of a bridge contract is not generally considered when determining whether an offered procurement is a new requirement, since a bridge contract is a temporary vehicle to fill a specific need until a more comprehensive procurement can be conducted. SBA MOL at 6. The SBA specifically notes that in this case, the bridge contract was only meant to be a temporary solution while DIA was contemporaneously planning for its next DLOC contract. Id. As a result, the SBA states that it was reasonable to compare the previous “long-term” SKC contract to the requirement offered to the 8(a) program. Again, as noted above, we will accept the SBA’s interpretation of its own regulations unless that interpretation is not reasonable. While SKC disagrees with SBA, it has not provided any information which demonstrates that the SBA position violates a statute or regulation, or is otherwise unreasonable. Accordingly, we accept the SBA’s view that the requirement is new and that no adverse impact analysis was required. (SKC, LLC B-415151: Nov 20, 2017)

Adverse Impact Determination

Section 8(a) of the Small Business Act authorizes the SBA to contract with other government agencies and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses. 15 U.S.C. § 637(a). The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; our Office will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. § 21.5(b)(3); JXM, Inc., B-402643, June 25, 2010, 2010 CPD ¶ 158 at 3.

Under the Act’s implementing regulations, the SBA may not accept any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c). The adverse impact review process is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. Id. SBA presumes adverse impact to exist where a small business concern has performed the specific requirement for at least 24 months; the small business is performing the requirement at the time it is offered to the 8(a) program, or its performance of the requirement ended within 30 days of the procuring activity’s offer of the requirement to the 8(a) program; and the dollar value of the requirement that the small business is or was performing is 25 percent or more of its most recent annual gross sales. 13 C.F.R. § 124.504(c)(1)(i).

The requirement for the SBA to conduct an adverse impact analysis generally does not apply to new requirements. 13 C.F.R. § 124.504(c)(1)(ii). The SBA regulations define a new requirement as one that previously has not been procured by the relevant procuring activity. Id. The SBA regulations also provide that:

[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation) or to require significant additional or different types of capabilities or work.

13 C.F.R. § 124.504(c)(1)(ii)(C). These regulations explain that an adverse impact analysis is not required for a new requirement because “no small business could have previously performed the requirement and, thus, SBA’s acceptance of the requirement for the 8(a) BD program will not adversely impact any small business.” 13 C.F.R. § 124.504(c)(1)(ii)(A).

Here, we find that an adverse impact analysis was not necessary because DISA’s proposed requirement is considered new under SBA’s regulations. In this regard, we find nothing unreasonable about SBA’s and DISA’s conclusion that the anticipated value of the proposed requirement is more than 25 percent lower than the total dollar value of the work previously awarded to B&D. The record also confirms the agencies’ conclusion. DISA’s offer letter established that the anticipated value of the proposed technology environment management support and outreach services was $2,997,189.04. AR, Tab 19, 8(a) Offer Letter, at 1. The total value of B&D’s expired contract, inclusive of all options was $21,858,038.07. AR, Tab 2, B&D’s Contract, at 4-62. Thus, the total value of the new requirement is more than 25 percent lower than the one that was being performed by B&D, and no adverse impact analysis was required. Compare AR, Tab 19, 8(a) Offer Letter, at 1, with Tab 2, B&D’s Contract, at 4-62. Accordingly, we decline to sustain B&D’s protest based on this allegation.  (B&D Consulting, Inc. B-413310, B-413310.2, B-413310.3: Sep 30, 2016)

PSC primarily argues that the CDC and SBA’s decision to place the Atlanta-area guard services requirement in the 8(a) program violates the SBA’s regulations because the SBA failed to conduct an adverse impact analysis in accordance with 13 C.F.R. § 124.504. Specifically, the protester argues that the SBA improperly failed to consider the adverse impact on PSC and “other similarly situated small businesses” that would have an opportunity to compete for the Atlanta-area guard services requirement, were the agency made to procure this requirement outside the section 8(a) program. Protest at 15. PSC also argues that the CDC failed to provide the SBA with all relevant facts, and if it had done so PSC asserts that the SBA would have found adverse impact on small businesses and not accepted the procurement for award as an 8(a) contract. Protester’s Comments at 8.

Section 8(a) of the Small Business Act authorizes the SBA to contract with other government agencies and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses. 15 U.S.C. § 637(a). The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; our Office will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. § 21.5(b)(3); JXM, Inc., B-402643, June 25, 2010, 2010 CPD ¶ 158 at 3. Under the Act’s implementing regulations, the SBA may not accept any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c).

The CDC responds that an adverse impact analysis was not required here, because the requirement awarded to Chenega was a new requirement resulting from the consolidation of the Atlanta-area and Fort Collins guard service requirements. Legal Memorandum at 10-11. In this regard, the agency asserts that comparing any of the four option periods on Chenega’s contract to a similar option period on PSC’s prior contract leads to a price increase of 30 percent for Chenega’s contract over PSC’s contract. The agency argues that this increase in contract price exceeds the threshold for being considered a new requirement under the SBA’s regulations, and thus exempted this procurement from an adverse impact analysis. Id. (citing Alpa Tech. and Servs., Inc., B-408762.2, Feb. 12, 2014, 2014 CPD ¶ 66 at 5, where our Office discusses the SBA’s new requirement rules pertaining to an adverse impact analysis, i.e., 13 C.F.R. § 124.504(c)(1)(ii)).

At our Office’s invitation, the SBA provided comments addressing the issues presented in PSC’s protest. In response to the issue of whether the procurement was for a new requirement, the SBA responds that it reasonably relied on the CDC’s determination that the procurement was a new requirement, and therefore, the SBA properly considered it to be a new requirement exempt from the requirement to conduct an adverse impact anaylsis. SBA Comments at 6. The SBA also argues that even if the procurement was not considered a new requirement, it still would not have performed an adverse impact analysis pertaining to PSC as the firm was an other-than-small incumbent contractor, and “should not benefit from a scheme designed to protect small business concerns.” Id. at 8.

We need not address whether this was a “new requirement” under the SBA’s regulations, because we agree with the SBA that since PSC was found to be an other-than-small incumbent under the Atlanta-area guard services contract, it was not a “small business” as contemplated in the SBA’s regulatory framework pertaining to an adverse impact determination requirement. See 13 C.F.R. § 124.504(c)(1). Further, we agree with the SBA that the CDC was not required to identify PSC’s incumbent contract in its offer letter to the SBA, as PSC was not a small business contractor with respect to that contract. See 13 C.F.R. § 124.502(c)(10) (requiring small business contractors who have performed the requirement in the past 24 months to be identified in the offer letter).

Here, as noted, SBA conclusively found that PSC is not a small business for purposes of its performance on the incumbent Atlanta-area guard services contract. For instance, the SBA’s OHA found that PSC was proposing to perform the contract by adopting Walden’s entire incumbent workforce en masse, and that PSC was proposing, as its entire management team, the incumbent Walden management team to perform the contract. Size Appeal of Professional Security Corporation, supra. at 9. SBA’s OHA also found that PSC did not, standing alone, have the resources or experience necessary to perform the Atlanta-area guard services requirement. Id. at 10-11. SBA’s OHA concluded that PSC made virtually no contribution of employees or other value to the teaming arrangement with Walden “beyond Appellant’s small business status.” Id. at 10. Since PSC was found to be other-than-small by SBA’s OHA with respect to its prior contract for the Atlanta-area guard services, we agree with the SBA that the agency was not required to consider any adverse impact on PSC owing to its performance on that contract.

PSC also argues that even if it was not a small business under the incumbent contract due to the OHA’s ruling, it remains a small business ready to perform the requirement should it be competed again outside of the 8(a) program. Protester’s Supp. Comments at 23. Further, PSC asserts that there are many other small businesses interested in the requirement. Id. According to PSC, these facts are enough to trigger a requirement for an adverse impact analysis. Id. We disagree.

As stated previously, under the Act’s implementing regulations, the SBA may not accept any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c). As the Act states, the adverse impact review process is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. Id. Thus, the relevant consideration for the SBA is the impact on individual and groups of small businesses who are performing government contracts outside the 8(a) program, and with respect to the adverse impact on other small business programs, the number and value of contracts in the subject industry in the 8(a) business development program as compared with other small business programs. See 13 C.F.R. § 124.504(c)(3) (defining the SBA’s considerations for adverse impact on other small business programs).

The Act’s language clearly establishes that the adverse impact requirement is meant to protect other small businesses performing contracts outside of the 8(a) program, not to protect small businesses that might be interested in performing the requirement prospectively, as the protester argues. Further, such an interpretation is consistent with the “new requirement” rule, discussed above, which obviates the need for an adverse impact analysis for a new requirement, as “[w]here a requirement is new, no small business could have previously performed the requirement and, thus, SBA's acceptance of the requirement for the 8(a) BD program will not adversely impact any small business.” 13 C.F.R. § 124.504(c)(1)(ii)(A). By its terms, this rule is predicated on the lack of adverse impact on small businesses since there are none who could have previously performed the requirements, and does not consider the impact on small businesses who would be interested in performing the new requirement prospectively.

Since PSC was not a small business under the incumbent contract, and no other small business concern is implicated with respect to performance of these requirements, we have no reason to question the SBA’s position that an adverse impact analysis was not required. Further, as there were no other small business incumbents for the relevant requirements, we have no basis to disagree with the SBA that the CDC was not required to identify PSC, or any other small business that might be interested in performing the work prospectively, in its offer letter. As we determine that the CDC’s offer of the requirement to the SBA was unobjectionable, and the SBA’s acceptance of the requirement into the 8(a) program was likewise unobjectionable, we need not address the remainder of the issues raised by PSC in its protest.

