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Protesting Failure to Refer to an SBA Certificate of Competency Review

Procuring agencies must make an affirmative determination of contractor responsibility before awarding federal contracts. While a responsibility determination is necessary for all successful offerors, a non-responsibility determination that precludes a small business from receiving an award must be referred to the Small Business Administration (SBA). Specifically, SBA regulations require contracting officers (COs) to refer to the SBA for a Certificate of Competency (COC) determination, all small businesses deemed ineligible for award on a non-comparative basis under a responsibility-related factor, such as past performance or key personnel qualifications. In this regard, non-comparative responsibility factors are evaluated on a pass/fail, go/no-go, acceptable/non-acceptable or another similar basis. Once the referral is made, the SBA informs the small business of the non-responsibility determination and offers it the opportunity to apply for a COC. The SBA then typically reviews COC applications within 15 days. If an agency improperly fails to refer a small business for a COC determination, the small business may file a bid protest at the Government Accountability Office (GAO), alleging violation of the SBA’s COC procedures.

In B-413104.10, a decision issued on April 18, 2017, the GAO sustained such a bid protest when the agency improperly failed to refer the small business protester to the SBA under its COC procedures. The Request for Proposals (RFP) contemplated an award of up to 35 additional indefinite-delivery, indefinite quantity (IDIQ) contracts for the National Institute of Health (NIH)’s Chief Information Officer-Solutions and Partners 3 (CIO-SP3) small business government-wide IDIQ contract for IT solutions and services. Under phase one of the two-phase solicitation, proposals were evaluated against four Go/No-Go requirements. One of the four requirements related to domain-specific capability in a health-related mission, which offerors could demonstrate through experience examples or internal resources with relevant experience. Notably, the solicitation informed offerors that a failure to demonstrate compliance with the health-related mission requirement would be unacceptable and render them ineligible for further consideration for award.

The protester submitted a timely proposal, which was evaluated under CIO-SP3’s service-disabled veteran-owned small business (SDVOSB) grouping. During the phase one evaluation, the agency found that the experience examples contained in the protester’s proposal solely involved the provision of IT services and solutions. Consequently, the examples were deemed insufficient to demonstrate the protester’s inherent capabilities in health-related missions. Furthermore, the protester’s proposal also did not present sufficient internal resources with relevant experience to satisfy the health-related Go/No-Go requirement. As a result, the protester’s proposal was eliminated from further consideration for an award. Upon receiving the notification of elimination, the protester filed a protest with the GAO, arguing that its exclusion based on insufficient capabilities for health-related missions was essentially a non-responsibility determination that should have been referred to the SBA for a COC determination. Meanwhile, the agency took the position that the protester’s proposal was eliminated from competition because it was found non-responsive to solicitation requirements, based on a reasonable evaluation.

The GAO disagreed with the agency, noting that the record was devoid of any evidence suggesting that the protester’s proposal was eliminated from competition because it was not responsive to the solicitation. Instead, the protester was eliminated based on a responsibility-type criteria. In this regard, the solicitation provided that phase one evaluation would be conducted on a Go/No-Go basis, and proposals found unacceptable under any of the phase one factors would be eliminated from the competition. The GAO also noted that during phase one evaluation, the agency found the examples in the protester’s proposal insufficient to demonstrate its capabilities in health-related missions. Similarly, the protester’s proposal failed to demonstrate health-related capabilities through internal resources with substantial relevant experience. Under these circumstances, the agency’s elimination decision was based on the protester’s capability (or lack thereof) to perform the contract and thus related to its responsibility, rather than the responsiveness of its proposal. Since the protester was eliminated on a non-comparative basis under a responsibility-related factor, the agency was required to refer the matter to the SBA. Consequently, the GAO sustained the protest and recommended that the agency refer the protester to the SBA for a COC review.

Government contracts may not be awarded unless the CO makes an affirmative determination that the offeror is capable of performance. This affirmative responsibility determination is committed mainly to the CO’s discretion, who may request additional information from the small business to support his determination. When a CO deems a small business non-responsible, and thus ineligible for award, she must refer the matter to the SBA for a COC review. In such cases, the CO’s non-responsibility determination must be based on a responsibility-type evaluation conducted on a non-comparative basis, such as a Pass/Fail or Go/No-Go decision on past performance. Notably, a referral to the SBA is not required if the small business is eliminated for reasons unrelated to responsibility, such as the inadequacy or incompleteness of its proposal. However, if the agency fails to refer a small business non-responsibility determination to the SBA, the small business may file a protest alleging violations of the SBA’s COC procedures. As in the above protest, if the protester is deemed to have been eliminated as a result of a non-comparative, responsibility-type evaluation, the GAO will sustain the protest and recommend that the matter be referred to the SBA.

