CICA generally requires that solicitations permit full and open competition and contain restrictive provisions and conditions only to the extent “necessary to satisfy the needs of the executive agency.” 10 U.S.C. § 2305(a)(1)(A) (2006). Since consolidated or “bundled” procurements may combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirements. In interpreting CICA, we have assessed whether an agency has a reasonable basis for its contention that the consolidation is required to meet its needs, and have sustained protests only where no reasonable basis is demonstrated. We have noted that mere administrative convenience alone does not provide a reasonable basis for restrictive competition through consolidation of requirements, but substantial cost savings through reduction of duplicative efforts and operational efficiencies may provide a reasonable basis for consolidation.

Major Contracting Services, Inc., B-406980, Oct. 10, 2012.

[T]he Small Business Act prohibits agencies from bundling two or more procurement requirements for goods or services that were previously provided under separate smaller contracts into a single solicitation that is likely to be unsuitable for award to a small business. An exception to the prohibition on bundling exists when agencies can demonstrate that the government would receive “measurably substantial benefits” from the bundling valued at 10 percent of the estimated contract or order value (including options), if the contract is $86 [now 94] million or less (or valued at 5 percent of the estimated contract value if the contract is for more than $86 [now 94] million).

BlueStar Energy Solutions, B-405690, Dec. 12, 2011.

The reach of the restrictions against total package or bundled procurements in CICA is broader than the reach of restrictions against bundling under the Small Business Act… Specifically, CICA generally requires that solicitations include specifications which permit full and open competition and contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency. See 10 U.S.C. sections 2305(a)(1)(A), (B). Because procurements conducted on a bundled or total package basis can restrict competition, we will sustain a challenge to the use of such an approach where it is not necessary to satisfy the agency’s needs. The determination of a contracting agency’s needs and the best method for accommodating them are matters primarily within the agency’s discretion… where a requirement relates to national defense or human safety, an agency has discretion to define the solicitation requirements to achieve not just reasonable results, but the highest possible reliability and effectiveness.

Outdoor Venture Corporation, Applied Companies, B-299675, B-299676, July 19, 2007.

When a proposed acquisition involves bundled requirements, the agency must first conduct market research to determine whether the bundling is necessary and justified, given the potential impact on small business participation, by ascertaining whether the government will derive measurably substantial benefits from the bundling and quantifying these benefits. FAR sect. 7.107(a), (b). In addition, the agency must, at least 30 days before issuing a solicitation, provide its acquisition package to the SBA procurement representative for review and also provide a statement why the (1) proposed acquisition cannot be divided into reasonably smaller lots for small businesses, (2) delivery schedules cannot be established that will encourage small business participation, (3) proposed acquisition cannot be structured so to make it likely that small businesses can compete for the prime contract, (4) consolidated construction project cannot be acquired as separate discrete projects, or (5) bundling is necessary and justified. FAR sect. 19.202–1(e). Furthermore, within the same 30 days, an agency must notify any affected incumbent small business concerns of the Government’s intention to bundle the requirement. FAR sect. 10.001(c)(2).

Sigmatech, Inc., B-296401, Aug. 10, 2005.

CICA generally requires that solicitations permit full and open competition and contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency. 10 U.S.C. Section 2305(a)(1) (2000). Since “bundled” (or “consolidated”) procurements combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirement. Because of the restrictive impact of bundling, we will sustain a protest challenging a bundled solicitation, unless the agency has a reasonable basis for its contention that bundling is necessary. CICA and its implementing regulations require that the scales be tipped in favor of ensuring full and open competition, whenever concerns of economy or efficiency are being weighed against ensuring full and open competition. Nevertheless, bundling may serve to meet an agency’s needs where the agency reasonably determines that consolidation will result in significant cost savings or efficiencies.

B.H. Aircraft Company, Inc, B-295399.2, July 25, 2005.

A subcontracting limitation, including the LOS [limitation on subcontracting] clause, is a material RFP term and a condition of a solicitation to which the offeror must agree in its proposal. Compliance with the LOS clause is material because the mix of prime-subcontractor labor affects cost evaluation. 48 C.F.R. § 14.405…. Thus, a proposal that, on its face, leads “an agency to the conclusion that an offeror could not and would not comply with the subcontracting limitation” is technically unacceptable and “may not form the basis for an award.” A subcontracting limitation, including the LOS clause, is a material RFP term and a condition of a solicitation to which the offeror must agree in its proposal. Compliance with the LOS clause is material because the mix of prime-subcontractor labor affects cost evaluation.

