Generally, when a business is awarded a multi-year IDIQ contract, it retains its “small” business designation unless a contracting officer (CO) requires the business to recertify its size status, and has since grown larger than the small business threshold. A recent decision from the Small Business Administration’s (SBA) Office of Hearings and Appeals (OHA) throws a wrench into that general understanding when OHA found an implicit recertification requirement absent an express requirement or CO demand.
On March 25, 2015, the Army issued an RFP for a multiple award IDIQ which was not set aside or restricted to small businesses; however, it provided that individual task orders could be restricted to small businesses under certain conditions. Further, the IDIQ required restricted task orders to indicate the restriction, prohibited large businesses from performing on restricted task orders, and required all restricted task orders to include language indicating that recertification was required.
On May 12, 2021, the Army issued a task order under the IDIQ “to all eligible [IDIQ contract] holders but restricted [performance] to small business prime contract holders only.” The task order lacked clear language indicating it was conducted as a set-aside contract and failed to include any language mandating concerns recertifying their size status before submitting their bids. One such bidder, Avenge, Inc., won, but the award was immediately challenged as the CO filed a protest challenging Avenge’s size.
Since the initial 2015 offer, Avenge was acquired by SAAI in 2020, an All Small Mentor Protégé Program (ASMPP) Joint Venture (JV) comprised of Semper Valens Solutions (SVS) and AASKI Technology. The acquisition and concurrent affiliation made Avenge ineligible under the employee threshold assigned to the task order.
The Area Office’s Decision
The Area Office determined that the acquisition disqualified Avenge as a small business, and while the solicitation did not expressly use words like “recertify,” it had provisions tantamount to it. The task order solicitation included FAR 52.204-19 incorporating “the contractor’s representations and certifications from SAM,” and the Area Office argued that “it was a condition of [the IDIQ] that each task order set-aside for small businesses required the offerors to recertify their size.”
The SBA’s OHA agreed.
At OHA, Avenge argued the date of the initial IDIQ proposal submission in 2015 should be the date used to determine size because the task order did not contain any requirement for recertification. However, OHA leaned heavily on its 2021 decision in Size Appeal of 22nd Century Techs., SBA No. SIZ-6122, stretching its applicability slightly to ultimately decide Avenge was ineligible.
In 22nd Century Techs, the government released a similar IDIQ contract involving a task order restricted to small businesses that failed to incorporate an express recertification requirement. OHA held that the lack of an express requirement to recertify was irrelevant. The decision is not completely analogous, however. The 22nd Century Techs task order specifically referenced the clause in the initial IDIQ contract “pertaining to orders restricted to small businesses,” whereas the task order at issue was less clear regarding its sole applicability to small businesses. Additionally, unlike the task order in Avenge, the task order in 22nd Century Techs expressly included the text from the initial IDIQ contract requiring bidders re-represent their size status. Despite the differences, OHA concluded that Avenge did “not persuasively [show] that these differences are sufficiently significant to compel a different result.”
Specifically, OHA first found the task order was clearly restricted to small businesses. The SBA office argued, “the context…[and] statements that the order was ‘Restricted’ could only have meant that the order was restricted to [contractors] that are small businesses.” The Army also released a Q&A to dispel any uncertainty as to bidder eligibility. Therefore, OHA believed it was clear the task order was restricted to small business concerns.
In response to the second difference from the 22nd Century Techs case, while the task order did not incorporate the recertification language from the initial IDIQ, OHA agreed with the Area Office that “it was a condition of [the IDIQ contract] that each order set-aside for small businesses required the offerors to recertify their size.” Furthermore, the initial contract stipulated, “[a]ny proposals for a task order restricted to small businesses shall include” a recertification.
Interestingly, the decision also mentions that “OHA will give weight to the CO’s opinion” when determining if size recertification was required. The CO’s proactive initiation of a size protest and her rationale that recent acquisitions made Avenge ineligible as a small business apparently suggested to OHA that while the CO failed to explicitly include the recertification requirement, she subjectively believed contractors should recertify. The outward exhibition of the CO’s subjective understanding of the terms of the task order helped OHA reach its decision.
The Avenge decision extends the original 22nd Century Techs decision to cases where task orders do not expressly state they are restricted for small businesses or that a recertification is required. Contractors who have moved from small to large should review their IDIQ contracts for language incorporating recertification requirements into task orders, as the decision will implicitly incorporate them even if the task order fails to mention it.
Additionally, large businesses should prioritize the review of such certification requirements upon pre-acquisition due diligence. Otherwise, an acquisition may nullify a small business’s eligibility for subsequent restricted task orders.
For more information on the firm’s Government Contracts Practice, and specifically, assistance on size eligibility questions and small business programs, contact the author at firstname.lastname@example.org.