4 CFR 21.5 (b): Small Business Administration [Department of Veterans Affairs] Issues

Comptroller General - Key Excerpts

The protester also challenges the NAICS code identified for the procurement and contends that the relationship identified for manufacturers and dealers in the two-tiered acquisition will preclude dealers from being considered small businesses. Protest at 26. We, however, lack jurisdiction to hear challenges of selected NAICS codes, and to hear size-status challenges. 4 C.F.R. § 21.5(b)(1) (2012). With respect to the NAICS code selected by the Air Force, the Small Business Administration (SBA) is given exclusive authority to review challenges to an agency’s choice of NAICS code. See FAR § 19.303(c); Expeditions Int’l Travel Agency, B 252510, June 28, 1993, 93-1 CPD ¶ 497 at 4. We also do not agree with Herman Miller that we must accept its protest challenging the NAICS code, because it lacks standing, as a large business, to file a NAICS code appeal at the SBA.

Further, we do not agree that we have jurisdiction to decide whether the Air Force’s two-tiered acquisition implicates the affiliation rules of SBA’s size status regulations. Although Herman Miller asserts that our Office has previously heard similar challenges, the decisions to which Herman Miller cites are inapposite. For example, Herman Miller cites our decision in Med-South, Inc., B-401214, May 20, 2009, 2009 CPD ¶ 112, for the proposition that we have jurisdiction to determine whether a procurement should be set aside for small businesses. Here, however, Herman Miller is not asserting that the second tier competition cannot be set aside for small business competition, but is arguing that the approach may be considered an affiliation by SBA. For the same reason as stated earlier, this contention is more appropriately reviewed by the SBA, than by our Office. 
(Herman Miller, Inc., B-407028, Oct 19, 2012)  (pdf)

HCI challenges the evaluation of its proposed staffing, the adequacy of discussions, and the reasonableness of the source selection decision. HCI also argues that LVFC JV is not an [service-disabled veteran owned small business] SDVOSB, and that LVFC JV's proposal was unacceptable because the joint venture is not properly constituted.

First, HCI argues that LVFC JV is not an SDVOSB joint venture because a statement on the FedConsulting Internet site appears to state that the managing joint venture partner is not an SDVOSB. Supplemental Protest at 3. HCI also argues that the structure of LVFC JV's joint venture violates the Small Business Act, Small Business Administration (SBA) regulations, and guidance issued by the Department of Veterans Affairs. HCI Comments at 29. In an attempt to lay a basis for our Office to exercise jurisdiction for these allegations, HCI argues that the issues are a matter of proposal acceptability, and it maintains that its protest does not challenge the status, ownership, or control of Longview, nor the terms of the LVFC JV joint venture agreement. Id.

We disagree with HCI's effort to recharacterize an issue that fundamentally requires a determination of the validity of LVFC JV's eligibility to compete as an SDVOSB--and thus challenges the firm's eligibility to compete under this RFP--as a question of proposal acceptability. In our view, the question posed is whether LVFC JV is an eligible SDVOSB, and that question is reserved for determination by the SBA. Accordingly, we dismiss HCI's grounds of protest challenging the acceptability of LVFC JV's proposal on grounds related to the eligibility of LVFC JV as an SDVOSB.  (Hurricane Consulting, Inc., B-404619; B-404619.2; B-404619.3, March 17, 2011)  (pdf)

The procurement here is being conducted pursuant to the Veterans First Contracting Program, created by the Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. sections 3127-3128. The program provides the VA with independent authority to restrict competition to SDVOSBCs under certain circumstances. 38 U.S.C. sect. 3127(d).

With respect to a firm's eligibility for procurements restricted to SDVOSBCs under the authority of this program, 38 U.S.C. sect. 8127(e) states that "a small business concern may be awarded a contract under this section only if the small business concern and the veteran owner of the small business concern are listed in the database of veteran-owned businesses maintained by the Secretary [of the VA] under subsection (f)." The referenced provision, 38 U.S.C. sect. 8127(f), states, in relevant part:

(1) Subject to paragraphs (2) through (6), the Secretary shall maintain a database of small business concerns owned and controlled by veterans and the veteran owners of such business concerns.

(2) To be eligible for inclusion in the database, such a veteran shall submit to the Secretary such information as the Secretary may require with respect to the small business concern or the veteran.

* * * * *

(4) In maintaining the database, the Secretary shall carry out at least the following two verification functions:

(A) Verification that each small business concern listed in the database is owned and controlled by veterans.

(B) In the case of a veteran who indicates a service-connected disability, verification of the service-disabled status of such veteran.

As the relevant statutes state that SDVOSBC eligibility is to be determined on the basis of a list maintained in a VA-controlled database, and that eligibility for inclusion on that list is to be determined and verified by the VA, we conclude that the VA is vested with the authority to determine a firm's eligibility for SDVOSBC set-aside procurements conducted under the Veterans First Contracting Program.

In the context of small business set-aside procurements under the Small Business Act, we will not review protests of an awardee's small business size status because the Act, 15 U.S.C. sect. 637(b)(6), gives the SBA, not our Office, the conclusive authority to determine matters of small business size status for federal procurements. Bid Protest Regulations, 4 C.F.R. sect. 21.5(b)(1) (2010); Randolph Eng'g Sunglasses, B-280270, Aug. 10, 1998, 98‑2 CPD para. 39 at 3. Here, similarly, the applicable statute and regulation vest the VA, not our Office, with the conclusive authority to determine matters of SDVOSBC eligibility for SDVOSBC set-aside procurements under the Veterans First Contracting Program. We therefore will not review the protester's challenge to the awardee's SDVOSBC eligibility for this award.  (TEC/WEST-TEC JV, B-402573.3, July 30, 2010)  (pdf)

Because an agency's choice of a NAICS code is a matter for review by the SBA, not our Office, this is not a matter for our consideration.  (Triune Associates, B-292005, May 13, 2003)  (pdf)

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

Comptroller General - Listing of Decisions

For the Government For the Protester
Herman Miller, Inc., B-407028, Oct 19, 2012  (pdf)  
Hurricane Consulting, Inc., B-404619; B-404619.2; B-404619.3, March 17, 2011  (pdf)  
TEC/WEST-TEC JV, B-402573.3, July 30, 2010  (pdf)  
Triune Associates, B-292005, May 13, 2003  (pdf)  
Integrity Management Services, Inc., B-283094.2, May 3, 2000  (pdf)  

U. S. Court of Federal Claims - Key Excerpts

U. S. Court of Federal Claims - Listing of Decisions
For the Government For the Protester


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