The protest is denied.  (Professional Security Corporation B-410606: Jan 13, 2015)  (pdf)
 

 BGI-Fiore acknowledges that at the time of the submission of its proposal on January 27, SBA had not yet taken action to approve BGI-Fiore’s 8(a) joint venture agreement. However, BGI-Fiore argues that the relevant SBA regulations governing 8(a) joint venture agreements do not require a joint venture agreement to be approved prior to submission of a proposal. Rather, according to the protester, the regulations require that the 8(a) member of the joint venture be certified at the time of proposal submission and that the joint venture be approved by SBA prior to the time of award.

In this regard, the protester cites the SBA’s regulations regarding 8(a) joint ventures, which provide as follows:

Prior approval by SBA. (1) SBA must approve a joint venture agreement prior to the award of an 8(a) contract on behalf of the joint venture.

13 C.F.R. § 124.513(e) (emphasis added). BGI-Fiore asserts that NASA erred by misapplying the certification requirement of FAR provision 52.219-18 to reject its proposal from the competition, where SBA does not “certify” 8(a) joint ventures, and where approval of an 8(a) joint venture agreement is governed by the SBA regulations, which contemplate approval of the joint venture agreement only prior to the time of contract award. BGI-Fiore contends that FAR provision 52.219-18 applies only to the status of the 8(a) member of the joint venture, and not the joint venture itself.

NASA contests the protester’s interpretation of the regulations. According to NASA, FAR provision 52.219-18 requires a joint venture to be admitted to the 8(a) program--whether through “certification” or “approval”--prior to the submission of a proposal. NASA contends that this reading of 52.219-18 does not conflict with 13 C.F.R. § 124.513(e), because the FAR provision does not prohibit an agency from requiring admission to the 8(a) program at an earlier time than the time of award, when necessary to meet the agency’s needs. As set forth below, and based on the legal opinion that our Office requested and received from SBA during the development of this protest, we disagree with NASA’s contention that its reading of the FAR provision does not conflict with the SBA’s regulation, which SBA asserts is intended to permit the approval of 8(a) joint venture agreements up until the time of award.

As a general matter, the SBA’s comments on this protest advised our Office that its regulations set forth the eligibility rules for participation in the 8(a) program. Upon determining that a business concern meets relevant criteria, SBA sends a letter “certifying the concern’s admission to the program.” 13 C.F.R. § 124.2 (emphasis added).

SBA further explained that its regulations separately address the eligibility of 8(a) joint ventures to perform an acquisition that has been set-aside under the 8(a) program. According to its regulations, “[i]f approved by SBA, a [certified 8(a)] Participant may enter into a joint venture agreement with one or more other small business concerns, whether or not 8(a) Participants, for the purpose of performing one or more specific 8(a) contracts.” 13 C.F.R. § 124.513(a)(1). According to SBA, it does not “certify” 8(a) joint ventures for admission to the 8(a) program. Rather, only the 8(a) participant to the joint venture is certified into the program. SBA explains that this is the case because “the joint venture can be comprised of one 8(a) Participant and one small business concern, and therefore would likely not meet the eligibility requirements for certification [as an 8(a) participant].” SBA Comments at 2. Moreover, regarding the timing of the joint venture approval, the SBA explains, as the protester notes, that its regulations contemplate approval “prior to the award of an 8(a) contract on behalf of the joint venture.” 13 C.F.R. § 124.513(e) (emphasis added).

In further support of SBA’s last point regarding the timing of such approval, SBA cites to the preamble to its regulations concerning mentor/protégé agreements, 13 C.F.R. § 124.520, which explains as follows:

Joint ventures are tied to procurements and often there is insufficient time to obtain SBA’s approval between the issuance of a solicitation and the submission of an offer. Therefore, SBA has permitted joint ventures to be approved on 8(a) procurements after the submission of offers, as long as the approval takes place prior to the actual award.

74 Fed. Reg. 55694 (Oct. 28, 2009) (distinguishing standard joint venture agreements from mentor/protégé agreements, which do require approval prior to the submission of a proposal).

With regard to the specific issue presented in the protest, the SBA interprets the FAR provision 52.219-18 as simply requiring “those 8(a) Participants to the joint venture to represent that they are certified into the 8(a) program[;] [t]he clause cannot be read to require the joint venture to be certified into the program because SBA does not certify the joint venture; rather . . . it approves the joint venture for the purposes of a specific award.” Id. at 3.

Further, to the extent NASA interprets FAR provision 52.219-18 as requiring certification of an 8(a) joint venture at the time of submission of proposals, SBA argues that NASA’s reading of the FAR provision would place it in conflict with the SBA’s regulations and its administration of the 8(a) program. Such a reading presupposes a joint venture certification process, which does not exist under the 8(a) program, and the certification of joint ventures occurring prior to the submission of an offer by the joint venture whereas the 8(a) program contemplates the approval of such agreements up until contract award. Moreover, SBA maintains that its interpretation of its regulations must be given deference. Id. at 4 (citing Hawpe Const., Inc., v. United States, 46 Fed. Cl. 571, 582 (2000) (“Conflicts between FAR and SBA regulations should be resolved by looking at the SBA’s latest intent on the issue and by relying on SBA to determine which provision best implements the policies of the agency itself”)).

Accordingly, SBA maintains that the correct and harmonious reading of the two regulations is one where 52.219-18 requires the 8(a) participant members of an 8(a) joint venture to be certified prior to the submission of a proposal, and 13 C.F.R. § 124.513(e), which governs the process for approving 8(a) joint venture agreements, allows a joint venture to compete for an award so long as SBA approves the agreement prior to the time of contract award.

We agree with the SBA’s interpretation of the relevant regulations in this case. The SBA’s interpretation reads the regulations harmoniously, while also giving effect to the specific language of each regulation--that is, by recognizing that “certification” of an 8(a) participant, and “approval” of an 8(a) joint venture agreement reflect distinct processes under SBA’s 8(a) program with distinct timeframes for approval by SBA in connection with a procurement, and are not merely interchangeable concepts as NASA’s interpretation would suggest. Therefore, we read the regulations in accordance with the views expressed by SBA.

In this case, the record shows that Banda Group International, LLC, was a previously certified 8(a) participant, satisfying the requirements of FAR provision 52.219-18, and that BGI-Fiore submitted its 8(a) joint venture agreement to SBA by December 10, 2013--well in advance of the January 27 submission of its proposal--thereby satisfying the requirements of 13 C.F.R. § 124.513(e) concerning the submission of a proposal. Where BGI-Fiore met the eligibility requirements for submission of a proposal set forth by both regulations applicable in this case, NASA erred in rejecting BGI-Fiore as an ineligible offeror.

We recommend that the agency reinsert BGI-Fiore into the competition under this solicitation, and evaluate BGI-Fiore’s previously submitted proposal. We also recommend that BGI-Fiore be reimbursed its costs of filing and pursuing the protest. Bid Protest Regulations, 4 C.F.R. § 21.8(d)(1) (2012). The protester’s certified claims for such costs, detailing the time expended and costs incurred, must be submitted directly to the agency within 60 days after receipt of this decision. 4 C.F.R. § 21.8(f)(1).

The protest is sustained.  (BGI-Fiore JV, LLC, B-409520: May 29, 2014)  (pdf)

Alpa challenges the SBA’s determination that the ILMS requirement is exempt from an adverse impact analysis because it is either a “new” requirement or a “follow-on” requirement. In this regard, Alpa argues that SBA’s failure to conduct an adverse impact analysis was contrary to 13 C.F.R. § 124.504. Protester’s Comments (Dec. 27, 2013), at 2. Alpa also contends that, even if the requirement is new, SBA’s regulations require an impact analysis because multiple small business requirements were consolidated. As discussed below, we find reasonable the SBA’s determination that the requirement was new, and that an adverse impact analysis was therefore not required. [4]

Section 8(a) of the Small Business Act authorizes the SBA to contract with other government agencies and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses. 15 U.S.C. § 637(a). The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; our Office will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. § 21.5(b)(3); JXM, Inc., B-402643, June 25, 2010, 2010 CPD ¶ 158 at 3.

Under the Act’s implementing regulations, the SBA may not accept any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c). The adverse impact review process is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. Id. SBA presumes adverse impact to exist where a small business concern has performed the specific requirement for at least 24 months; the small business is performing the requirement at the time it is offered to the 8(a) program, or its performance of the requirement ended within 30 days of the procuring activity’s offer of the requirement to the 8(a) program; and the dollar value of the requirement that the small business is or was performing is 25 percent or more of its most recent annual gross sales. 13 C.F.R. § 124.504(c)(1)(i).

The requirement for the SBA to conduct an adverse impact analysis does not apply to new requirements, except where a new requirement is created through a consolidation of existing requirements being performed by two or more small business concerns.[5] 13 C.F.R. §§ 124.504(c)(1)(ii), (2). The SBA regulations define a new requirement as one that previously has not been procured by the relevant procuring activity. 13 C.F.R. § 124.504(c)(1)(ii). The SBA regulations also provide that:

[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent

(adjusted for inflation) or to require significant additional or different types of capabilities or work.

