At the time of issuance of a federal contract solicitation, the contracting officer (CO) must designate the single North American Industry Classification System (NAICS) code that best describes the principal purpose of the solicitation and specify the corresponding size standard. The Small Business Administration (SBA) establishes the size standard for various NAICS codes. To participate in small business set-aside procurements, contractors must qualify under the relevant size standard based on maximum annual receipts or employee count. The Small Business Act gives the SBA conclusive authority to resolve protests and other matters related to the small-business size status of contractors for federal procurements. Similarly, the SBA Office of Hearings and Appeals (OHA) has the exclusive authority to resolve NAICS code appeals. Accordingly, the Government Accountability Office (GAO), in its bid protest function, does not review protests challenging a contractor’s size status, SBA decisions on whether a contractor is a small business, or whether the procuring agency selected the appropriate NAICS code for a particular procurement.

In B-405417.2, the GAO declined to review a post-award challenge based on the awardee’s size status, along with the SBA’s determination regarding the same. The Army issued a small business set-aside invitation for bid (IFB) for solid waste services at Fort Lee, Virginia. The IFB contemplated an award to the lowest-priced, responsible, and responsive bidder. The awardee had the low bid of roughly $4.5 million, while the incumbent-protester had the second-lowest bid of roughly $4.6 million. The protester filed a size protest with the SBA, which was denied. Next, the incumbent contractor appealed the denial of the size protest to the SBA OHA, which remanded the matter for a new size determination. On remand, almost a year and a half later, the SBA again determined that the awardee qualified as a small business for the subject procurement. The protester again appealed to the OHA, but this time its appeal was denied, and the contract was awarded.

The primary method of interpreting a government contract is to determine the “plain meaning” of the disputed language. The plain meaning method is applied when the contractual language is clear and unambiguous. Under this method, contract terms are interpreted according to the plain and ordinary meaning of the disputed words, and extrinsic evidence may not be relied on for interpretation. In determining the plain meaning of the disputed language, adjudicative forums may look to the dictionary definitions of the relevant words. In doing so, the words are assigned the meaning they had at the time of contract formation. In situations where the disputed words have more than one dictionary definition, the definition that is most appropriate within the context of the whole contract prevails. However, even when the plain meaning interpretation is applied, the contract must be construed as a whole and interpreted to harmonize and give reasonable meaning to all its parts without rendering terms superfluous or meaningless.

In Armed Services Board of Contract Appeals (ASBCA) No. 62461, issued on August 17, 2021, the Army Contracting Command, Rock Island Arsenal, awarded a task order under the awardee’s General Services Administration (GSA) IT Schedule 70 for Network and Communications, Engineering and Installation Support for the Army in Afghanistan and Kuwait. The task order contained the clause at Federal Acquisition Regulation (FAR) 52.217-8, Option to Extend Services (Nov 1999), which stated in pertinent part that “[t]he Contracting Officer may exercise the option by written notice to the Contractor within 90 days before the expiration of the contract.” Following the award, the contractor encountered difficulties retaining staff at the proposed labor rates under the primarily firm-fixed-price task order, leading the contractor to discuss with the government the possibility of terminating the contract. Despite the contractor’s staffing difficulties, the Army notified the contractor four days before the base period ended that it would exercise its option to extend the task order.

Under Federal Acquisition Regulation (FAR) 9.103, government contracts may be awarded only to responsible prospective contractors, and contracting officers (COs) are required to make an affirmative determination of financial responsibility before contract award. To be deemed financially responsible under FAR 9.104-1(a), a prospective contractor must either have adequate financial resources to undertake performance or be able to obtain them. While financial responsibility is an important prerequisite for awarding federal contracts, the FAR does not provide specific techniques to make this determination. Thus, depending on the procurement’s needs and circumstances, COs may use various criteria, analyses, and techniques to assess a prospective contractor’s financial responsibility. Such methods may include reviewing cash flow statements, forward projections, working capital, profit and loss, and other financial information. As with other responsibility criteria used to determine a prospective contractor’s ability to perform, when reviewing financial responsibility, the CO must consider all relevant information available at the time of making the determination. Furthermore, any calculations or analyses assessing a prospective contractor’s financial capabilities must be accurate and rely on information available to the CO from the proposal and other relevant sources.