Gordon GriffinAmy Laderberg O'Sullivan

The FAR Council issued a proposed rule on March 7, 2013, that would amend the FAR to mirror recent changes to the Small Business Administration’s procedures for protests and appeals of small business size and status determinations.  The rule also seeks to provide uniformity for protests and appeals of status as a HUBZone small business concern, Service-Disabled Veteran-Owned Small Business (“SDVOSB”), Economically Disadvantaged Women-Owned Small Business (“EDWOSB”), or Women-Owned Small Business (“WOSB”).  Finally, the proposed rule also includes several other revisions, including changes to the requirements of the “nonmanufacturer rule,” updates to small business status following size determinations, and guidance on NAICS determinations.

Size Protests & Appeals.  The new rule would increase the time (from 10 to 15 days) for the SBA to make a size determination of a protested business concern.  It would also provide the contracting officer with the authority and discretion to authorize more time for the SBA to make its determination, and to award contracts, if necessary, when the SBA has not completed its determinations within 15 days.  For appeals, the proposed rule clarifies that it is entirely within the discretion of the SBA’s Office of Hearing and Appeals (“OHA”) whether to hear an appeal of a size determination, and within the contracting officer’s discretion whether to suspend an award to a party whose size determination has been appealed.  The proposed rule also allows for email delivery of written protests.

Status Protests & Appeals.  The new rule includes requirements for protests of status, to include timeframes for timely protests and the information required to be alleged in the protest.  For protesters challenging the Service-Disabled Veteran-Owned status of a business, the protester must present evidence that either the owner cannot prove that the Department of Veterans Affairs has declared the owner a service-disabled veteran, or that no service-disabled veteran or group of service-disabled veterans owns 51% or more of the business.  Similarly, protesters challenging the status of an EDWOSB or a WOSB must present evidence that the business is not 51% owned by economically disadvantaged women or women with U.S. citizenship, respectively.  Finally, for a HUBZone business, the SBA will entertain a protest of the business’s status if evidence is presented showing that the business’s principal office is not located in a HUBZone or less than 35% of the business’s employees reside in a HUBZone.

Nonmanufacturers, Ineligibility, & NAICS Codes.  The proposed rule clarifies the requirements for “nonmanufacturers,” specifically requiring the small business concern to be primarily in the retail or wholesale trade, selling the item in question in their normal course of business, and supplying an end item made in the United States or its outlying areas.  Regarding ineligibility, contracting officers must now update the status of businesses in the Federal Procurement Data System (“FPDS”) once a final SBA decision concerning size determination is made.  Finally, the proposed rule provides more specific guidance to contracting officers on North American Industry Classification System (“NAICS”) determinations, and details administrative changes to the appeal process for NAICS designations made by the contracting officer.

Comments.  Interested parties have 60 days from the date of issuance of the proposed rule to provide comments.  Comments can be made on the website http://www.regulation.gov, by searching for FAR case 2012-14.