13 C.F.R. § 124.504(c)(1)(ii)(C). SBA’s regulations explain that an adverse impact analysis is not required for a new requirement because “no small business could have previously performed the requirement and, thus, [the] SBA’s acceptance of the requirement for the 8(a) [business development] program will not adversely impact any small business.” 13 C.F.R. § 124.504(c)(1)(ii)(A).

First, Alpa challenges SBA’s determination that the requirement at issue is “new” under the regulations, and therefore, exempt from an impact analysis. In this regard, the protester does not specifically disagree that the requirement is “new.” Protest at 9-11; Protester’s Comments (Dec. 27, 2013), at 10-11. Rather, the protester argues that the SBA’s determination letter “simply asserts that the requirement is ‘new’ without providing any explanation as to how it arrived at this conclusion,” and that “[b]ecause the SBA cannot demonstrate that it reasonably evaluated whether [the requirement] is new, its resulting [i]mpact [d]ecision cannot be upheld.” Protest at 9.

In response to the protest, the SBA[6] explains that the Coast Guard described the requirement as new, and that it was reasonable for the SBA to rely on the description provided by the Coast Guard. SBA Report (Dec. 18, 2013), at 7. As discussed below, we agree that the SBA’s reliance on the Coast Guard’s description was reasonable.

As explained above, 13 C.F.R. § 124.504(c)(1)(ii)(C) provides that a “modification” of an existing requirement will be considered “new” (and therefore exempt from the requirement to do an adverse impact analysis) where the “magnitude of change” between the original and modified requirements is at least 25 percent. The Coast Guard’s letter to the SBA explained the following rationale for categorizing the requirement as “new”: “[T]he ILMS procurement (at issue here) carries a maximum value of $295 million. This figure dwarfs the price or dollar value of the [District 13] work that [Alpa] seeks to hold (approximately $10 million which equates to 3% of the ILMS [ID/IQ Contract]).” AR, Tab 10, Coast Guard Letter (Sept. 19, 2013), at 3.

In its response to the Coast Guard’s request, the SBA found that “it was appropriate to identify the proposed procurement as a new requirement pursuant to 13 C.F.R. § 124.504(c)(1)(ii)(C).”[7] AR, Tab 11, SBA Determination, at 4. In addition, the SBA stated that “pursuant to 13 C.F.R. § 124.504(c)(1)(ii)(C), the requirement in question is a new requirement,” and consequently, “as prescribed in 13 C.F.R. § 124.504(c)(1)(ii)(D), SBA need not perform an impact determination where a new requirement is offered to the 8(a) BD program.” Id. at 6. To the extent the protester argues that the SBA’s determination is not supported by the record, we think the Coast Guard’s letter provided an adequate basis for SBA to find that the requirement was “new.” Based on this record, we find no basis to sustain the protest.

Next, Alpa argues that, even if the requirement is new, SBA failed to conduct an impact analysis on new requirements where multiple small business requirements are consolidated, as required by 13 C.F.R. § 124.504(c)(2). As discussed above, this provision states that “SBA will consider the effects of combining or consolidating various requirements being performed by two or more small business concerns into a single contract which would be considered a ‘new’ requirement as compared to any of the previous smaller requirements.” 13 C.F.R. § 124.504(c)(2). It further explains that “SBA may find adverse impact to exist if one of the existing small business contractors meets the presumption [regarding the existence of an adverse impact] set forth in paragraph (c)(1)(i) of this section.” Id. Accordingly, the protester asserts that “[b]ecause the ILMS contract is a consolidation of small business requirements, the SBA must perform an adverse impact analysis even if the contract is ‘new.’” Protest at 11.

We find the protester’s argument here unavailing. While the SBA’s regulation requires an adverse impact analysis for new requirements where multiple small business requirements are consolidated, the SBA previously has taken the position--to which our Office has given deference--that because this regulation provides that SBA “may,” rather than “shall,” find adverse impact if the circumstances described in the regulation exist, SBA has the discretion to accept a requirement into the 8(a) program in appropriate circumstances, even where one or more contractors met the presumption of adverse impact. See Klett Consulting Group, Inc., B-404023, Dec. 20, 2010, 2010 CPD ¶ 301, at 5; Catapult Tech., Ltd., B-294936, B-294936.2, Jan. 13, 2005, 2005 CPD ¶ 14 at 6. With regard to the presumptions of adverse impact set forth in 13 C.F.R. § 124.504(c)(1)(i), as mentioned above, the SBA stated that a presumption of adverse impact would not apply to Alpa (even if the SBA had authorized the release of the requirement from the 8(a) program) since the requirement was not performed outside the 8(a) program for at least two years. AR, Tab 11, SBA Determination, at 6. Accordingly, the record supports the conclusion that, had SBA performed the required analysis at the time, it would have concluded that Alpa would not suffer adverse impact. Under these circumstances, it does not appear that Alpa has suffered any prejudice by SBA’s failure to perform an adverse impact analysis. See Catapult Tech., Ltd., supra.

Finally, Alpa argues that the Coast Guard removed the incumbent work from the 8(a) program by awarding a task order to Alpa under Alpa’s FSS contract, after Alpa graduated from the 8(a) program, and therefore, the SBA was required to conduct an adverse impact analysis in accordance with 13 C.F.R. § 124.504(c). The SBA disagrees that the Coast Guard’s procurement under the FSS removed the requirement from the 8(a) program, arguing that the “once 8(a), always 8(a)” rule applies. SBA Report (Dec. 18, 2013), at 3-5. Our Office has recognized that the FAR exempts task orders issued under FSS contracts from application of the set-aside withdrawal requirements found in FAR § 19.506. See Global Analytic Info. Tech. Servs., Inc., B-297200.3, Mar. 21, 2006, 2006 CPD ¶ 53 at 2; Millennium Data Sys, Inc., B-292357.2, Mar. 12, 2004, 2004 CPD ¶ 48 at 9; see also K-LAK Corp. v. United States, 98 Fed. Cl. 1, 7-8 (Fed. Cl. 2011). Nonetheless, in light of the SBA’s position here that the requirement is new, as discussed above, the SBA would not be required to conduct an adverse impact analysis even if the SBA agreed that the requirement had been legally removed from the 8(a) program. Accordingly, the protester has not established prejudice from the SBA’s actions.

In sum, we find that the SBA’s conclusion that the requirement was “new” and therefore exempt from an adverse impact determination was reasonable.  (Alpa Technologies and Services, Inc., B-408762.2: Feb 12, 2014)  (pdf)

Section 8(a) of the Small Business Act, 15 U.S.C. § 637(a) (2006), authorizes the SBA to enter into contracts with government agencies and to arrange for performance through subcontracts with socially and economically disadvantaged small business concerns. Federal Acquisition Regulation (FAR) § 19.800. The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; accordingly, we will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. § 21.5(b)(3) (2012); Rothe Computer Solutions, LLC d/b/a/ Rohmann J.V., B-299452, May 9, 2007, 2007 CPD ¶ 92 at 3.

Blue Ridge argues that the solicitation was improperly set aside as an 8(a) competition because the SBA failed to perform an adverse impact analysis under 13 C.F.R. § 124.504(c). Blue Ridge also argues that it is adversely impacted by the decision to set aside the solicitation as an 8(a) award, given that it is a small business, but is no longer a certified 8(a) contractor.

The SBA contends that no adverse analysis was required because the work solicited here is a “follow-on” to shuttle bus service contracts performed under Blue Ridge’s 8(a) contracts, which provided the same basic services under the 8(a) program. The SBA contends that this requirement is, therefore, subject to the “once 8(a), always 8(a)” rule, set forth at 13 C.F.R. § 124.504(d), which, the SBA contends, precludes removing follow-on requirements from the 8(a) program unless they are specifically released by the SBA from the program for non-8(a) competition. SBA Report (Aug. 13, 2012) at 2-6. In such cases, the SBA reports, there is no requirement for an adverse impact analysis.

Alternatively, the SBA contends that if this requirement were not considered a follow-on requirement, then it would be considered a “new requirement” under 13 C.F.R. § 124.504(c)(1)(ii), for which no adverse impact analysis would be required under applicable regulations. SBA Report (Sept. 25, 2012) at 3; 13 C.F.R. § 124.504(c)(1)(ii)(D). The SBA contends that this would be so because the shuttle bus services previously obtained under the 8(a) program will be significantly expanded by this solicitation; in fact, SBA notes that the expansion of services here will lead to a price adjustment of at least 25 percent over the previous contracts. SBA Report (Sept. 25, 2012) at 3; 13 C.F.R. § 124.504(c)(1)(ii)(C); see Klett Consulting Group, Inc., B-404023, Dec. 20, 2010, 2010 CPD ¶ 301, at 5.

As a general matter, we accord SBA’s interpretation of its own regulations, such as those regarding the 8(a) program, great weight. Singleton Enters.-GMT Mech., A Joint Venture, B-310552, Jan. 10, 2008, 2008 CPD ¶ 16 at 3. Here, while Blue Ridge clearly disagrees with SBA’s interpretation of its regulations as applied to the facts in this case, we see no basis to conclude that SBA’s determination that no adverse impact analysis was required was inconsistent with applicable SBA regulations. Id.

Blue Ridge’s primary argument that an adverse impact analysis is required is premised upon its award of contract -0042 when Blue Ridge was no longer a certified 8(a) contractor. Thus, Blue Ridge contends that the solicitation under protest here is not a follow-on to the previous 8(a) contract, given that the services are being performed by other than a certified 8(a) contractor; in fact, Blue Ridge contends that contract -0042 and the current solicitation were for a new requirement, rather than being a follow-on to the 8(a) contract, given that the current services are of a much greater magnitude than the 8(a) contracts--$2.5 million per year as compared to $100,000 per year.