Centech Group, Inc. v. United States, 554 F.3d 1029 (Fed. Cir. 2009)

The proper analytical framework for the review of an agency’s decision to accept a proposal (and its representations as to subcontracting that will comply with FAR 52.219–14) is succinctly provided by a different statement in Centech:

554 F.3d at 1038 (quoting Chapman Law Firm v. United States, 63 Fed.Cl. 519, 527 (2005)). This approach is echoed in a number of GAO decisions, one of which was cited by plaintiff. See Pl.’s Mot. at 6–7 (citing Global Assocs. Ltd., B–271693, 96–2 CPD ¶ 100, 1996 WL 509228 (Comp.Gen. Aug. 2, 1996)). In that decision, the GAO stated that:

Global Associates, 1996 WL 509228, at *4 (citations omitted and emphasis added). Thus, the court reviews the reasonableness, or rationality, of the agency’s acceptance of the proposal (and its representations as to subcontracting), in light of the requirements set forth in FAR 52.219–14.

In other words, unless a proposal “leads” the agency to question the awardee’s subcontracting of contract work as a possible violation of the limitations on subcontracting clause, it is generally reasonable for the agency to accept the proposal and determine compliance with that clause after the award decision has been made:

KIRA Inc., B–287573.4, 2001 CPD ¶ 153, 2001 WL 1073392, at *3 (Comp.Gen. Aug. 29, 2001).

Excel Mfg., Ltd. v. United States, 111 Fed. Cl. 800, (2013)

With regard to contracts for services, FAR 52.219-14(c)(1) provides that “[A]t least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.” As a general matter, an agency’s judgment as to whether a small business offeror will be able to comply with this subcontracting limitation presents a question of responsibility not subject to our review. However, where a quotation, on its face, should lead an agency to the conclusion that an offeror has not agreed to comply with the subcontracting limitation, the matter is one of the quotation’s acceptability.

…

…The protester has not identified any portion of the awardee’s quotation that, on its face, should have led the agency to the conclusion that [the awardee] had not agreed to comply with the subcontracting limitation. Instead, the protester argues that [the awardee] did not provide any supplemental data to support its claim that the firm would perform at least 50 percent of the cost of the contract itself. However, it is the protester who bears the burden of demonstrating that the proposal should have led the agency to conclude that the awardee did not comply with this limitation; simply arguing that the awardee’s quotation did not contain sufficient information to demonstrate whether the awardee will comply does not meet this burden….

We find that there is nothing on the face of [the awardee’s] quotation, nor has the protester directed us to anything on the face of [the awardee’s] quotation, that evidences that the firm will not comply with the solicitation’s subcontracting limitation provision. As a result, we see no basis to conclude that the agency acted improperly in accepting [the awardee’s] quotation.

KAES Enterprises, LLC, B-408366, Aug. 7, 2013.

As a general rule, an agency’s judgment as to whether a small business concern will comply with the LOS [limitation on subcontracting] clause is a matter of responsibility, and the contractor’s actual compliance with the provisions is a matter of contract administration. However, where a quotation, on its face, should have led the agency to conclude that the concern could not and would not comply with the subcontracting limitation, this is a matter of technical acceptability. A submission that fails to conform to a material term or condition of the solicitation, such as the LOS clause, is unacceptable and may not form the basis for an order.

Chant Engineering Company, Inc., B-402054, Dec. 29, 2009.

Our Office solicited the views of the United States Small Business Administration (SBA) on this matter. The SBA advised that, contrary to the [Agency’s Policy] Memorandum, in general, a small business receiving a prime contract award as a result of a solicitation set aside for [small business concerns] must meet the subcontracting limitation set forth in statute and regulations itself…. In this regard, the Small Business Act provides that a concern may not be awarded a contract—as a small business concern unless the concern agrees that—(A) in the case of a contract for services (except construction), at least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern—15 U.S.C. sect. 644(o) (2000); see also 13 C.F.R. sect. 125.6(a) (1) (2006) (SBA’s regulations implementing this statute).

Tybrin Corporation, B-298364.6, B-298364.7, Mar. 13, 2007.

