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What options does a Contractor have to prevent a Contracting Officer from assigning an inappropriate NAICS code to a solicitation for a task order under an MA-IDIQ?


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Background: If you are familiar with GSA’s OASIS, then you know that it is a “family of MA-IDIQ contracts” referred to as “pools”, which each Pool consisting of one or more NAICS codes. While the NAICS codes under each Pool have the same business size standard, each Pool has its own size standard ranging from $16.5M to 1,500 employees. As such, a company may be considered a Small Business on one Pool (e.g., Pool 6), but other than small on another (e.g., Pool 1).

The OASIS Ordering Guide and OASIS Contracts make it clear that an OASIS Ordering Contracting Officer (OCO) must select the task order NAICS code based upon the work to be performed and not based upon the applicable size standard or program office supported.

 Protest history: NAICS appeals on MA-IDIQs such as GSA OASIS go to SBA’s Office of Hearings and Appeals (OHA). Unfortunately, OHA’s decision at NAICS Appeals Of: Credence Management Solutions, Appellant makes apparent that an OASIS prime contractor has few if any options to successfully overturn an ordering contracting officer's (OCO) NAICS code and Pool assignment for an OASIS task order solicitation (unless the contractor is also a prime on that specific pool).

In summary, OHA determined two things:

  1. The protest was untimely. Even though this protest was regarding the OCO’s section of a NAICS and Pool for a Task Order, OHA stated “any objection Appellant had to the designation of [the] NAICS code [for this] OASIS Pool […] should have been filed within 10 days of the issuance of the RFP for that [MA-IDIQ] contract.
  2. The appellant lacked standing to protest. Even though the protester was an OASIS Prime Contractor, they were not a Prime on the Pool used, so OHA determined they lacked standing to protest.

The rationale for this decision seems ludicrous. Firstly, The OCO is required to assign the NAICS code that reflects the principal nature of the work required under the task order. If the expectation is that NAICS codes will only be challenged at the IDIQ level, then the OCO is free to assign any NAICS he wants, whether it reflects the principal nature of the work or not.

Secondly, per FAR 19.103 & 13 CFR § 121.1103, “any person adversely affected by a NAICS code designation or applicable size standard” may appeal an OCO’s NAICS decision through SBA’s OHA within 10 days of the issuance of the solicitation. An OASIS Prime Contractor should be considered “adversely affected” and allowed to protest when they cannot bid on the Pool is selected by the OCO.

Question: Considering OHA’s apparent disinterest in entertaining a NAICs code selection on a TO, what options are available to industry to potentially prevent the OCO from selecting an inappropriate NAICS and Pool unrelated to the work simply because it has a larger Small Business size standard?

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5 hours ago, BlaineTheMono said:

Question: Considering OHA’s apparent disinterest in entertaining a NAICs code selection on a TO, what options are available to industry to potentially prevent the OCO from selecting an inappropriate NAICS and Pool unrelated to the work simply because it has a larger Small Business size standard?

Why not submit a nonmonetary claim? If the contract said that a certain type of work would be competed exclusively among the awardees of Pool X, but the contracting officer instead competed that work among the awardees of Pool Y, then that would probably be a breach of contract--right?

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Let me first say I have experience on both sides - a long career in government contracting and over 20 years in the private sector including business development responsibility.  It takes both proper adherence to contracting principles and astute marketing to be successful in the marketplace.

So a wise start in my opinion in this case is have a conversation with the contracting officer.  Find out why a particular NAICS code is selected.  You may not clearly see the government logic.  Or you may end up suspecting the government doesn’t want to limit competition to the pool you think is needed for a variety of reasons.  If you aren’t satisfied, several options exist - protest, file a nonmonetary claim, complain to senior agency management, submit a request for Congressional review by your representative, and so on.  But this usually doesn’t help you as a business.  In fact, quite often it hurts your company on future actions.  Even though it’s not right, government personnel often feel injured and upset and can hold that against you.   Also what sometimes happens in similar situations is the agency backs off their current approach and starts over with sometime like a FAR 15 full and open action, a GSA Schedule buy, or another GWAC.  Like the old saying goes, you might win the battle but lose the war.