As noted by the SBA, it is apparent that NGB never intended for contract -0042 to remove this shuttle bus service requirement from the 8(a) program. NGB described action No. 0042 as a modification and treated it as the practical equivalent of a modification to the 8(a) contract during the contracting process. AR, Tab 2, Contracting Officer Statement at 1. The contents of contract -0042, quoted above, make clear that it was intended to be a modification of Blue Ridge’s 8(a) contract to provide for increased performance costs. We see nothing in the record to support the protester’s assertion that the purpose of the -0042 contract was to remove the contract from the 8(a) program. Thus, we agree with the SBA that contract -0042 can be considered a follow-on to the initial 8(a) contract, and that therefore the current solicitation can also be considered to be a follow-on to the 8(a) contract. See Madison Servs., Inc., B-400615, Dec. 11, 2008, 2008 CPD ¶ 225 (adverse impact analysis not required because of “extraordinary circumstances,” where the services were not put under the 8(a) program as was intended by the procuring agency, but were instead erroneously made small business set-asides).

Moreover SBA explains that the fact that the requirement has increased in magnitude more than 25 percent does not mean that it is not a follow-on to the prior 8(a) contract under 13 C.F.R. § 124.504(d). In this regard, the SBA states that the “new requirement” provision in 13 C.F.R. § 124.504(c)(1)(ii) only addresses situations where the requirement is not in the 8(a) program and is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. See Madison Servs., Inc., supra, at 4.

Under the circumstances, and, given the deference we accord the SBA’s interpretation of its regulations, we find the SBA’s determination--i.e., that the current solicitation is a follow-on to the previous contracts to obtain these services under the 8(a) program, and, is thus subject to the “once 8(a), always 8(a)” rule--is not inconsistent with applicable SBA regulations. In this regard, the pertinent regulation provides, “where a procurement is awarded as an 8(a) contract, its follow-on or renewable acquisition must remain in the 8(a) . . . program unless the SBA agrees to release it for non-8(a) competition.” 13 C.F.R. § 124.504(d)(1). For procurements covered by this regulation, no adverse impact analysis is required. We cannot find the SBA’s position in this regard to be inconsistent with applicable regulations.  (Blue Ridge Limousine and Tour Service, Inc., B-407020, Oct 19, 2012)  (pdf)

Section 8(a) of the Small Business Act authorizes SBA to contract with government agencies and to arrange for performance of such contracts by awarding subcontracts to socially and economically disadvantaged small businesses. 15 U.S.C. § 637(a) (2006). The Act affords SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program. We will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. Bid Protest Regulations, 4 C.F.R. § 21.5(b)(3) (2012).

The section 8(a) program has both competitive and noncompetitive components, depending on the dollar value of the requirement. See 13 C.F.R. § 124.506(a) (2012); Donnelly & Moore Corp., B-404480, Feb. 16, 2011, 2011 CPD ¶ 46 at 3. In order to obtain the information necessary for the SBA to determine that an offered requirement is eligible and appropriate for award under the 8(a) program (whether on a competitive or noncompetitive basis), the SBA’s regulations require that contracting agencies furnish information about a procurement when offering it for inclusion in the program. 13 C.F.R. § 124.502 (2012). As a general matter, the SBA is entitled to rely on a contracting agency’s representations in making decisions regarding 8(a) acquisitions, and SBA’s regulations place primary responsibility on the procuring agency to submit all relevant information necessary to SBA’s decision-making process. Security Consultants Group, Inc., B-276405, B-276405.2, June 9, 1997, 97-1 CPD ¶ 207 at 2.

In its initial protest, MCB argued that the Air Force had violated SBA regulations by failing to notify SBA of the protester’s interest in the acquisition in its March 26 offering letter to the DFWDO. Among the items that the SBA regulations specifically require are “[i]dentification of all Participants [that] have expressed an interest in being considered for the acquisition” and “[i]dentification of all SBA field offices [that] have requested that the requirement be awarded through the 8(a) BD program.” 4 C.F.R. §§ 124.502(c)(14) and (15).

Prior to submitting its agency report to our Office, the Air Force took corrective action with regard to this issue. That is, on June 1, it sent an amended offering letter to the SBA in which it identified MCB as an 8(a) concern that had expressed an interest in being considered for the requirement and the BDO as a field office that had requested that the requirement be awarded through the 8(a) BD program. The agency’s corrective action renders this ground of protest academic; accordingly, we dismiss the argument.

In a related vein, the protester argues that the Air Force should have explained in its amended offering letter to the SBA that it was nominating US2 rather than MCB based on an informal assessment of the technical capabilities of the vendors, which led the agency to question MCB’s ability to comply with certain agency requirements.

SBA regulations simply provide that the nominating agency should include a brief justification for its nomination in its offering letter. 13 C.F.R. § 124.503(c)(12). The Air Force complied with this requirement by noting in the offering letter that it was nominating US2 “based on their positive response to all requirements in the source sought notice . . . and their capabilities history.” AR, Tab 17. We do not agree with the protester that the Air Force was required to further justify its nomination or furnish an explanation as why other firms, such as MCB, were not nominated.

MCB further argues that the Air Force violated 4 C.F.R. § 124.505(b)(2) by offering the requirement to the DFWDO on behalf of US2 before the head of the agency had issued a written decision on MCB’s appeal. In this regard, section 124.505(b)(2) provides that upon receipt of a notice of intent to appeal from the SBA, the procuring activity must suspend further action regarding the procurement until the head of the procuring agency issues a decision on the appeal (or makes an urgency determination). This allegation, like the protester’s first protest argument, was rendered academic by the Air Forces’ issuance of an amended offering letter on June 1. Moreover, there is no evidence that the protester suffered any prejudice as a result of the agency’s failure to issue a written decision before proceeding with the 8(a) procurement given that the Air Force acceded to the SBA’s position on both issues raised in the appeal--that is, it changed the NAICS code consistent with the SBA’s recommendation and agreed to make the requirement available under the 8(a) program.

MCB also argues that once the Air Force decided to change the NAICS code and set the acquisition aside for the 8(a) program, it should have offered the requirement to the BDO on behalf of MCB because the BDO appealed the Air Force’s NAICS code designation and decision not to set the requirement aside for the 8(a) program. In essence, MCB is arguing that because it, through the BDO, played a significant role in persuading the Air Force to change the NAICS code assigned to the acquisition, which, in turn, led the Air Force to decide that the requirement was appropriate for the 8(a) program, it should have had priority for nomination to the SBA.

The protester has furnished no legal authority for its argument, and we are aware of none. Both US2 and MCB had identified and requested that the requirement here be awarded to them in support of their approved business plans under the 8(a) program. Accordingly, it was within the Air Force’s discretion to decide which of the two 8(a) firms to nominate, and the Air Force made its decision based on the results of its informal assessment of the two vendors’ capabilities.

Finally, the protester objects to the Air Force’s assessment of its capability to perform the requirement. MCB argues that it can, in fact, provide glass lenses with UV coating and an acceptable warranty.

Based on the information furnished in the protester’s response to the sources sought notice and follow-up telephone conversation, indicating that the protester’s product would not include the UV coating desired by the agency and that its manufacturer’s warranty would not apply if installation was done by a third party, the contracting officer reasonably concluded that MCB did not offer a product that met the agency’s requirements. While it is possible that the contracting officer would have reached a different conclusion had he considered the additional information furnished by MCB in connection with its protest, this does not establish that the conclusion he reached based on the information available to him at the time was unreasonable or otherwise improper.

The protest is denied.  (MCB Lighting & Electrical, B-406703, Jul 13, 2012)  (pdf)

Donnelly & Moore (D&M) Corporation, of New York, New York, protests the award of three sole-source contracts (Nos. N000104-10-M-QV71, N000104-10-M-QV72, and N000104-10-M-QV73), by the Department of the Navy, Naval Inventory Control Point (NAVICP) under the Small Business Administration's (SBA) section 8(a) program to eDataTech, of Seaside, California, for various information technology services.

(sections deleted)

D&M argues that the sole-source contracts were improper because the Navy violated applicable regulations in that the letters offering the requirements to the SBA under the 8(a) program failed to include pertinent information. Specifically, D&M asserts that the agency's offering letter did not mention D&M and its existing contract with the Army at DLIFLC or indicate that the procurement was therefore for a repetitive acquisition. D&M asserts that 13 C.F.R. sect. 124.502(c) and FAR sect. 19.804-2 required that this information be provided in the Navy's offering letter to the SBA.

As discussed previously, the record reflects that the Navy undertook a new effort with the Army to migrate DLIFLC's network from .mil to .edu, including helpdesk-desktop support for the new network. Thus, the Navy explains (and the SBA agrees) that the requirements being procured by the Navy are new requirements, not a repetitive acquisition, because they are not the same as those procured by the Army from D&M. The SBA further advises that the SBA's regulations do not require procuring agencies to disclose information concerning prior acquisitions of other procuring agencies, even in situations where the agencies have partnered together or the services are rendered at the same facility. SBA Report at 3. Indeed, an offering letter to the SBA under the 8(a) program involving proposed sole-source awards for a new requirement need only mention those 8(a) firms that that have expressed an interest in being considered for the award. 13 C.F.R. sect. 124.502(c)(14). Here, D&M did not express any interest in these requirements until after the agency had offered them to the SBA.  (Donnelly & Moore Corporation, B-404480, February 16, 2011)  (pdf)

Next, ECCS argues that HUD's award to Deque was not properly issued as a sole‑source section 8(a) award under the FAR. ECCS argues generally that HUD's use of non-competitive procedures to award the contract to Deque was improper, and that the SBA did not properly accept HUD's contract offer before HUD awarded the contract.