It is well-settled that an agency must follow the ground rules of the competition set forth in the solicitation, and deviation from those stated ground rules is grounds to sustain the protest. Here, the unambiguous language of the solicitation required that the agency apply “a factor of 10 percent to the price of all offers” other than certain HUBZone or small business offers. The Army failed to do so here, and we sustain the protest on this ground.

…

Neither the Army nor the SBA have cited, and we have not found, any case law or other authority to support the agencies’ position that the HUBZone price evaluation preference need not be applied in a best value procurement when the HUBZone offer is priced lower than the large business offer.

Explo Systems, Inc., B-404952, B-404952.2, July 8, 2011.

We find no basis to conclude that FPI [Federal Prison Industries] is required to comply with the HUBZone subcontracting provision. In this regard, we agree with the SBA that, because FPI is not a HUBZone, nor indeed a small business concern, limitations imposed under FAR § 52.219-3 on subcontracting by a “HUBZone small business concern” do not apply to FPI.

[The HUBZone protester] asserts, and the SBA agrees, that a HUBZone price evaluation preference should be applied in this procurement because FPI, an other-than-small business, was permitted to compete with a HUBZone small business. In this regard, FAR § 19.1307(a) provides that a price evaluation preference for HUBZone small businesses shall be used in acquisitions “conducted using full and open competition.” [The agency] denies that it was required to include a HUBZone price evaluation preference in a solicitation set aside for HUBZone small businesses. We need not resolve this dispute. Since the solicitation in fact did not include a HUBZone price evaluation preference, the agency has not violated the terms of the solicitation or otherwise acted improperly by failing to apply the preference here.

Tennier Industries, Inc., B-403946.2, June 29, 2012.

Here, the statute under consideration, the HUBZone price evaluation preference statute, creates a program to be administered by the Small Business Administration (SBA), not GSA. In particular, the HUBZone statute expressly identifies the Administrator of SBA as the official responsible for administering the HUBZone program, and establishes the HUBZone program within SBA. 15 U.S.C. § 657a(a). As such, it is the views of SBA, rather than those of GSA, to which our Office will afford deference.

Consistent with the deference standard established in Chevron supra, we did carefully consider the views of the SBA in our prior decision; SBA—the agency charged with administration of the HUBZone program—took the position that the HUBZone price evaluation preference is applicable to leasehold acquisitions. In this reconsideration, SBA has taken the same position, SBA Brief, June 21, 2012, and again we find that it reflects a reasonable interpretation of the statute. Simply stated, the HUBZone Act price evaluation preference, on its face, does not limit the type of contract to which it applies, and as we pointed out in our prior decision, courts (including the Supreme Court) and other adjudicative bodies have long recognized that a real property lease is a contract. There also is no affirmative language in the statute that specifically excludes application of the HUBZone Act price evaluation preference to procurements of leasehold interests in real property. Accordingly, we find that SBA’s interpretation of the HUBZone statute is reasonable and should be upheld.

General Services Administration—Reconsideration, B-406040.2, Oct. 24, 2012.

Under the Small Business Act, 15 U.S.C. § 637(b)(7), agencies may not find a small business non-responsible without referring the matter to the SBA, which has final authority to determine the responsibility of small business concerns. With regard to consideration of SBA COC determinations, the Small Business Act gives the SBA the conclusive authority to review a contracting officer’s determination that a small business is not responsible. 15 U.S.C. § 637(b)(7). Therefore, our Office does not review challenges to the SBA’s decision not to issue a COC unless there is a showing that the COC denial resulted from possible bad faith, or the SBA’s failure to follow its own regulations or to consider vital information because of how information was presented to, or withheld from, the SBA by the procuring agency. Bid Protest Regulations, 4 C.F.R. § 21.5(b)(2). In this context, the subject for our review is limited to examining whether SBA applied the correct regulations when it denied a COC to Construct….

In sum, the record reflects that SBA incorrectly applied the limitation on subcontracting found at 13 C.F.R. § 125.6(a), to [the protester], a SDVOSB subject to the limitation on subcontracting at 13 C.F.R. § 125.6(b). We therefore sustain the protest where SBA refused to issue a COC to Construct due to failure to properly follow its own regulations.

Construct Solutions, Inc., B-405288, B-405288.2, Oct. 11, 2011.