Again, my advice is have a candid conversation upfront.  Then decide from there what you might do next.

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Some of the references I read indicated that you must submit a protest over an improper NAICS designation within 10 days of the date of publication of the solicitation.

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22 hours ago, joel hoffman said:

Some of the references I read indicated that you must submit a protest over an improper NAICS designation within 10 days of the date of publication of the solicitation.

Yes, the issue here is that OHA has interpreted the rule to mean 10 days of the solicitation for an IDIQ, not TOs under IDIQs. On a vehicle like OASIS where there are multiple Pools, it doesn't make sense that OHA won't entertain a NAICS code protest on a Task Order. No one would be trying to challenge which NAICS codes are associated with each OASIS Pool. Rather, the challenge would be that the OCO purposely picked an irrelevant NAICS code because it's Pool had a much larger size standard (e.g., 1,500 people vs $16.5M).

I agree with formerfed's comments about having a conversation with contracting. However, my original question was trying to find out what to do if that fails. OHA has dismissed these types of protests without even considering whether or not the OCO selected an appropriate NAICS. The lack of standing and untimeliness arguments seem extremely unfair to the protester in this situation, considering the language of the FAR and what was being challenged. 

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On 4/30/2024 at 3:56 PM, BlaineTheMono said:

Considering OHA’s apparent disinterest in entertaining a NAICs code selection on a TO, what options are available to industry to potentially prevent the OCO from selecting an inappropriate NAICS and Pool unrelated to the work simply because it has a larger Small Business size standard?

In addition to what others have written, you can still file a NAICS protest with OHA and if unsuccessful, file an "appeal" with the Court of Federal Claims asserting the proposed order is outside the scope of the contract.

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  • 1 month later...

The requirement for the CO to accurately assign NAICS codes isn't just limited to OASIS (FAR 19.102(b)(2)(i)).  How that could apply to anything other than a task order/call is a mystery, but this is SBA we're talking about.

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This problem was foreseen.  Several years ago, a contract (including an IDIQ contract) could have only one NAICS code -- to me, that was the right answer.  Then, some of our contractors said only one NAICS code per contract wasn't fair, and they petitioned to allow multiple NAICS codes on a single IDIQ contract.  They prevailed, and the rules were changed by people who did not understand the rules in the first place and who did not understand the implications of their great decision to change.  Now, some of our contractors are complaining again.

If anyone were to ask me, I would say to go back to one NAICS code per contract, period.

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I don't think a single NAICS code makes sense for large omnibus contracts, but the choice of NAICS code shouldn't be a surprise when ordering. If there will be multiple NAICS codes for a single contract, maybe each line item should have its own NAICS code.

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12 hours ago, Don Mansfield said:

I don't think a single NAICS code makes sense for large omnibus contracts, but the choice of NAICS code shouldn't be a surprise when ordering. If there will be multiple NAICS codes for a single contract, maybe each line item should have its own NAICS code.

Did you happen to read the OHA decision I offered up?  I suspect the OP might be looking at too narrow of a view.   Likewise as to ji's post I beleive SBA found more of a middle ground than what ji's post might imply.   Take a read of this.......

13 CFR 121.402 -

(a) A concern must not exceed the size standard for the NAICS code specified in the solicitation. The contracting officer must specify the size standard in effect on the date the solicitation is issued. If SBA amends the size standard and it becomes effective before the date initial offers (including price) are due, the contracting officer may amend the solicitation and use the new size standard.