The Competition in Contracting Act of 1984 (CICA) allows executive agencies to use non-competitive procurement procedures where "a statute expressly authorizes . . . that the procurement be made through another executive agency". 41 U.S.C. sect. 253(c)(5) (2006). In this regard, section 8(a) of the Small Business Act expressly authorizes the SBA to enter into contracts with other agencies "to furnish . . . services . . . to the Government" through subcontracts to disadvantaged small business concerns. 15 U.S.C. sect. 637(a), (b) (2006). Accordingly, the FAR expressly authorizes agencies to use non-competitive procedures pursuant to CICA when making "sole source awards under the [section] 8(a) program." FAR sect. 6.302-5(b)(4).

The FAR then specifies the circumstances in which a sole-source award under section 8(a) is appropriate. Agencies must use competitive procedures for section 8(a) contract awards when: (1) there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and that an award can be made at fair market price, and (2) the anticipated total value of the contract, including options, will exceed $4 million. FAR sect. 19.805-1(a). Since HUD's award to Deque was for $75,048--well below the $4 million competitive threshold--HUD was not required to use competitive procedures here.

Furthermore, despite the protester's contentions, the applicable regulations do not require HUD to obtain the SBA's formal acceptance of the contract offer prior to directly awarding the contract to Deque. Generally, before a procuring agency may award an 8(a) sole-source contract, it must submit an offer letter for the procurement to the SBA, and the SBA must accept it. See 13 C.F.R. sect. 124.502(a). However, section 8(a) regulations provide that when the value of a proposed contract falls below the simplified acquisition threshold, an agency that has sent an offer letter for the contract to the SBA "may assume the offer is accepted and proceed with award" of the contract if the agency "does not receive a reply [from the SBA] within two days" of sending the offer letter. 13 C.F.R. sect. 124.503(a)(4)(i).

HUD submitted an offer letter for the Deque contract to the SBA on September 16, 2010. The offer letter specified that the proposed contract amount was $75,048, which was below the simplified acquisition threshold in place at the time of the offer, which was $100,000. See FAR sect. 2.101. Although HUD had not received a reply from the SBA to its September 16 offer letter when it awarded the contract to Deque on September 30, it was authorized to assume that the SBA had accepted the contract. 13 C.F.R. sect. 124.503(a)(4)(i); see also FAR sect. 19.804-3(c) ("For acquisitions not exceeding the simplified acquisition threshold, when the contracting activity makes an offer to the 8(a) Program on behalf of a specific 8(a) firm and does not receive a reply to its offer within 2 days, the contracting activity may assume the offer is accepted and proceed with award of an 8(a) contract."). Therefore, it is immaterial that the SBA did not affirmatively accept HUD's offer before HUD awarded the contract to Deque.

The protest is denied. (Eagle Collaborative Computing Services, Inc., B-401043.3, January 28, 2011)  (pdf)

Klett's first protest contention is that the Army provided SBA with insufficient information regarding the seven-state 63rd RSC requirement, and that with sufficient information, SBA would have determined that placement of the requirement in the 8(a) program would adversely impact Klett. Protest at 3-5. In its comments on the Army's report filed in response to the protest, the only specific information that Klett alleges the Army failed to provide to SBA is that two small businesses--Klett and its subcontractor under the 90th RRC contract--were performing requirements that were to be consolidated. Comments at 4.

The record reflects that, as a result of Klett's August 18 letter, SBA's San Francisco District Office recognized that the Army initially had not provided certain information specified in 13 C.F.R. sect. 124.504(c). AR, Tab 14, SBA E-Mail to Army, Aug. 25, 2010; AR, Tab 15, SBA E-Mail to Army, Aug. 31, 2010. The record further reflects that, also as a result of Klett's letter, SBA's San Francisco District Office requested, and the Army provided, additional information described in 13 C.F.R. sect. 124.504(c). AR, Tab 14, SBA E-Mail to Army, Aug. 25, 2010; AR, Tab 15, SBA E-Mail to Army, Aug. 31, 2010; AR, Tab 16, Army 8(a) Reservation Letter, Sept. 13, 2010. In addition to providing further information described in 13 C.F.R. sect. 124.504(c), the Army's revised 8(a) program offering letter also explained why the Army considered the requirement to be new and responded to the SBA questions regarding differences between the current requirement and the predecessor requirements. AR, Tab 16, Army 8(a) Reservation Letter, Sept. 13, 2010.

At our Office's request, SBA provided its views on the protest. Regarding the issue of the sufficiency of the information that the Army submitted to SBA, SBA asserts that "[t]o the extent the Army initially failed to provide SBA with all of the pertinent information, the Army has corrected the deficiencies and SBA has received all pertinent information." SBA Report at 3. As the agency responsible for promulgating the regulations setting forth the required contents of an agency's letter offering a procurement requirement as an 8(a) contract, SBA's interpretation of the regulations deserves great weight. NANA Servs., LLC, B‑297177.3, B-297177.4, Jan. 3, 2006, 2006 CPD para. 4 at 6. The record here, taken together with the deference that we accord to SBA in interpreting the requirements of its regulations, does not provide a basis to sustain Klett's protest that the Army provided SBA with insufficient information regarding whether placement of the seven-state 63rd RSC requirement in the 8(a) program would adversely impact Klett. See id. at 7.

Moreover, the record reflects that the only two specific items of information that the protester alleges the Army failed to provide to SBA were either provided to SBA or not required by SBA regulations. With regard to the first item of information, although Klett alleges that the Army failed to notify SBA that Klett, a small business, was performing requirements that were to be consolidated, Comments at 4, the Army's revised 8(a) program offering letter to SBA described Klett as a service-disabled, veteran-owned small business that had performed the four-state 90th RRC contract.[4] AR, Tab 16, Army 8(a) Reservation Letter, Sept. 13, 2010, at 1. With regard to the second item of information, although Klett alleges that the Army failed to notify SBA that Klett's small business subcontractor was performing requirements that were to be consolidated, Comments at 4, neither the relevant SBA regulations nor the FAR identify a small business subcontractor's performance of a requirement to be offered for acceptance to the 8(a) program as one of the items of information that an offering agency must provide to SBA. See 13 C.F.R. sect. 124.502(c); FAR sect. 19.804-2. In this regard, SBA's response to Klett's protest explains that the adverse impact concept applies only to small business prime contractors, and not to small business subcontractors. SBA Report at 3. Given the deference we accord to SBA's interpretation of regulations that it promulgates, such as those regarding the 8(a) program, Singleton Enters.-GMT Mech., A Joint Venture, B-310552, Jan. 10, 2008, 2008 CPD para. 16 at 3, we have no basis to agree with Klett's position that the regulation encompasses information regarding subcontractors.

Klett's second protest contention is that the seven-state 63rd RSC requirement does not qualify as a new requirement under the SBA regulations. Comments at 5-7. The Army and SBA disagree and assert that because it qualifies as a new requirement, the SBA regulations expressly render an adverse impact determination unnecessary. Army Memorandum of Law at 14-15; SBA Report at 3.

Klett advances two arguments in opposition to the agencies' position, each based on a separate subsection of the relevant SBA regulation. Klett first points to language in the regulation providing that the expansion or modification of an existing requirement qualifies as a new requirement where the expansion or modification requires significant or different types of capabilities of work. Comments at 6 (citing 13 C.F.R. sect. 124.504(c)(1)(ii)(C)). Klett contends that the seven-state 63rd RSC requirement is not a new requirement because the tasks and labor categories associated with Klett's four-state 90th RRC contract are very similar to those of the seven-state 63rd RSC requirement. Comments at 6.

While there is no dispute that the type and location of work previously performed by Klett will be subsumed in the contract at issue here, SBA's regulations simply do not apply to this situation. Specifically, the SBA regulations provide that the expansion or modification of an existing requirement will be considered a new requirement when it "require[s] significant additional or different types of capabilities or work" or "where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation)." 13 C.F.R. sect. 124.504(c)(1)(ii)(C). It is the latter component of the regulation that the Army and SBA rely on in asserting that the seven-state 63rd RSC requirement constitutes a new requirement.

In its report to our Office, the Army explains that the $3.498 million estimated value of the seven-state 63rd RSC requirement, which has a period of performance of 1 year, represents an 88 percent increase over the actual value of the final year of Klett's four-state 90th RRC contract. Army Memorandum of Law at 15. Because this magnitude of change exceeds the 25 percent threshold established in the regulation at issue, the Army asserts that the seven-state 63rd RSC requirement constitutes a new requirement under the regulation. Id. In its submission to our Office, SBA agrees with the Army that the magnitude of change between Klett's four-state 90th RRC contract and the seven-state 63rd RSC requirement fits within the regulatory definition of a new requirement, but SBA arrives at this conclusion through a different calculation. SBA Report at 3. SBA explains as follows:

In comparing requirements, SBA considers the overall value of the existing contract, including options, with the overall value of the requirement offered into the 8(a) program . . . . Klett's five-year contract had a total value of over $7 million. The subject one-year requirement has an estimated value under $3.5 million, which is over 50 percent less than the value of Klett's contract . . . .

