The following is the final installment in Crowell & Moring’s 2023 Bid Protest Sustain of the Month Series.  All through 2023, Crowell’s Government Contracts Practice kept you up to date with a summary of the most notable bid protest sustain decision each month.  Below, we cap off 2023 with an excellent GAO decision that provides guidance about the standards an agency must satisfy when conducting procurements under FAR subpart 8.4 and an in-depth discussion of interested party status for companies that are graduating from small business programs.

FAR Subpart 8.4 Procurement Requirements

GAO’s decision in Washington Business Dynamics, LLC, B-421953, B-421953.2, December 18, 2023, is chock full of useful discussion on a number of different topics.  Perhaps most impactful is GAO’s discussion of the standards that agencies must satisfy when conducting procurements under FAR subpart 8.4, which allows the government to use “simplified” ordering procedures to obtain commercial supplies and services.  Although this process is supposed to be simplified, it is not intended to be lawless.  And, although agencies are generally given discretion in their decisions, as GAO demonstrated in the WBD decision, that discretion has a limit. 

In, WBD the Office of Personnel Management (OPM) sought to establish a blanket purchase agreement (BPA) under the GSA federal supply schedule (FSS) contract for professional services to obtain acquisition support services.  The solicitation advised offerors that award would be made using a best-value tradeoff analysis.  However, WBD argued that the agency had improperly concluded that the awardee’s proposal had addressed all of the solicitation requirements.  GAO agreed, noting that, although the awardee’s proposal included a few high-level references to the PWS requirements, there was insufficient information to show that the company understood of “all the requirements identified in the PWS” or to demonstrate the “feasibility of its approach.”  Significantly, GAO stressed that even if the awardee’s proposal had included the needed information, the agency’s procurement record was insufficient to support the award.  In this regard, GAO found that “the underlying evaluation record does not support a conclusion that OPM evaluated [the awardee’s] quotation in a manner consistent with the terms of the solicitation.”  Specifically, GAO noted that “OPM’s evaluation fails to demonstrate an examination of how, or to what degree, [the awardee’s] approach demonstrates an understanding of the tasks to be performed, or the feasibility of that approach.”  Id. (emphasis added). 

The importance of this last finding cannot be overstated.  Although evaluations under FAR Subpart 8.4 may use “simplified” procedures, this does not mean that agencies may simply perform a check-the-box exercise or rely upon conclusory statements.  Rather, even where such simplified procedures are permitted, agencies must document the basis for their evaluation conclusions and “demonstrate an examination” of how well proposals address the solicitation’s requirements.

GAO next turned to OPM’s best-value tradeoff analysis, which was also lacking.  In tradeoff decisions, an agency is not tasked to simply determine whether offerors met technical requirements – such assessments essentially convert evaluation factors to pass/fail requirements.  Instead, GAO emphasized that agencies are required to perform qualitative assessments to assess how well or “the degree to which” proposals meet or exceed requirements.  An evaluation that fails to document the agency’s examination of how well the quote met or exceeded solicitation requirements is insufficient.  Here, GAO observed that “the evaluation record provides no information as to how the [awardee’s proposal] equaled or surpassed the criteria outlined in the RFQ.”  In sustaining the protest, GAO stressed that, while agencies are not required to document every aspect of an offeror’s quotation, the government’s underlying record must have sufficient documentation to show that the agency undertook a qualitative examination of quotations in a manner consistent with the solicitation.  Because OPM had failed to do so here, GAO concluded that the best-value tradeoff analysis did not support the award decision.

Small Business Size Status & Recertification Requirements

Aside from its discussion of agencies’ evaluation and documentation obligations when conducting procurements under FAR Subpart 8.4, the WBD decision also includes an in-depth discussion of small business size status and certification requirements.  The discussion arose via OPM’s request that GAO dismiss the protest because the protest was set aside for Service-Disabled Veteran-Owned Small Businesses (SDVOSB) and WBD was no longer an SDVOSB concern.  OPM argued that WBD was no longer eligible for award of the BPA, and therefore was not an interested party to pursue the protest.