[The protester] asserts that the agency’s determination that its revised price was unrealistic and risky constituted a finding that the firm was not responsible. In this regard, [the protester] notes that, in making the best value determination, the agency found that the firm’s pricing structure would make it very difficult or impossible to transition a large percentage of the incumbent personnel to a new contract, and was highly unlikely to allow the firm to meet the government’s performance standards. [The protester] also notes that the agency considered its past performance and experience to be deficiencies that it could not overcome. [The protester] concludes that since it is a small business, the agency was required to refer the matter of its responsibility to the Small Business Administration (SBA) for review under its certificate of competency procedures. See Federal Acquisition Regulation § 19.602-1(a).

[The protester’s] assertions are without merit. An agency may use traditional responsibility factors, such as personnel competencies and capabilities, as technical evaluation factors where, as here, a comparative evaluation of those areas is to be performed. A comparative evaluation means that competing proposals will be rated on a scale relative to each other rather than on a pass/fail basis. No SBA referral is required where a small business offeror’s proposal, while evaluated as acceptable, is not selected for award because another offeror’s proposal is evaluated as superior under a comparative analysis or because of a cost/technical tradeoff analysis. There was no pass/fail evaluation here; the record shows that evaluation of [the protester’s] past performance and experience, as well as the price realism and risk assessment based on the firm’s low proposed labor rates, were all part of a comparative, best value evaluation, not a responsibility determination.

Zolon Tech, Inc., B-299904.2, Sept. 18, 2007.

Where an agency utilizes a lowest price technically acceptable source selection process, the FAR provides that past performance need not be an evaluation factor at all. However, when it is included, it cannot be utilized for the purpose of making a “comparative assessment”; rather, past performance is to be determined solely on a pass/fail basis.

FAR § 15.101-2. Our Office has long held that pass/fail evaluations of capability issues, such as past performance, are tantamount to responsibility determinations, with the result that a rating of “unacceptable” in these areas is the same as a determination of nonresponsibility. Consistent with this premise, in the context of a lowest price technically acceptable evaluation scheme, where the contracting officer determines that a small business’ past performance is not acceptable, “the matter shall be referred to the Small Business Administration for a Certificate of Competency determination.”4 FAR § 15.101-2(b)(1).

Frontier Systems Integrators, LLC, B-298872.3, Feb. 28, 2007.

As indicated, [the protester’s] proposal was not considered for award because its proposed price was considered unreasonably low. However, there was no technical or price evaluation factor under the RFP providing for the evaluation of price realism or the offerors’ understanding of the requirements. The price evaluation provided only for the evaluation of the “reasonableness” of the proposed price, that is, whether the price was unreasonably high. Thus, the agency’s concern that [the protester’s] price was too low was a matter of the firm’s responsibility. Since [the protester] is a small business, if the [agency] believed that [the protester] could not satisfactorily perform the contract at its proposed price, it was required to refer this finding of nonresponsibility to the SBA for that agency’s review under its certificate of competency procedures.

J.A. Farrington Janitorial Services, B-296875, Oct. 18, 2005.

Thus, we have previously recognized with respect to the limitation on subcontracting clause at FAR § 52.219-14, governing eligibility for consideration for requirements set aside for small business concerns and 8(a) contractors, that, as a general rule, an agency’s judgment as to whether a small business offeror will comply with the subcontracting limitation is a matter of responsibility, to be finally determined by the SBA in connection with its Certificate of Competency (COC) proceedings.

Liberty Power Corporation, B-295502, March 14, 2005.

Under the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures. 15 U.S.C. § 637(b)(7) (2000); FAR Subpart 19.6. Responsibility concerns, among other factors, whether a prospective contractor will be able to comply with the required or proposed delivery or performance schedule, and whether it has the necessary organization, experience, and technical skills (or the ability to obtain them). FAR § 9.104-1(b), (e).

It is true that the reasons for GSA’s concern about [the protester] arose in connection with the evaluation under the solicitation (not post-evaluation, when a responsibility review is normally conducted). This, however, is not determinative. We have long recognized that agencies may use responsibility-type factors as evaluation criteria. Here, the evaluation criteria related to management and staffing are at issue, and both can be viewed as “traditional” responsibility factors. Where a solicitation uses traditional responsibility factors as technical evaluation criteria and where the proposal of a small business concern which otherwise would be in line for award is found ineligible for award based on an agency’s evaluation under those criteria, the agency has effectively made a determination that the small business offeror is not a responsible contractor capable of performing the solicitation requirements. In those circumstances, because of the offeror’s small business size status, the agency must refer the matter of the firm’s responsibility to the SBA for the possible issuance of a COC.

