At the outset of a small business set-aside procurement, the contracting officer (CO) assigns the procurement a North American Industry Classification System (NAICS) code, which has a corresponding size standard. The CO is also responsible for structuring the procurement as one for manufactured products or supply items, or for services. When a contract for manufactured products or supply items is set aside for small business, the prime contractor must either manufacture the end item or qualify under the nonmanufacturer rule. Entities may qualify as a manufacturer if they manufacture the end item in the United States. Under the relevant regulations, a manufacturing entity utilizes its own facilities to perform the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being procured. Notably, there can only be one manufacturer of an end item for size purposes. The Small Business Administration (SBA) conducts an analysis under three factors enumerated in 13 C.F.R. § 121.406(b)(2)(i) to determine whether an entity is the manufacturer. These factors are:

• (A) The proportion of total value in the end item added by the efforts of the entity, excluding costs of overhead, testing, quality control, and profit.
• (B) The importance of the elements added by the entity to the function of the end item, regardless of their relative value.
• (C) The entity’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties.

Past performance evaluations play an important role in determining the strength and viability of competing offerors’ proposals. It is generally within the procuring agency’s discretion to determine the scope of the past performance history to be considered during evaluation, provided all proposals are evaluated on the same basis and the evaluation is consistent with the terms of the solicitation. While procuring agencies are typically permitted to limit their evaluations to only consider past performance information submitted in response to the solicitation, under certain limited circumstances, outside information not submitted with the offerors’ proposals must also be considered. Under such circumstances, the procuring agency is required to consider outside information as part of its past performance evaluation when the information is determined to be “too close at hand” to require competing offerors to bear the inequities that would arise from the agency’s failure to obtain and consider the information. Notably, the “too close at hand” principle is narrowly interpreted and is only applied to information related to the offerors’ past performance.

In B-275554, the Government Accountability Office (GAO) sustained a bid protest challenging the procuring agency’s past performance evaluation by applying the “too close at hand” principle. In that procurement, the Department of Veterans Affairs (VA) intended to acquire a replacement telephone system for the VA Medical Center in Wilkes-Barre, Pennsylvania. In evaluating the protester’s past performance, the contracting officer (CO), as the source selection authority, identified two directly relevant past performance references but only considered one reference, as an agency official did not complete a required form with respect to the protester’s other past performance reference. Notably, the contract whose reference was not considered involved the same agency, the same CO, and virtually the same services as the solicitation at hand. Furthermore, the CO conducting the procurement not only had the first-hand knowledge of the prior contract but also described the protester’s performance as “exemplary” in a letter provided to the Small Business Administration (SBA) on an unrelated matter. In applying the “too close at hand” principle, the GAO sustained the protest and concluded that it was unreasonable for the CO not to consider the protester’s past performance information on the earlier contract under these circumstances.

The Competition in Contracting Act (CICA) requires full and open competition in federal procurement unless one of the limited exceptions enumerated in the Federal Acquisition Regulation (FAR) part 6 applies. Meanwhile, the General Services Administration (GSA) Federal Supply Schedule (FSS) program provides the government with a streamlined process for acquiring commonly used commercial supplies and services. These simplified procedures notwithstanding, CICA’s competition mandate applies to procurements conducted under the FSS program. In this regard, the Government Accountability Office (GAO) has previously held that following the streamlined FSS procedures satisfies CICA’s competition requirements. It follows that when conflicting interpretations of a regulation governing competition in the FSS program are advanced, the interpretation consistent with the principles of CICA should prevail. One such long-recognized CICA principle provides that when concerns of administrative convenience or expediency are being weighed against ensuring full and open competition, the latter should be favored. Stated another way, mere administrative convenience or expediency should not provide a valid basis for restricting competition.

The government’s disclosure of proprietary information to third parties may form the basis of a pre-award protest when an agency improperly incorporates the information in a solicitation. To be successful in such pre-award protests, the protester must provide clear and convincing evidence that its proprietary rights were violated. The protester must demonstrate that the proprietary information was marked as such or that it was disclosed to the government in confidence. Additionally, the protester must show that the preparation of the information involved significant time and expense and that it contains material or concepts that cannot be independently obtained from publicly available literature or common knowledge. Protest adjudicative forums, such as the Government Accountability Office (GAO), will not sustain a protest based on improper disclosure of proprietary information unless the protester satisfies both elements. That is, such a protest will be denied if the protester fails to appropriately mark proprietary information in its submissions to the government, or if the information consists solely of ideas or concepts that are obvious and not innovative or unique.

In B-416685.6, a bid protest decision issued on May 4, 2020, the GAO denied a protest alleging that the government improperly disclosed proprietary information from an unsolicited proposal in a solicitation because the information was not innovative or unique. The protest involved certain systems on the Navy’s UC–35C aircraft, which were similar to systems on an older UC–12W aircraft. In 2010, after delivery of six UC–12Ws, the Navy had discovered that the aircraft's engines exceeded the maximum allowable Internal Turbine Temperature (ITT). The Navy leased expensive spare engines to keep the aircraft operational before developing an engine aural tone warning system in the 2011-2012 timeframe to resolve the ITT issue. The new warning system provided an audible tone to alert the aircrew when engine temperatures approached the allowable limits. As a direct result of the aural tone system, the Navy no longer needed the expensive spare engines to keep the UC-12W aircraft operational.