Id. (internal citations omitted). SBA further explains:

[E]ven if we were to compare the requirements based on the annual value, the subject requirement has a value more than 25 percent greater than Klett's most recent option period ($1.8 million). Finally, the subject requirement is also new because it requires significant additional work by incorporating work in three states (Arizona, Nevada and California) performed under a different contract.

Id. (internal citations omitted). Based on the record, we agree with the Army and SBA that SBA reasonably determined that under the subsection of the regulation at issue, the seven-state 63rd RSC requirement was new, and no adverse impact analysis was required.

As a final matter, Klett points to a separate subsection of the regulation which provides that:

. . . SBA will consider the effects of combining or consolidating various requirements being performed by two or more small business concerns into a single contract which would be considered a "new" requirement as compared to any of the previous smaller requirements. SBA may find adverse impact to exist if one of the existing small business contractors meets the presumption [regarding the existing of an adverse impact] set forth in paragraph (c)(1)(i) of this section.

13 C.F.R. sect. 124.504(c)(2). Klett asserts that two small businesses--Klett and its subcontractor under the four-state 90th RRC contract--are performing a requirement to be consolidated and that Klett has demonstrated that it meets the presumption of adverse impact set forth in paragraph (c)(1)(i) of the SBA regulation.[5] Comments at 5, 7.

The regulatory subsection cited by Klett, however, refers to two or more requirements that presently are being performed by two or more small business concerns. Only one of the requirements at issue in this protest (the four-state 90th RRC requirement) was being performed by a small business concern, Klett; the other requirement (the three-state 63rd RRC requirement) was performed by a large business, TAD PGS. Moreover, SBA asserts that the regulation's reference to "two or more small business concerns" means small business prime contractors, and not subcontractors. SBA Report at 3. Accordingly, we find no merit to Klett's position that the regulation encompasses subcontractors.

Moreover, even an affirmative showing by Klett that the circumstances described in 13 C.F.R. sect. 124.504(c)(2) exist here would be unavailing. SBA previously has taken, and we have given deference to, the position that because this regulation provides that SBA "may," rather than "shall," find adverse impact if the circumstances described in the regulation exist, SBA has the discretion to accept a requirement into the 8(a) program in appropriate circumstances, even where one or more contractors met the presumption of adverse impact. Catapult Tech., Ltd., B‑294936, B-294936.2, Jan. 13, 2005, 2005 CPD para. 14 at 6.

The protest is denied.  (Klett Consulting Group, Inc., B-404023, December 20, 2010) (pdf)

Section 8(a) of the Small Business Act authorizes the SBA to contract with other government agencies and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses. 15 U.S.C. sect. 637(a) (2006). The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; we will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. sect. 21.5(b)(3) (2010); Rothe Computer Solutions, LLC, B‑299452, May 9, 2007, 2007 CPD para. 92 at 3.

The section 8(a) program has both competitive and noncompetitive (that is, sole‑source) components. Generally where a procurement for services exceeds the competitive threshold (currently $3.5 million), the requirement must be competed among qualified 8(a) program participants. 13 C.F.R. sect. 124.506(a)(2)(ii). However, as provided by statute,[4] the competitive threshold does not apply to the award of a sole-source 8(a) contract to a participant that is owned and controlled by an Indian tribe or an ANC, such as Ahtna.

In implementing this statutory authority, the SBA has established a limit on moving an existing requirement from the 8(a) competitive program to the 8(a) sole-source program:

SBA may award a sole source 8(a) contract to a Participant concern owned and controlled by an Indian tribe or an ANC where the anticipated value of the procurement exceeds the applicable competitive threshold if SBA has not accepted the requirement into the 8(a) [business development] program as a competitive procurement. There is no requirement that a procurement must be competed whenever possible before it can be accepted on a sole-source basis for a tribally-owned or ANC-owned concern, but a procurement may not be removed from competition to award it to a tribally-owned or ANC-owned concern on a sole-source basis.
13 C.F.R. sect. 124.506(b) (emphasis added).

The main question posed by the protest, then, is whether the requirement issued as an 8(a) competitive procurement in April 2008 is the same as the requirement accepted for the 8(a) sole-source award to Ahtna.

In this regard, the SBA regulations provide that:

[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation) or to require significant additional or different types of capabilities or work.
13 C.F.R. sect. 124.504(c)(1)(ii)(C).

JXM argues that the Army and the SBA pursued an 8(a) competitive procurement for the requirement here in April 2008, and therefore the SBA is now prohibited from procuring the requirement using a sole-source contract to Ahtna. JXM disputes the Army's characterization of the contract with Ahtna as a new requirement, and argues that the Army's assertion that it needs services at significantly more building square footage is based on adding to the contract unfinished, unoccupied buildings that do not require such services. JXM submitted photographs to show that some of the buildings included are new buildings still under construction, and it argues that the Army has not shown a "definitive date for use and occupancy" of the additional square footage such that additional services could be validly required under Ahtna's contract. Protester's Supplemental Comments at 3.

The Army maintains that it accurately described its requirement to the SBA, and the SBA properly accepted it for award to Ahtna. The Army states that the building reconfiguration and new construction have nearly doubled the area requiring services, from 1,392,313 square feet for the original requirement to 2,712,720 square feet for the requirement here. The Army also identifies an increase in the scope of services to be provided. In this regard, the original requirement was for housekeeping services, whereas the requirement here is for hospital environmental services including housekeeping, medical waste and trash collection and removal, and exterior building services.[6] As the agency also explained, the contract value increased from approximately $11.3 for the prior 13-months of interim contracts to $20.4 million for the 12-month effort here. AR at 5; Contracting Officer's Statement at 12-13.

With respect to JXM's argument that the buildings have not been finished, the Army acknowledges that services are not immediately needed for all of the additional square footage now. However, the Army maintains that it will begin to require the additional services in the coming weeks because much of the construction is nearing completion. In support of this argument, the Army has identified each building undergoing construction, and has explained when each is expected to be ready. The Army states that even though one large building will not be complete until 2011, it expects to transition areas of the building into service upon completion of those areas. Accordingly, the Army contends that it was necessary to include the square footage for all the additional buildings in its requirement. Supplemental Contracting Officer's Statement at 3-6.

At our Office's request, the SBA provided its views on the protest. We accord great weight to the SBA's interpretation of its regulations as to what constitutes a new requirement, unless the interpretation is unreasonable. NANA Servs., LLC, B‑297177.3; B‑297177.4, Jan. 3, 2006, 2006 CPD para. 4 at 10. Here, the SBA states that it agrees with the Army that notwithstanding the protester's arguments, the SBA properly accepted the requirement into the 8(a) program for award to Ahtna. The SBA considered the increase in square footage, workload, and contract value and reasonably determined that the services sought constituted a new requirement. SBA's Comments at 7; SBA's Supplemental Comments at 1-2. Based on the record, as discussed above, we see no basis to object to the Army's decision to offer the requirement to the SBA, or to the SBA's decision to accept it as an 8(a) sole-source award to Ahtna.  (JXM, Inc., B-402643, June 25, 2010)  (pdf)

Additionally, AHNTECH claims that the SBA was required, but failed, to perform an analysis as to whether the 8(a) award would have an adverse impact on individual small business, a group of small businesses in a specific geographical location, or other small business programs as was required by 13 C.F.R. sect. 124.504(c).

The adverse impact concept is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. 13 C.F.R. sect. 124.504(c). The SBA presumes adverse impact to exist where the small business concern has performed the specific requirement for at least 24 months; the small business is performing the requirement at the time it is offered to the 8(a) program, or its performance of the requirement ended within 30 days of the procuring activity's offer of the requirement to the 8(a) program; and the dollar value of the requirement that the small business is or was performing is 25 percent or more of its most recent annual gross sales. 13 C.F.R. sect. 124.504(c)(1)(i).

As indicated above, the Air Force and the SBA assert that an adverse impact analysis was not required because AFSOC's Melrose Range requirement was considered to be a new requirement. In this regard, the SBA's regulations provide that the "SBA need not perform an impact determination where a new requirement is offered to the 8(a) [business development] program." 13 C.F.R. sect. 124.504(c)(1)(ii)(D). The SBA's regulations define a "new requirement" as a requirement that has not previously been procured by the relevant procuring activity. 13 C.F.R. sect. 124.504(c)(1)(ii) and (2). The rationale for exempting new requirements from adverse impact analysis under the SBA's regulations is that "[w]here a requirement is new, no small business could have previously performed the requirement and, thus, SBA's acceptance of the requirement for the 8(a) [business development] program will not adversely impact any small business." 13 C.F.R. sect. 124.504(c)(1)(ii)(A). The regulations further provide that "[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation) or to require significant additional or different types of capabilities or work." 13 C.F.R. sect. 124.504(c)(1)(ii)(C).

The Air Force and the SBA disagree with AHNTECH's assertion that its work under the ACC contracts was substantially similar to the AFSOC Melrose Range requirements to be obtained under the 8(a) program. The SBA's analysis established that AHNTECH's contracts were awarded by ACC and the pending requirement will be awarded by AFSOC; that ACC and AFSOC have different missions; and that as a result AFSOC will use the Melrose Range in a different manner, which will require different operations, maintenance and support services. The Air Force has explained the significant difference in the missions of ACC and AFSOC and how this relates to the range and support services required. Moreover, the SBA has confirmed the Air Force's analysis finding a difference in value between the AFSOC requirement and the ACC requirement as much greater than the 25 percent required to meet the regulation's new requirement definition for the expansion or modification of existing requirements.