Capitol CREAG LLC, B-294958.4, Jan. 31, 2005.

The award… was unobjectionable. The FAR requirement that agencies make award to a concern where SBA issues a COC presumes that the COC referral will occur after the concern has been determined to be otherwise in line for the award. FAR § 9.104-3(d). The record in this case shows that, at the time of the referral, the contracting specialist had not yet determined that [the protester] was in line for the award; she had determined only that [the protester] was one of several firms that could receive the award. Nevertheless, apparently not fully understanding the COC process, and having questions about [the protester’s] financial capability, the contracting specialist (prematurely) submitted the matter to SBA for a COC review. Although SBA acted on the referral and issued a COC to [the protester], [the agency] was not required to make award to [the protester] at that juncture, since it had not yet determined that [the protester] was otherwise in line for the award. The agency could not deny [the protester] the award based on matters of responsibility, but nothing prohibited it from selecting another offeror for award based on a price/technical tradeoff in accordance with the RFP’s evaluation scheme.

Tenderfoot Sock Company, Inc., B-293088.2, Jul. 30, 2004.

Under the Small Business Act, agencies may not find a small business nonresponsible without referring the matter to the SBA, which has the ultimate authority to determine the responsibility of small businesses under its COC procedures. 15 U.S.C. Sec. 637(b)(7) (2000); FAR Subpart 19.6. Past performance traditionally is considered a responsibility factor, that is, a matter relating to the offeror’s ability to perform the contract. See FAR Sec. 9.104-1(c). Traditional responsibility factors may be used as technical evaluation factors in a negotiated procurement, but only when a comparative evaluation of those areas is to be made. Comparative evaluation in this context means that competing proposals will be rated on a scale, relative to each other, as opposed to a pass/fail basis. We have cautioned that an agency may not find a small business nonresponsible under the guise of a relative assessment of responsibility-based technical factors in an attempt to avoid referral to the SBA. That appears to be what occurred here.

Here, the agency did not, and could not, perform a “comparative evaluation.” The only technical evaluation factor, past performance, a traditional responsibility factor, was evaluated for the sole “purpose” of making an “assessment of the Offeror’s ability to perform.” As essentially conceded by the agency, [the protester’s] proposal was rejected because [the protester] allegedly failed to meet the RFP requirements that the offeror have past performance experience in medical construction on projects of 50 to 100 bed hospitals or large clinics valued at between $5 and $10 million. Because of this, past performance was clearly evaluated on a “pass/fail” basis. Under the circumstances, the agency’s rejection of [the protester’s] proposal amounted to a determination of nonresponsibility, which required referral to the SBA for a possible COC.

Phil Howrey Company, B-291402.3, B-291402.4, Feb. 6, 2003.

The Small Business Act, 15 U.S.C. sect. 637(b)(7) (2000), gives the SBA, not our Office, the conclusive authority to review a contracting officer’s determination that a small business is not responsible. We therefore do not review challenges to the contracting agency’s initial non-responsibility determination where the firm subsequently has been denied a COC by the SBA. Nor do we review challenges to the SBA’s decision not to issue a COC unless there is a showing that the COC denial resulted from the possible bad faith of a government official, or from a failure to consider vital information because of how information was presented to, or withheld from, the SBA by the procuring agency.

However, Federal Acquisition Regulation (FAR) sect. 19.602-4(a) provides that “if new information causes the contracting officer to determine that the concern referred to the SBA is actually responsible to perform the contract, and award has not already been made… the contracting officer shall reverse the determination of nonresponsibility, notify the SBA of this action, withdraw the referral, and proceed to award the contract.” On the other hand, where, after the SBA’s denial of a COC, no new information is presented to lead the contracting officer to determine that the concern is responsible, the contracting officer should proceed with award to another appropriately selected and responsible firm. Here, since the SBA has declined to issue a COC and since none of the limited exceptions exist for our Office to review the SBA’s decision, the essential issue for our consideration raised by this protest is whether new information requiring reversal of the nonresponsibility determination was presented to the contracting officer after the denial of the COC. The information presented by the protester following the SBA’s denial of a

COC was not new information.