This Bid Protest Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.

Related Insights

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The Federal Acquisition Regulation (FAR) requires prospective contractors to be deemed responsible before they are awarded federal contracts. FAR subpart 9.1 prescribes policies, standards, and procedures for determining whether prospective contractors and subcontractors are responsible. FAR 9.103 requires contracting officers to make an affirmative determination of responsibility before award. This affirmative determination must be reasonable and factually supported. Prime contractors may also be required to demonstrate the responsibility of their proposed subcontractors when necessary. FAR 9.104 states general and special standards that prospective contractors must meet to demonstrate responsibility to receive contracts.

General Standards

The general standards listed in FAR 9.104 require prospective contractors to:

  • Either have adequate financial resources to perform the contract at issue or have the ability to obtain them.
  • Have the ability to comply with the required or proposed performance or delivery schedule, taking into consideration all existing commercial and governmental commitments.
  • Have a satisfactory past performance record. Notably, the responsibility determination of prospective contractors cannot solely be made based on a lack of relevant performance history, subject to exceptions of FAR 9.104–2.
  • Have a satisfactory record of integrity and business ethics.
  • Possess or have the ability to obtain the necessary organization, experience, accounting and operational controls, and technical skills.
  • Be otherwise qualified and eligible to receive an award under applicable laws and regulations.
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Companies must meet specific responsibility standards before being awarded U.S. federal contracts. The Federal Acquisition Regulation (FAR) lists prospective contractors’ general and special responsibility standards. FAR 9.103(b) requires contracting officers (CO) to make affirmative determinations of responsibility that are reasonably and factually supported. Disappointed contractors with adequate standing may challenge these determinations through post-award bid protests. Such responsibility determination challenges may be brought to the Court of Federal Claims (COFC) by alleging that the responsibility determination decision lacks a rational basis under the Administrative Procedure Act (APA) or involves a regulatory violation. Alternatively, such challenges may be brought to the Government Accountability Office (GAO) under its bid protest adjudication authority. However, both forums consider responsibility determinations firmly committed to the CO’s discretion, making such protests challenging to sustain. Nevertheless, the GAO will consider bid protests alleging that the CO’s determination of responsibility either unreasonably failed to consider relevant information or that the awardee could not meet the definitive criteria established by the solicitation.

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Government agencies must document their evaluations decisions in sufficient detail to provide a reasonable basis to support an award. When a protestor challenges the reasonableness of the government’s evaluation in the form of a bid protest, adjudicative forums such as the Government Accountability Office (GAO) first question whether the government’s evaluation is adequately documented before determining whether the evaluation is consistent with the solicitation’s stated evaluation criteria. Therefore, when an agency fails to document its evaluation or retain evaluation materials, it bears the risk that there may not be sufficiently detailed supporting rationale in the record for the adjudicative forum to conclude that the government had a reasonable basis for the award decision. In such cases, the GAO will typically sustain the protest challenging the government’s evaluation decision and recommend that the agency reevaluate the proposals and sufficiently document its rationale. The adjudicative forum will also generally recommend that the procuring agency terminate the awarded contract for the government's convenience if as a result of the reevaluation, an offeror other than the awardee is in line for the award.

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Solicitations for federal contracts performed in foreign countries may include definitive responsibility criteria mandating compliance with the laws and requirements of the host nation. Such criteria are considered objective standards, included in the solicitation to evaluate the offerors’ ability to perform the contract. Procuring agencies may restrict competition using such requirements if the definitive responsibility criteria are reasonably necessary to meet the government’s minimum needs. If an offeror fails to meet specifically included responsibility criteria mandating compliance with foreign laws, it is deemed non-responsible and considered ineligible for an award. Of course, offerors may challenge solicitation terms requiring compliance with foreign laws as unduly restrictive of competition. In such cases, the procuring agency must establish that the solicitation terms containing the responsibility criteria are reasonably necessary to meet its minimum needs. While the agency’s explanation must withstand logical scrutiny to be considered adequate, an offeror’s disagreement with the explanation alone does not demonstrate that the agency’s reasoning is unreasonable. Ultimately, when solicitations for contracts involving performance in foreign countries incorporate definitive responsibility criteria based on foreign laws, prospective offerors must either comply with the terms of the solicitation or demonstrate that the relevant requirements are clearly unreasonable.

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Protesting Failure to Refer to an SBA Certificate of Competency Review

TILLIT LAW Bid Protest Insights