Late last month, the Small Business Administration’s (SBA) Office of Hearings & Appeals (OHA) issued a decision adhering to its prior line of cases discussing when present effect will be given to an indication of interest (IOI) between a small business and its potential large business acquirer for size determination purposes. As with prior cases, OHA conducts a fact-intensive analysis to determine whether the parties had an agreement in principle at the time the small business submits its bid on a federal procurement. The case, Size Appeal of Enhanced Vision Systems Inc., SBA No. SIZ-5978, offers some helpful tips on how to avoid an affiliation finding when negotiating an IOI and still pursuing small business set-aside opportunities.
On October 5, 2017, the U.S. Department of Veterans Affairs, Office of Acquisition Operations – Strategic Acquisition Center (VA) issued a small business set-aside RFP for in-home video magnification closed-circuit televisions. The solicitation had a 1,250 employee size standard. Proposals were due on December 12, 2017. Enhanced Vision Systems, Inc. (EVS) timely submitted its proposal and was subsequently acquired by Freedom Scientific, Inc., a subsidiary of VFO Holdings, BV. The contracting officer notified bidders that EVS was the apparent successful offeror. In response, FedBiz IT Solutions LLC (FedBiz), an unsuccessful offeror, challenged the awardee’s size arguing that EVS had already entered into negotiations at the time of its initial offer, and therefore should be considered affiliated with VFO, the acquiring large business. The Area Office sustained the protest, finding EVS and VFO affiliated, and therefore exceeded the employee size standard for the procurement.