Quality Trust, Inc., B-289445, Feb. 14, 2002.

Section 8(a) of the Small Business Act, 15 U.S.C. § 637(a) (2006), authorizes the SBA to enter into contracts with government agencies and to arrange for performance through subcontracts with socially and economically disadvantaged small business concerns. Federal Acquisition Regulation (FAR) § 19.800. The Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; accordingly, we will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. 4 C.F.R. § 21.5(b)(3) (2012). [The protester] argues that the solicitation was improperly set aside as an 8(a) competition because the SBA failed to perform an adverse impact analysis under 13 C.F.R. § 124.504(c). [The protester] also argues that it is adversely impacted by the decision to set aside the solicitation as an 8(a) award, given that it is a small business, but is no longer a certified 8(a) contractor.

The SBA contends that no adverse analysis was required because the work solicited here is a “follow-on” to shuttle bus service contracts performed under [the protester’s] 8(a) contracts, which provided the same basic services under the 8(a) program.4 The SBA contends that this requirement is, therefore, subject to the “once 8(a), always 8(a)” rule, set forth at 13 C.F.R. § 124.504(d), which, the SBA contends, precludes removing follow-on requirements from the 8(a) program unless they are specifically released by the SBA from the program for non-8(a) competition. In such cases, the SBA reports, there is no requirement for an adverse impact analysis.

Alternatively, the SBA contends that if this requirement were not considered a follow-on requirement, then it would be considered a “new requirement” under 13 C.F.R. § 124.504(c)(1)(ii), for which no adverse impact analysis would be required under applicable regulations. 13 C.F.R. § 124.504(c)(1)(ii)(D). The SBA contends that this would be so because the shuttle bus services previously obtained under the 8(a) program will be significantly expanded by this solicitation; in fact, SBA notes that the expansion of services here will lead to a price adjustment of at least 25 percent over the previous contracts. 13 C.F.R. § 124.504(c)(1)(ii)(C).

As a general matter, we accord SBA’s interpretation of its own regulations, such as those regarding the 8(a) program, great weight. Here, while [the protester] clearly disagrees with SBA’s interpretation of its regulations as applied to the facts in this case, we see no basis to conclude that SBA’s determination that no adverse impact analysis was required was inconsistent with applicable SBA regulations. Id.

Blue Ridge Limousine and Tour Service, Inc., B-407020, Oct. 19, 2012.

Section 8(a) of the Small Business Act authorizes SBA to contract with government agencies and to arrange for performance of such contracts by awarding subcontracts to socially and economically disadvantaged small businesses. 15 U.S.C. § 637(a) (2006). The Act affords SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program. We will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials or that regulations may have been violated. Bid Protest Regulations, 4 C.F.R. § 21.5(b)(3) (2012).

The section 8(a) program has both competitive and noncompetitive components, depending on the dollar value of the requirement. See 13 C.F.R. § 124.506(a) (2012). In order to obtain the information necessary for the SBA to determine that an offered requirement is eligible and appropriate for award under the 8(a) program (whether on a competitive or noncompetitive basis), the SBA’s regulations require that contracting agencies furnish information about a procurement when offering it for inclusion in the program. As a general matter, the SBA is entitled to rely on a contracting agency’s representations in making decisions regarding 8(a) acquisitions, and SBA’s regulations place primary responsibility on the procuring agency to submit all relevant information necessary to SBA’s decision-making process.

MCB Lighting & Electrical, B-406703, July 13, 2012.

The section 8(a) program has both competitive and noncompetitive components, depending on the dollar value of the requirement. See 13 C.F.R. § 124.506(a) (2010). Generally, where the acquisition value exceeds $4 million, a section 8(a) contract must be competed among section 8(a) firms; section 8(a) acquisitions with values less than $4 million generally are awarded on a noncompetitive basis. FAR § 19.805-1(a). In order to obtain the information necessary for the SBA to determine that an offered requirement is eligible and appropriate for award under the 8(a) program (whether on a competitive or a noncompetitive basis), the SBA’s regulations require that contracting agencies furnish detailed information about a procurement when offering it for inclusion in the program. 13 C.F.R. § 124.502. In this regard, 13 C.F.R. § 124.502(c) sets forth 17 enumerated items which must be identified in a contracting agency’s letter offering work for inclusion in the SBA’s 8(a) program. See also FAR § 19.804-2(a). As a general matter, the SBA is entitled to rely on a contracting agency’s representations.