AHNTECH has not rebutted the Air Force's and the SBA's explanation regarding the differences between those previously performed by AHNTECH and those contemplated under this 8(a) contract. For example, AFSOC requires support for new aircraft not currently operated on the Melrose Range, use by special operations ground troops, and live fire support for AC-130 gunships. COS at 3-4; AR Tab 2.1, AFSOC/A3 Statement of Work Analysis. Under these circumstances, we have no basis to object to the SBA's and Air Force's analyses and interpretation as to why the Melrose Range requirement to be obtained under the 8(a) program was new. Thus, we find that the SBA properly accepted AFSOC's Melrose Range requirement into the 8(a) program without an adverse impact analysis.  (AHNTECH, Inc., B-401092, April 22, 2009) (pdf)

In its protest, Madison argues that SBA’s acceptance of the travel trailer deactivation services and septic bladder pumping services requirements under the 8(a) program was contrary to 13 C.F.R. sect. 124.504(a) since they had been initially issued as small business set-asides. In this regard, Madison argues that the “extraordinary circumstances” exception should not apply here. Madison also alleges that SBA was required by regulation, but failed, to perform a study to determine whether accepting the two requirements under the 8(a) program would have an adverse impact on Madison. As a final matter, Madison contends that the solicitations at issue are defective because they do not include past performance as an evaluation factor.

Section 8(a) of the Small Business Act, 15 U.S.C. sect. 637(a) (2000), authorizes SBA to enter into contracts with government agencies and to arrange for performance through subcontracts with socially and economically disadvantaged small business concerns. Federal Acquisition Regulation sect. 19.800. The Act affords SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; accordingly, we will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. sect. 21.5(b)(3) (2008); Rothe Computer Solutions LLC d/b/a Rohmann J.V., B-299452, May 9, 2007, 2007 CPD para. 92 at 3.

As noted above, 13 C.F.R. sect. 124.504(a) precludes SBA from accepting into the 8(a) program a procurement for which the contracting agency had previously issued, or expressed the intent to issue, the solicitation as a small business set-aside except under “extraordinary circumstances.” Madison takes the position that extraordinary circumstances did not exist here and that it therefore was improper for SBA to accept the procurements in the 8(a) program. Specifically, Madison notes that, as reflected by FEMA’s acquisition plan, which preceded the four solicitations, FEMA had expressly decided against placing the requirements with the 8(a) program. According to Madison, the solicitations were not issued “in error,” as contemplated by the examples set out in SBA’s regulations; rather, FEMA merely changed its mind regarding the 8(a) set-aside issue after it had issued the solicitations.

SBA maintains that after considering all the relevant facts, it properly concluded that FEMA’s initial small business set-asides were erroneous and did not reflect the agency’s intentions. In this regard, SBA highlights the fact that not placing any of the work under the 8(a) program was inconsistent with FEMA’s previously awarded contracts encompassing the same services, which had been equally divided between small business set-aside awards and awards under the 8(a) program. Based on these facts, SBA concluded that the case fell within the extraordinary circumstances exception provided in its regulations. As a general matter, we accord SBA’s interpretations of regulations which it promulgates, such as those regarding the 8(a) program, great weight. Singleton Enters.--GMT Mech., A Joint Venture, B-310552, Jan. 10, 2008, 2008 CPD para. 16 at 3. Here, while Madison clearly disagrees with SBA’s interpretation of its regulations as applied to the facts in this case, we see no basis to conclude that SBA’s conclusions violated the relevant SBA regulation. Id.

Madison also argues that SBA’s acceptance of the requirements for award under the 8(a) program was improper because SBA failed to consider, as required by 13 C.F.R. sect. 124.504(c), the “adverse impact” on small businesses presently performing the requirements under the previously awarded ID/IQ contracts. The adverse impact concept is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program.

SBA argues that an adverse impact determination was not required because the requirements at issue were considered to be new as compared to the ID/IQ contracts previously awarded by FEMA to small business concerns. In this regard, the regulations explicitly provide that the “SBA need not perform an impact determination where a new requirement is offered to the 8(a) BD [business development] program.” 13 C.F.R. sect. 124.504(c)(1)(ii)(D). The regulations further explain that “[t]he expansion or modification of an existing requirement will be considered a new requirement where the magnitude of change is significant enough to cause a price adjustment of at least 25 percent (adjusted for inflation) or to require significant additional or different types of capabilities or work.” 13 C.F.R. sect. 124.504(c)(1)(ii)(C).

In determining whether there has been a price change of at least 25 percent where an agency has decided to essentially modify the requirements to unbundle previously consolidated requirements, SBA has reasonably interpreted its own regulations as providing for a comparison of the value of the requirement to be solicited (the unbundled requirement) with the overall value of the existing contract encompassing the requirement (the consolidated requirement). Rothe Computer Solutions LLC d/b/a Rohmann J.V., supra, at 10. Here, as explained above, FEMA previously awarded consolidated small business set-aside contracts for septic tank pumping, trailer and mobile home maintenance, travel trailer deactivation, and mobile home deactivation services, with values up to $100 million. FEMA is now separately procuring those services and SBA has accepted, under the 8(a) program, the travel trailer deactivation services requirement, with an estimated value of approximately $2.8 million, and the septic tank pumping requirement, with an estimated value of approximately $1.2 million. The change in value of the travel trailer deactivation services requirement and septic tank pumping services requirement, as compared to the value of the consolidated contracts, is, for each contract, greater than 25 percent. As a consequence, the argument advanced by Madison, that SBA improperly failed to perform a required adverse impact determination prior to accepting the disputed requirements into the 8(a) program, is without merit.  (Madison Services, Inc., B-400615, December 11, 2008) (pdf)

SSI also complains that award to ERI was improper because the date for receipt of proposals was 2 days before ERI’s 8(a) status was to expire. The agency set an initial date for receipt of proposals on January 31, 2005, then modified that date to February 11, 2005, and again to February 10, 2005. RFP, amends. 1, 2. The protester states that ERI’s 8(a) term of participation was due to expire on February 12, 2005.  With regard to the award to ERI, SBA regulations state that an offeror’s status as an 8(a) contractor is determined as of the date the offeror submits a written self-certification that it is small to the procuring activity as part of its initial offer. 13 C.F.R. sect. 121.404(a), (b). SBA regulations further state that an award may be made to an offeror whose 8(a) program term has expired, provided that it was an 8(a) program participant eligible for contract award on the initial date specified for receipt of offers. 13 C.F.R. sect. 124.507(d). Here, ERI’s timely submitted proposal was eligible for award.  (Synectic Solutions, Inc., B-299086, February 7, 2007) (pdf)

OMNI objects that the proposed contract does not qualify as a “new requirement” and, therefore, the proposed contract cannot be placed in the 8(a) program. 13 C.F.R. sect. 124.504 (2005). Section 8(a) of the Small Business Act authorizes the SBA to contract with other government agencies, and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses. 15 U.S.C. sect. 637(a) (2000). The SBA and contracting agencies have broad discretion in selecting procurements for the 8(a) program, and a contracting officer has broad discretion to let a noncompetitive contract under section 8(a) of the Small Business Act upon such terms and conditions as may be agreed upon by the procuring agency and the SBA. NANA Servs., LLC, B-297177.3, B‑297177.4, Jan. 3, 2006, 2006 CPD para. 4 at 2. The Army and the SBA argue that the scope of work has been changed so significantly from that in OMNI’s incumbent contract that the price differential (which the regulation refers to as a "price adjustment," and in this case is a decrease in price) would exceed 25 percent, thereby making the proposed contract per se a new requirement under the applicable regulation. 13 C.F.R. sect. 124.504(c)(1)(ii)(C). To reach this conclusion, the Army and the SBA calculated the differential by comparing the estimated maximum dollar value of the base year and four option years for the protested requirement--$6,711,000[3]--to the value of the incumbent contract, which they calculated as $9,791,025, which was adjusted for inflation. Comparing the inflation-adjusted incumbent contract value and the government estimate for the 8(a) contract, the Army argues, and the record confirms, that there was a percentage differential (i.e., a decrease) of 31 percent. Army Request for Summary Dismissal, attach. 1. The protester challenges the government estimate as erroneous because it allegedly does not include any labor costs for photographers, arguing that the functions described in several places in the new performance work statement necessarily encompass skills that would require performance by Photographer III, Photographer IV, and Photographer V, as defined in the occupational dictionary used by the Department of Labor. First Supplemental Protest at 2-7. The protester also objects that the government estimate does not appear to include additional fees and equipment costs. The Army responds that at least for purposes of an estimate, the non-photographer labor categories selected could perform the reduced photography requirements specified in the new performance work statement. Supplemental Memorandum of Law at 2; Joint Program Officials’ Statement at 2-6. Nevertheless, even if photographers were required, the Army points out that the Service Contract Act labor rates for photographers were generally below the labor rates of the labor categories used in the estimate and, therefore, the impact of substituting photographers would be expected to decrease the estimate, thereby further widening the differential between the cost of the new contract and the cost of the protester’s inflation-adjusted incumbent contract. Joint Program Officials’ Statement at 1. The protester has not meaningfully disputed the agency’s position. The protester also has not shown that the Army’s estimate was otherwise unreasonable. More specifically, the protester has not shown that the agency’s estimate failed to include any additional fees and equipment costs required to perform the new contract. To the contrary, the Army has shown that its estimate did include estimates of direct materials and other direct costs. Supplemental Memorandum of Law at 2. In short, the protester has failed to show that the Army and the SBA were incorrect in concluding that the proposed contract was a “new requirement” and could be submitted and accepted for performance under the 8(a) program. (OMNI Government Services, LP, B-297240.2; B-297240.3; B-297240.4, March 22, 2006) (pdf)

