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.
Background
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.
Taylor Hillman and I recently discussed how small Alabama businesses can enter the world of federal contracts. The All Small Mentor-Protégé Program (ASMPP) was established by the Small Business Administration (SBA) to extend business development assistance to all small businesses and help them achieve success in competing for federal government contracts. Only 20 of the 511 approved Mentor-Protégé Agreements had Alabama addresses as of May 5, 2018, despite one of the ASMPP’s top 10 district offices being located in Alabama, showing the potential for growth of the program within the state.
What are the recent changes in rules that could impact your small business and teaming partners in federal contracting in 2019? The Small Business Administration (SBA) and Federal Acquisition Regulatory (FAR) Council have recently finalized and issued proposed rules implementing provisions of past NDAAs that could alter how you team and ensure compliance with set-aside requirements on future procurements.
Richard Arnholt will speak at the 17th Annual DOE Small Business Forum & Expo. Richard will speak on the topic of, “Teaming 101: Utilizing Teaming Arrangements and Joint Ventures in Subcontracting as a Competitive Advantage.”