…

Government officials are presumed to act in good faith, and a protester’s claim that contracting officials were motivated by bias or bad faith must be supported by convincing proof; our Office will not attribute unfair or prejudicial motives to procurement officials on the basis of inference or supposition.

Donnelly & Moore Corporation, B-404480, Feb. 16, 2011.

The Competition in Contracting Act of 1984 (CICA) allows executive agencies to use noncompetitive procurement procedures where “a statute expressly authorizes… that the procurement be made through another executive agency.” 41 U.S.C. § 253(c)(5) (2006). In this regard, section 8(a) of the Small Business Act expressly authorizes the SBA to enter into contracts with other agencies “to furnish… services… to the Government” through subcontracts to disadvantaged small business concerns. 15 U.S.C. § 637(a), (b) (2006). Accordingly, the FAR expressly authorizes agencies to use noncompetitive procedures pursuant to CICA when making “sole source awards under the [section] 8(a) program.” FAR § 6.302-5(b)(4).

The FAR then specifies the circumstances in which a sole-source award under section 8(a) is appropriate. Agencies must use competitive procedures for section 8(a) contract awards when: (1) there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and that an award can be made at fair market price, and (2) the anticipated total value of the contract, including options, will exceed $4 million. FAR § 19.805-1(a). Since [the agency’s] award to [the 8(a) Company] was for $75,048—well below the $4 million competitive threshold—[the agency] was not required to use competitive procedures here.

Eagle Collaborative Computing Services, Inc., B-401043.3, Jan. 28, 2011.

Under the Act’s implementing regulations, SBA may not accept any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c). The adverse impact concept is designed to protect small business concerns that are performing government contracts awarded outside the 8(a) program. SBA presumes adverse impact to exist where a small business concern has performed the specific requirement for at least 24 months; the small business is performing the requirement at the time it is offered to the 8(a) program, or its performance of the requirement ended within 30 days of the procuring activity’s offer of the requirement to the 8(a) program; and the dollar value of the requirement that the small business is or was performing is 25 percent or more of its most recent annual gross sales. Id. § 124.504(c)(1)(i).

The concept of adverse impact does not apply to new requirements, except where a new requirement is created through a consolidation of existing requirements being performed by two or more small business concerns. Id. § 124.504(c)(1)(ii), (2). The SBA regulations define a new requirement as one that previously has not been procured by the relevant procuring activity. Id. § 124.504(c)(1)(ii). The SBA regulations also provide that:

Id. § 124.504(c)(1)(ii)(C). The rationale for exempting new requirements from an adverse impact analysis, the regulations explain, is that “[w]here a requirement is new, no small business could have previously performed the requirement and, thus, [the] SBA’s acceptance of the requirement for the 8(a) [business development] program will not adversely impact any small business.” Id. § 124.504(c)(1)(ii)(A).

To avoid adverse impacts, and to obtain other information necessary for SBA to determine that an offered requirement is eligible and appropriate for award under the 8(a) program, the SBA regulations require that contracting agencies furnish detailed information about a procurement when offering it for acceptance under the 8(a) program. Id. § 124.502; see also Federal Acquisition Regulation (FAR) § 19.804-2. Among the information required to be included in the offering letter are the requirement’s acquisition history, if any, and the names and addresses of any small business contractors that have performed the requirement within the previous 24 months. 13 C.F.R. § 124.502(c)(9), (10); FAR § 19.804-2(a)(8).

Klett Consulting Group, Inc., B-404023, Dec. 20, 2010.

In implementing this statutory authority, the SBA has established a limit on moving an existing requirement from the 8(a) competitive program to the 8(a) sole-source program:

13 C.F.R. § 124.506(b) (emphasis added).

The main question posed by the protest, then, is whether the requirement issued as an 8(a) competitive procurement in April 2008 is the same as the requirement accepted for the 8(a) sole-source award to [the selected 8(a) company].

