Today we are going to answer the following questions about 8(a) Protests. Can you protest a 8(a) sole source contract? How about protesting a 8(a) competitive contract? Can you protest the NAICS code assigned to a 8(a) competitive or sole source? Today, we are going to answer these questions and more. As a bonus we also have a GiveAway going on!!!
What is a Protest?
In government contracting a protest is a challenge to the award or proposed award of a contract to procure goods and services. Or a challenge to the terms of a solicitation to a contract. Remember, that you can protest one of three ways. You can file a protest with the procuring agency, which is the preferred way, file a protest with the Government Accountability Office (GAO) or file with the U.S. Court of Federal Claims.
Before we go on let’s go over some general information.
General Information on 8(a) Protests
Contracting Officers must seek legal advice when protests are submitted either before or after award and whether filed directly with the agency, the Government Accountability Office, or the U.S. Court of Federal Claims.
Now the Federal Acquisition Regulation (FAR) will provide guidance on protests. I have included the FAR references for your convenience. Also, I have included specific information on the 8(a) Business Development Program specifically regarding protests. This program has its own specific information on whether you can file a protest or not, and the type of protest that may be filed if it is allowed. But first let’s look at the other set-aside programs.
FAR References for Set-asides.
We felt we would be remiss if we did not include the Federal Acquisition Regulation regarding the difference set-aside programs. If you did not know each set-aside has its own section of the FAR governing the protest process.
- Protests of Small Business Status (SB) – FAR 19.302
- Protests of Small Disadvantaged Business Status (SDB) – FAR 19.305.
- HUBZone Small Business Status Protests (HUBZone) – FAR 19.306.
- Service-Disabled Veteran-Owned Small Business Status (SDVOSB) – FAR 19.307.
- Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Status (WOSB) – FAR 19.308.
As promised, we will talk about the 8(a) Business Development Program regarding filing protests. We will talk about what you can and cannot protest. This is different than the other programs that is why we are discussing it separately.
Information on 8(a) Protests
Now you may be wondering if you can protest a sole source or competitive 8(a) requirement. The answer to this is simple. The Code of Federal Regulations (CFR) states that the eligibility of an 8(a) Participant for a sole source or competitive 8(a) requirement may not be challenged by another Participant, or any other party either to SBA or any administrative forum as part of a bid or other contract protest. Please refer to the Code of Federal Regulations (CFR) for more information. Specifically, 13CFR124.517. Does this mean that I cannot protest the size of an 8(a) participant? Yes, you may protest the size status of the apparent successful offeror on a competitive 8(a) contract. You cannot, however, protest the size status of an 8(a) sole source contract.
Can I Protest the North American Industry Classification Code System (NAICS) on a 8(a) Requirement?
Can I protest the NAICS code assigned to a sole source requirement? The answer is simply no. The only person that can appeal a NAICS code designation with respect to a sole source 8(a) requirement is the Associate Administrator for Business Development. Does this also apply to a competitive 8(a) procurement? The answer is yes, any interested party who has been adversely affected by the NAICS code designation may appeal the designation to SBA’s Office of Hearings and Appeals (OHA). (13CFR121.1103)
In addition, anyone with information that questions the eligibility of a Participant in the 8(a) BD program or for a specific contract may submit this information directly to SBA.
Now that we have talked about all the set-aside programs it is time to get on with
What Happens if the Solicitation, proposed award or award does not comply with law or regulation?
If during a protest the head of an agency determines that a solicitation, proposed award, or award is not in compliance with the requirements of law or regulation the head of the agency may take several actions. First, the agency head can take any action that has been recommended by the Comptroller General if the protest was filed with the GAO. Also, he or she may pay appropriate costs. Let’s look at these costs in detail.
If GAO made a determination that the solicitation for contract, a proposed award, or an award of a contract did not comply with a statute or regulation the GAO may recommend that the agency pay to the appropriate protester the cost, exclusive of profit, of filing and pursing the protest, including reasonable attorney, consultant, and expert witness fees, and bid and proposal costs. The agency will use the funds for that procurement to pay the costs awarded.
Time Frame To File GAO Claim for Costs?
Now the protester must file its claim for costs with the contracting agency within 60 days after they receive GAO’s recommendation for the agency to pay the protester its costs. However, if you fail to file your claim within the time frame you may forfeit your right to recover these costs.
Of course, the agency will attempt to reach an agreement with you on the amount of costs to be paid. If, however, neither part can agree on the amount to be paid, GAO may recommend the amount to be paid. That is however, if you the protester, request that GAO get involved.
The agency has 60 days to notify GAO of the action taken in response to GAO’s recommendation.
Now the costs allowed are covered by various regulations. Let’s look at these costs:
Consultant & Expert Witness Fees
You will need to consult 5 U.S.C. 3109 and 5CFR 304.105. These regulations do not state an actual threshold. You will have to make a judgement call based on the criteria contained in these regulations. This is where your attorney will come in handy. They generally will have an idea if a fee is reasonable according to the Government or not.
