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GAO: Small Business Teaming Agreement Must Follow Solicitation Guidelines

Koprince Law LLC


As we often tell people, language in a teaming agreement is important for a federal contract. But so is complying with the terms of a solicitation. A recent GAO decision hinged on a very specific portion of the language in a teaming agreement that was required as part of a solicitation. Because the contractor did not include the required language in a teaming agreement, it lost out on an award.

In Global Patent Solutions, LLC, B-421602.2 (Feb. 23, 2024), GAO looked at a solicitation from the Patent and Trademark Office (PTO or USPTO) for professional services to assist the PTO in reviewing international patent applications. Protester Global Patent Solutions, LLC (GPS), challenged award under the solicitation to CPA Global, Inc. (CPAG).

The protest argued that CPAG was not evaluated properly under Factor 4, Small Business Participation. Here, the solicitation required large business offerors to submit a small business subcontracting plan, and provided that an offeror’s plan “shall comply with all elements of FAR Subpart 19.704 (Subcontracting Plan Requirements) and FAR Clause 52.219-9 (Small Business Subcontracting Plan).”

In particular, there was a requirement that “[t]he extent of small business participation shall equal or exceed the minimum requirement” of at least 10 percent with a goal of reaching at least 25 percent. In addition, “[t]o receive credit under this factor, an enforceable teaming agreement must be in place with one or more small businesses (unless the Prime Offeror is a small business) and a copy of each signed agreement shall be included with the Offeror’s proposal as an attachment.” Finally, an “Enforceable agreement” was defined as one “signed by both parties committing to a teaming arrangement if the contract is received and identifying the percentage of the total contract to be subcontracted.”

As far as the evaluation, small business subcontracting plan would “be evaluated to the extent the Offeror complies with all elements of FAR Subpart 19.704 . . . and FAR Clause 52.219-9″ and proposals would “be evaluated to ensure it meets or exceeds the Government’s minimum requirement that at least ten percent (10 [percent]) of the annual order value be directed to small business for each of the five ordering periods,” and that the teaming agreements would “be reviewed to ensure compliance.”

The small business teaming agreement for CPAG stated that the small business “Partner will accept and perform a subcontract for the services for up to [DELETED] [percent] of awarded volumes.” In reviewing this language, the agency initially determined that the subcontractor teaming agreements submitted by CPAG “do not specify any percentages of work to be contracted.” The evaluation team also noted that it was “impossible for the USPTO to evaluate exactly how much is guaranteed to go to small business” and “CPAG’s proposal also neglected to state what the percentages were as a portion of the subcontract value as required by FAR 52.219-9.” That FAR provision, FAR 52.219-9, in part states that a subcontracting plan should express small business subcontracting goals “as a percentage of total planned subcontracting dollars.”

Ultimately, the agency weighed the missing information in the teaming agreement against the historical performance by the awardee when it comes to small business subcontracting and concluded that “CPAG’s flaws” in the small business participation “area were mostly procedural and not substantive.”

GAO disagreed. GAO ultimately found that the agency did not follow its own solicitation rules:

Specifically, under the small business participation factor, the solicitation established a material requirement that a minimum of 10 percent of the annual order value be subcontracted to small businesses. RFP §§ L‑M at 12. The solicitation was clear and unambiguous that, for an offeror to receive credit under this factor, it must submit “enforceable teaming agreements” that were signed by both parties and identified “the percentage of the total contract to be subcontracted.”

In the evaluation record, all statements by the USPTO found “CPAG’s teaming agreements and the firm’s overall subcontracting plan to be lacking.” This included the contract specialist, who found that the agreements “do not specify any percentages of work to be contracted[.]” Similarly, the TET stated that CPAG’s teaming agreements failed to include “firm commitments with guaranteed minimum percentage[s] as specified in the [solicitation][.]” Finally the SSA found that the teaming agreements “did not represent a guaranteed amount of work to be subcontracted.”

GAO concluded that “the evaluators’ and SSA’s conclusions were inconsistent with the solicitation’s material requirement for offerors to demonstrate through the use of enforceable teaming agreements that a minimum of 10 percent of the annual order value would be subcontracted to small businesses.” The agency tried to get a little sneaky in its argument, saying that the solicitation requirement for “the percentage of the total contract to be subcontracted” could mean any range of percentages, rather than a specific number. Again, GAO didn’t buy it–“the percentage” meant a specific percentage, not a range.

GAO sustained the protest because USPTO did not follow its own solicitation requirements in evaluating a teaming agreement. But the take home message for contractors is that, if a solicitation asks for a specific number, even if it is in a teaming agreement, the contractor should include a specific number, or risk losing an award.

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The post GAO: Small Business Teaming Agreement Must Follow Solicitation Guidelines first appeared on SmallGovCon - Government Contracts Law Blog.

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