COFC: Protesters Must Follow SBA's Procedures Before Lodging a Size Protest at the Court
Recent U.S. Court of Federal Claims ("COFC") opinion provides a cautionary reminder to protesters: before challenging the size of a small business at COFC, protesters must first follow the procedures set forth in Small Business Administration's ("SBA") regulations.
In Harmonia Holdings Group, LLC v. United States, No. 19-1421C (Fed. Cl. Apr. 3, 2020), the protester challenged an award decision by the United States Census Bureau, Applications Development and Services Division's (the "Agency") for IT services under General Service Administration’s ("GSA") IT Schedule 70.
The women-owned small business set-aside contract provided a one 12-month base period of performance and six 12-month option periods. The Agency received three timely offerors: Harmonia, Alethix (intervenor), and [redacted], and on September 3, 2019, the Technical Evaluation Team issued the Final Consensus Technical Report provided the following ranking: (1) Alethix, (2) Harmonia, and (3) [redacted]. The Price Evaluation Team ranked offers as follows: 1) [redacted], 2) Harmonia, and 3) Alethix. Harmonia's proposed price was approximately $37.17 million and Alethix's proposed price was approximately $38.22 million.
Following the Agency's award to Alethix, Harmonia filed a complaint challenging, among other things, that "[t]he Agency’s failure to recognize the ostensible subcontractor issue apparent on the face of Alethix’s proposal and refer Alethix to the SBA [] for a Status Determination was irrational and contrary to regulation." Though perhaps an interesting way to challenge the award, COFC concluded that the protester's argument essentially "seeks to compel this court to make a size determination by referring the matter to the SBA."
Given that COFC construed the protester's argument as a size protest, Harmonia was required to follow the size protest procedures set forth in SBA's regulations prior to making the argument before COFC. In dismissing this count, COFC explained at length the doctrine of exhaustion of administrative remedies. The court noted that the doctrine "governs the timing of federal-court decision making," and reiterated Supreme Court precedent that "that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." [1]
To that end, COFC recognized that the SBA has particular procedures regarding a concern’s self-certification as a small business for a particular procurement, noting that SBA regulations "provides explicitly that this administrative remedy 'must be exhausted before judicial review of a formal size determination may be sought in a court.'" [2] Given the framework under which size protests are governed, COFC concluded that because the protester "did not raise this issue with the Agency, nor did the SBA make a size determination before or after award was made, the court declines to make a post-award size determination, or refer to the issue to the SBA."
Takeaway
This protest provides a cautionary reminder to small businesses on the procedures that must be followed (including timeliness rules) before COFC will entertain a size protest. As a reminder, contractors need to move quickly as size protests must be filed shortly after learning the identity of the prospective awardee.
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[1] McKart v. United States, 395 U.S. 185, 194 (1969) (quoting Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51 (1938)).
[2] See generally 13 C.F.R. §§ 121.1001–121.1010; see also Taylor Consultants, Inc. v. United States, 90 Fed. Cl. 531, 547 (2009) (quoting 13 C.F.R. § 121.1101(a)) (emphasis in original).
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