Now we will discuss attorney fees. Generally, if your attorney fees exceed $150 an hour then the government will look at these on a case by case basis. The Government will review the factors that could affect the attorney’s price. What factors? Well, they will consider will cost of living or special factor like the limited availability of a qualified attorney for the proceedings involved. Now agency personnel will have to have their legal department review the costs and determine the award amount.
It is important to remember that any costs you receive will NOT be subject to subsequent proposals, billings, or claims against the Government. These exclusions will be reflected on the cost agreement between you and the Government.
What Happens if the Protest is Sustained?
If the Government does pay you these costs and the protest is sustained due to your intentional or negligent misstatement, misrepresentation, or mis-certification, the Government can require you to reimburse the Government for these costs. In addition, the Government may also collect this debt through offsetting the amount against any payment due to you under the contract and the Government. What does this mean? Well, it means that the Government could offset a payment on another contract in order to recoup their money.
How Does the Government Determine Whether to Recoup Costs?
When a protest is sustained by GAO, this allows the Government to seek reimbursement for protest costs. The contracting officer must determine whether the protest was sustained based on your negligent or intentional misrepresentation. If the protest was sustained on several issues, protest costs must be apportioned according the costs attributable to your actions.
The Contracting Officer will review the amount of debt and the degree of your fault and the costs of collection. Then they will determine whether a demand for reimbursement is to be made. Remember my favorite saying? If it is in the best interests of the Government? Well it applies here as well. If it is in the Governments best interest to seek reimbursement, the contracting officer must notify you in writing of the nature and amount of the debt and the intention to collect by offset is necessary. Prior to issuing a final decision, the contracting officer will allow you an opportunity to inspect and copy agency records pertaining to the debt to the extent permitted by statute and regulation. In addition, you can request that the head of the contracting activity review this matter.
Also, the contracting officer has an obligation to refer the matter to the agency debarment official. The debarment official can take further action such as debarment or suspension of your business from government contracting. This is something you want to avoid at all costs.
What about Protest After Award?
Remember in earlier blogs we talked about the timeframe to file a protest. A small business has 5 days to file the protest. However, GAO has 10 days to notify the contracting activity. As a result of this protest the contracting officer will stop performance on the contract. Remember that the contracting activity wishes that you resolve your protest with them first before filing a protest with the GAO. But you do have the GAO option. See 4CFR21.
Now you cannot file a protest with GAO for a procurement integrity violation unless you reported to the contracting officer the information constituting evidence of this violation within 14 days after you first discovered the possible violation.
Now let’s move on to How to File a protest.
Protest Established by Executive Order
We would be remiss if we did not provide to you the Executive Order that establishes the policy on agency procurement protests. That Executive Order is 12979. I will provide a link in today’s show notes.
This Executive Order establishes the Governments policy on agency procurement protests. This Executive Order states that prior to submitting an agency protest, that all interested parties must use their best efforts to resolve the concerns raised by the interested party. This must be accomplished at the contracting officer level through open and frank discussions.
Now the agency is tasked with providing an inexpensive, informal, simple procedure and expeditious resolution of your protest. The Government may use alternative dispute resolution techniques, third party neutrals, and other agency’s personnel as resolution methods. The Government has established procedures to resolve agency protest. These procedures are aimed at building confidence in the Government’s Acquisition system and ultimately reduce protests outside of the agency.
The Takeaway on 8(a) Protests
Whether to protest a bid or not is all about the cost-benefit analysis. Generally, the opportunity to claim a lucrative contract award is enough to justify the expenditure of time and resources. However, when the government ignores its own procurement errors and forces a contractor through unnecessary steps it’s good to know that you can possible obtain back some of the costs.
My Thoughts Regarding 8(a) Protests
Over the years, I have seen an increase in the number of protests filed. These protests are aimed at small business representation, the size of a small business, affiliation issues to name a few. The result is usually, the protest is sustained, and the small business wins the contract. However, this win is at a cost. In order to defend their position, the small business must obtain legal representation. The cost of this legal representation can wipe out any profits on this contract. That is a business decision that the small business needs to make but many do not think about. You need to be prepared for protests on all contracts. Though this is a cost-benefit analysis many contractors do not consider this when bidding on government contract. So, do yourself a favor and take this into consideration when bidding on contracts.
8(a) Protests – In Summary
Today, we covered the costs associated with filing a protest and whether a small business can recoup those costs when filing a protest. We also discussed the protest policy for the Government Accountability Office.
Please join us next week as will continue our discussions on protests and cover “How to File a Protest With the Procuring Agency?”
We hope you enjoyed today’s topic. If you want to read more articles, please see our blog. Until next time, be safe.