(b) The procuring agency contracting officer, or authorized representative, designates the proper NAICS code and corresponding size standard in a solicitation, selecting the single NAICS code which best describes the principal purpose of the product or service being acquired. Except for multiple award contracts as set forth in paragraph (c) of this section, every solicitation, including a request for quotations, must contain only one NAICS code and only one corresponding size standard.

(1) Primary consideration is given to the industry descriptions in the U.S. NAICS Manual, the product or service description in the solicitation and any attachments to it, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being purchased.

(2) A procurement is generally classified according to the component which accounts for the greatest percentage of contract value. Acquisitions for supplies must be classified under the appropriate manufacturing or supply NAICS code, not under a Wholesale Trade or Retail Trade NAICS code. A concern that submits an offer or quote for a contract, order, or subcontract where the NAICS code assigned to the contract, order, or subcontract is one for supplies, and furnishes a product it did not itself manufacture or produce, is categorized as a nonmanufacturer and deemed small if it has 500 or fewer employees and meets the requirements of § 121.406(b).

(c) Multiple Award Contracts (see definition at § 125.1).

(1) For a Multiple Award Contract, the contracting officer must:

(i) Assign the solicitation a single NAICS code and corresponding size standard which best describes the principal purpose of the acquisition as set forth in paragraph (b) of this section, only if the NAICS code will also best describe the principal purpose of each order to be placed under the Multiple Award Contract; or

(ii) Divide the solicitation into discrete categories (such as Contract Line Item Numbers (CLINs), Special Item Numbers (SINs), Sectors, Functional Areas (FAs), or the equivalent), and assign each discrete category the single NAICS code and corresponding size standard that best describes the principal purpose of the goods or services to be acquired under that category (CLIN, SIN, Sector, FA or equivalent) as set forth in paragraph (b) of this section. A concern must meet the applicable size standard for each category (CLIN, SIN, Sector, FA or equivalent) for which it seeks an award as a small business concern.

(2)

(i) The contracting officer must assign a single NAICS code for each order issued against a Multiple Award Contract. The NAICS code assigned to an order must be a NAICS code included in the underlying Multiple Award Contract. When placing an order under a Multiple Award Contract with multiple NAICS codes, the contracting officer must assign the NAICS code and corresponding size standard that best describes the principal purpose of each order. In cases where an agency can issue an order against multiple SINs with different NAICS codes, the contracting officer must select the single NAICS code that best represents the acquisition. If the NAICS code corresponding to the principal purpose of the order is not contained in the underlying Multiple Award Contract, the contracting officer may not use the Multiple Award Contract to issue that order.

(ii) With respect to an order issued against a multiple award contract, an agency will receive small business credit for goaling only if the business concern awarded the order has represented its status as small for the underlying multiple award contract for the same NAICS code as that assigned to the order, provided recertification has not been required or occurred for the contract or order.

(d) The NAICS code assigned to a procurement and its corresponding size standard is final unless timely appealed to SBA's Office of Hearings and Appeals (OHA), or unless SBA assigns an NAICS code or size standard as provided in paragraph (e) of this section.

(e) When a NAICS code designation or size standard in a solicitation is unclear, incomplete, missing, or prohibited, SBA may clarify, complete, or supply a NAICS code designation or size standard, as appropriate, in connection with a formal size determination or size appeal.

(f) Any offeror or other interested party adversely affected by an NAICS code designation or size standard designation may appeal the designations to OHA under part 134 of this chapter.

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Carl, I appreciate your mastery of 13 CFR!

I like the SBA's words.  If contracting officers followed the guidance in (c)(1)(i) and (ii) (especially for (ii)), maybe there would be fewer problems.  If they did follow the guidance, maybe there would not be surprises regarding NAICS codes for order opportunities -- and I agree that there should be no surprises at the order level.

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1 hour ago, ji20874 said:

If contracting officers followed the guidance in (c)(1)(i) and (ii) (especially for (ii))

ji, for clarification, by use of the word "guidance" are you indicating that the SBA regulations are mere suggestions and not mandatory?

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