The MWR services had been provided since 2000 by Raytheon Technical Services under a large base operations support (BOS) contract, with that contract having an end date of September 30, 2005. AR at 3. In preparation for the expiration of Raytheon’s contract, the agency issued request for proposals (RFP) No. N00604-05-R-0003 (RFP -0003) as a small business set-aside for the MWR services only. The agency received proposals from NANA and GFS, and selected GFS’s proposal for award. NANA filed protests with our Office on September 8 and 13, 2005, challenging the agency’s selection of GFS for award, and in response, the agency informed our Office and the parties that it would reevaluate the proposals of NANA and GFS, and make a new source selection. Because the agency’s actions rendered NANA’s protests academic, our Office dismissed the protests on September 15. The record reflects that the agency considered a number of options to ensure the uninterrupted provision of the MWR services while the proposals of NANA and GFS were being reevaluated, including the extension of the MWR services portion of Raytheon’s contract past September 30, and the provision of the services through SBA’s section 8(a) program. AR, Tab 3, Memorandum for the Record Concerning Raytheon’s BOS Contract (Sept. 22, 2005); Tab 4, Memorandum for the Record Concerning Raytheon’s BOS Contract (Sept. 23, 2005). Based upon its understanding that Raytheon was either not interested or unable to provide the MWR services past September 30, and because the agency’s requirement for a bridge contract to acquire the MWR services while the proposals were being reevaluated was accepted by SBA into its section 8(a) program, a contract for the MWR services with a base period of 3 months and one 3-month option period at a total price of $2,711,097 was awarded to GFS, a section 8(a) firm, through the 8(a) program on a noncompetitive basis. AR, Tab 25, Post-Negotiation Memorandum (Sept. 26, 2005), at 3-4. This protest followed. NANA argues that the Navy and SBA violated regulations governing the placement of work under SBA’s 8(a) program, as well as the regulations governing the award of a contract under the 8(a) program on a noncompetitive basis.  (NANA Services, LLC, B-297177.3; B-297177.4, January 3, 2006) (pdf)

However, the SBA acknowledges that where, as here, a new requirement is a consolidation of two or more requirements previously performed by a group of small businesses, under the regulatory guidance found in 13 C.F.R. 124.504(c)(2), the SBA is required to conduct an adverse impact analysis. The SBA contends, however, that the failure to conduct an adverse impact analysis did not prejudice Catapult, for two reasons. First, according to the SBA, Catapult did not meet the 25-percent dollar value threshold for the presumption of adverse impact under the SBA's regulations. Specifically, the SBA explains that from its review of the pleadings filed in response to Catapult's protest, including DOT's report and supplemental report, Catapult received "approximately $4.8 million over the last 12 months of its performance of the [DOT] requirement that has already been consolidated into the Bowhead contract, which is well short of 25 percent of Catapult's claimed annual gross sales ($28 million)." SBA Report at 3 (Dec. 6, 2004). Indeed, in a letter to the SBA, Catapult accepts DOT's statement that Catapult "has lost only 17 percent of its revenues, not the 25 percent required for an adverse impact." Catapult's Letter to SBA at 2 (Dec. 3, 2004). While the protester argues that the SBA's analysis ignores DOT's "immediate plans to consolidate more work into [the protested contract]" and that Catapult will have "a total loss of 42 percent of Catapult's revenues," id. at 2-3, the fact remains that the record shows that, at the time the matter was before the SBA, Catapult did not meet the 25-percent threshold. More importantly, in the view of the SBA, the additional work that may be consolidated into the contract is being performed under a section 8(a) contract and, according to the SBA, consolidation of such requirements is not to be counted toward the 25-percent share relevant to the adverse impact analysis. For this reason, the SBA contends that Catapult did not meet the 25-percent threshold for the presumption of adverse impact. Second, the SBA points out that the language of the regulation provides that, in the context of consolidated requirements, even if the presumption of adverse impact is met as to an affected small business, the SBA "may"--rather than "shall"--find adverse impact to exist. 13 C.F.R. 124.504(c)(2). In other words, according to the SBA, the above-quoted exception to the usual provision exempting new requirements from the adverse impact rule gives the SBA "the discretion to accept a requirement into the 8(a) [business development] program in appropriate circumstances even where one or more contractors met the presumption of adverse impact." SBA Supplemental Report at 2 (Dec. 14, 2004). The SBA points out that the adverse impact regulation was amended to provide that the SBA "may" find adverse impact to exist if the adverse impact presumption is met for a "new" consolidated requirement. 62 Fed. Reg. 43583, 43591 (1997). The regulation thus does not preclude the SBA from deciding to accept a consolidated requirement into the section 8(a) business development program, even if the adverse impact presumption is met. The SBA argues that under the circumstances here, the SBA's decision to accept the offered IT requirement into the section 8(a) business development program was in accordance with its regulations.

We are required to give deference to an agency's reasonable interpretation of its regulations, and because the SBA is the agency responsible for promulgating the adverse impact regulation, we give its interpretation great weight. See Red River Serv. Corp. , B279250, May 26, 1998, 98-1 CPD 142 at 5-6; see also Udall v. Tallman , 380 U.S. 1, 16 (1965). Because Catapult would appear not to have met the 25percent threshold, particularly in light of the SBA's view that section 8(a) contracts should not be the basis of an adverse impact determination, it appears that the record supports the conclusion that, had the SBA performed the required analysis at the time, it would have concluded that Catapult would not suffer adverse impact. In addition, the SBA's interpretation of its regulations indicates that the requirement could properly have been accepted, even if adverse impact had been found as to Catapult. Under these circumstances, it does not appear that Catapult has suffered any prejudice by the SBA's admitted failure to perform an adverse impact analysis. Designer Assocs., Inc. , B-293226, Feb. 12, 2004, 2004 CPD 114 at 5. (Catapult Technology, Ltd., B-294936; B-294936.2, January 13, 2005) (pdf)

Under the Act's implementing regulations, SBA will not accept a procurement for award as a section 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographic location, or other small business programs. 13 C.F.R. 124.504(c) (2004). The purpose of the "adverse impact" concept is to protect other small businesses performing contracts outside the 8(a) program. Id. ; Grace Indus., Inc. , B-274378, Nov. 8, 1996, 96-2 CPD 178 at 2 n.2. The "adverse impact" concept, however, does not apply to "new" requirements that have not been previously purchased by the procuring agency. See 13 C.F.R. 124.504(c)(1)(ii)(A), which explains that:

[w]here a requirement is new, no small business could have previously performed the requirement and, thus, SBA's acceptance of the requirement for the 8(a) [business development] program will not adversely impact any small business.

The SBA states that, because the four barracks at issue here were not among the buildings listed in the previous contracts or solicitations that had been set aside for small businesses, the SBA considered the requirement to be "new" and suitable for inclusion in the section 8(a) program. The SBA explains that the purpose of the adverse impact concept "is to prevent an agency from snatching a procurement opportunity away from small business concerns when such concerns may have already expended time and resources in the pursuit of that opportunity." SBA Report at 4. The SBA adds that, in its view, the relocation/removal clause pointed to by the protester "which would purportedly give the [Marine Corps] the ability to add or relocate machines after award [is] not specific enough to trigger the [regulatory] provisions" requiring a determination of adverse impact, and that, in its view, the "adverse impact" concept and relocation/removal provisions of the previous solicitations or contracts "should not be interpreted to bar the [Marine Corps] from ever awarding a section 8(a) contract for washers and dryers at Camp Lejeune." Id. at 3, 4. Tiger has not shown that the SBA's interpretation of its regulations is unreasonable. As the agency responsible for promulgating the adverse impact regulation, the SBA's interpretation deserves great weight, and we give deference to an agency's reasonable interpretation of its regulations. See The Urban Group, Inc.; McSwain and Assocs., Inc. , B-281352, B-281353, Jan. 28, 1999, 99-1 CPD 25 at 25. Here, as stated by the SBA, the four barracks listed in Class Act's contract are not among the buildings listed in the previous contracts, or among the 183 buildings listed in the most recent solicitation issued as a small business set-side by the Marine Corps for the lease of washers/dryers at Camp Lejeune. Given this, and our view that the SBA is correct that the relocation/removal clause cannot reasonably be read as applying to each needed washer/dryer at Camp Lejeune regardless of whether the building where the washer/dryer is needed has been previously set aside for performance by small business concerns, we have no basis upon which to object to the placement and acceptance of the requirement in the section 8(a) program by the Marine Corps and SBA. (Tiger Enterprises, Inc., B-294973, January 4, 2005) (pdf)

No firm has a right to have the government satisfy a specific procurement need through the 8(a) program or award a contract to that firm, since the contracting officer is authorized "in his discretion" to let the contract to SBA upon terms and conditions to which the agency and SBA agree.  (The Writing Company, B-284622.2, May 19, 2000)