GAO’s resolution of this argument includes one of the most extensive discussions of size recertification requirements ever included in a GAO protest decision.  Here, the WBD certified as small when it was awarded its FSS contract.  Approximately four years later, OPM issued the solicitation for the BPA at issue in the protest.  After WBD submitted its quotation, WBD was acquired by a non-SDVOSB concern, rendering WBD no longer able to claim SDVOSB status.

To resolve the dismissal request, GAO analyzed SBA’s regulation at 13 C.F.R. § 121.404, concerning when a firm’s size status is determined.  To begin, GAO noted the baseline rule that size status is to be determined at the time a business concern submits its initial offer which includes price for a Multiple Award Contract (here, the FSS contract).  13 C.F.R. § 121.404(a)(1)(ii).  The regulation establishes different certification requirements depending on whether the multiple award contract is unrestricted or set-aside for small business concerns, and then whether any subsequent orders or agreements under the contract are procured on an unrestricted or set-aside basis.

Here, with an unrestricted multiple award contract, GAO noted that “where a business was small at the time of offer and contract-level certification for discrete categories in the multiple award contract, it is small for goaling purposes for each order issued against any of those categories, unless a contracting officer requests a size recertification for a specific order or BPA.”  The regulation provides that for orders or BPAs set aside exclusively for small businesses, companies must recertify their size status and qualify as a small business at the time of initial offers.  However, orders and BPAs issued under an FSS contract are specifically exempted from this recertification requirement. 

GAO next analyzed the applicability of two specific subsections of the applicable regulation – the first was 13 C.F.R. § 121.404(g)(2)(i), which discusses the recertification requirements for existing awards where certain corporate transactions occur:

Text Box: “In the case of a merger, sale, or acquisition, where contract novation is not required, the contractor must, within 30 days of the transaction becoming final, recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. If the contractor is other than small, the agency can no longer count the options or orders issued pursuant to the contract, from that point forward, towards its small business goals. The agency and the contractor must immediately revise all applicable Federal contract databases to reflect the new size status.”

            The second – 13 C.F.R. § 121.404(g)(2)(iii) – addresses recertification requirements for changes in size arising prior to award:

Text Box: “If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award. If the merger, sale or acquisition (including agreements in principal) occurs within 180 days of the date of an offer and the offeror is unable to recertify as small, it will not be eligible as a small business to receive the award of the contract. If the merger, sale or acquisition (including agreements in principal) occurs more than 180 days after the date of an offer, award can be made, but it will not count as an award to small business.”

To resolve whether WBD was eligible for award of the contract, GAO had to determine which of the above subsections applied to OPM’s BPA procurement.  (As an aside, GAO noted that WBS had separately satisfied the requirements of 13 C.F.R. § 121.404(g)(2)(i) with respect to it its existing FSS contract.)  The government argued that WBD’s acquisition also triggered an obligation under 13 C.F.R. § 121.404(g)(2)(iii) to recertify as small in connection with the submission of a quotation for the BPA at issue.  However, GAO disagreed, finding no recertification was required. 

First, GAO noted that imposing a recertification requirement here would be inconsistent with the regulation’s unique treatment of BPAs issued under an FSS contract, which provides that set-aside orders or BPAs issued against the FSS are expressly exempt from recertification requirements.  Second, GAO explained that it did not believe a corporate transaction requiring recertification at the FSS contract level under 13 C.F.R. § 121.404(g)(2)(i) automatically triggers recertification for any pending quotations for a BPA or order issued under the FSS contract pursuant to 13 C.F.R. § 121.404(g)(2)(iii).  In reaching this conclusion, GAO relied upon an SBA Office of Hearings and Appeals (OHA) decision – Size Appeal of EBA Ernest Bland Assocs. PC, SBA SIZ No. 6139 (2022), 2022 WL 529352 – in which OHA rejected the argument that an awardee’s notification to the government of a completed corporate transaction pursuant to 13 C.F.R. § 121.404(g)(2)(i) “obligated” the agency – under (g)(2(iii) – to request recertification for the task order at issue.  Because recertification with respect to the BPA was not mandatory here, GAO concluded that WBD remained eligible for award, and therefore was an interested party. 

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Companies of all sizes can find a wealth of guidance in the WBD decision, and small businesses (as well as those companies who have recently become no-longer-small) will find the decision particularly informative with respect to recertification requirements.