13 C.F.R. § 124.504(c)(1)(ii)(C).

…

At our Office’s request, the SBA provided its views on the protest. We accord great weight to the SBA’s interpretation of its regulations as to what constitutes a new requirement, unless the interpretation is unreasonable. Here, the SBA states that it agrees with the [Agency] that notwithstanding the protester’s arguments, the SBA properly accepted the requirement into the 8(a) program for award to [the selected 8(a) company]…. Based on the record, as discussed above, we see no basis to object to the [agency’s] decision to offer the requirement to the SBA, or to the SBA’s decision to accept it as an 8(a) sole-source award to [the selected 8(a) company.

JXM, Inc., B-402643, June 25, 2010.

Under the Small Business Act’s implementing regulations, the SBA is precluded from accepting into the 8(a) program a procurement for which the contracting agency had previously “issued a solicitation for or otherwise expressed publicly a clear intent to reserve the procurement as a small business or small disadvantaged business set-aside prior to offering the requirement to SBA for award as an 8(a) contract… [except] under extraordinary circumstances.” 13 C.F.R. § 124.504(a) (2008). Moreover, these regulations preclude the SBA from accepting any procurement for award as an 8(a) contract if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. 13 C.F.R. § 124.504(c).

…

…we will not interpret the regulation’s language to preclude the removal of a requirement for the 8(a) program that was allegedly historically set-aside for small businesses. As the agency responsible for promulgating the applicable regulations, the SBA’s interpretation of the regulations, that is, what constitutes “express[ing] a clear intent to reserve the requirement for small businesses,” deserves great weight, and we defer to the SBA’s interpretation so long as that interpretation is reasonable. [The protester] has provided no basis for us to disagree with the SBA’s interpretation of 13 C.F.R. § 124.504(a) as not including requirements that were allegedly historically set-aside for small businesses.

AHNTECH, Inc., B-401092, April 22, 2009.

The Rule of Two states that the “contracting officer shall set aside any acquisition over $150,000 for small business participation when there is a reasonable expectation that: (1) Offers will be obtained from at least two responsible small business concerns….and (2) Award will be made at fair market price.” 48 C.F.R. § 19.502-2(b). It is worth highlighting that the rule does not require that the particular companies who respond to the RFI actually be determined responsible. Rather, the test is simply whether it appears likely that, when the solicitation later moves forward, at least two responsible small businesses will appear.

…

We begin with the reminder that whether to set aside a solicitation for small businesses “‘is a matter of business judgment within the contracting officer’s discretion.’” Gear Wizzard, Inc. v. United States, 99 Fed. Cl. 266, 282 (2011) (quoting Benchmade Knife Co. v. United States, 79 Fed. Cl. 731, 738 (2007)). The “law does not require any particular method.” Id.; see McKing Consulting Corp. v. United States, 78 Fed. Cl. 715, 724-25 (2007) (holding that the Rule of Two was satisfied when the contracting officer relied on market research and a history of successful procurements conducted as small business set-asides); Crucially, the contracting officer need not make affirmative determinations of responsibility, but need only have “a reasonable expectation that: (1) Offers will be obtained from at least two responsible small business concerns…; and (2) Award will be made at fair market prices.” 48 C.F.R. § 19.502-2(b)

Past acquisition history may be relevant to the Rule of Two analysis, but “it is not the only factor to be considered in determining whether a reasonable expectation exists.” 48 C.F.R. § 19.502-2(b)(2). “The contracting officer may consider and base its decision on such factors as prior procurement history, the nature of the contract, market surveys, and/or advice of the agency’s small business specialist.” MCS Mgmt., Inc. v. United States, 48 Fed. Cl. 506, 512, 514 (2000). Additionally, it is not required or practical at this stage of the procurement process for the contracting officer to conduct a full responsibility evaluation. Rather, the contracting officer need only reasonably expect that likely offerors will “be capable of surviving a future responsibility determination.”

Adams & Associates, Inc. v. United States, 109 Fed. Cl. 340 (2013).

Under Federal Acquisition Regulation (FAR) § 19.502-2(b), a procurement with an anticipated dollar value of more than $150,000, such as the one here, must be set aside for exclusive small business participation when there is a reasonable expectation that: (1) offers will be received from at least two responsible small business concerns; and (2) that award will be made at a fair market price. The use of any particular method of assessing the availability of small businesses is not required so long as the agency undertakes reasonable efforts to locate responsible small business competitors.

The decision whether to set aside a procurement may be based on an analysis of factors such as the prior procurement history, the recommendations of appropriate small business specialists, and market surveys that include responses to sources sought announcements. In making set-aside decisions, agencies need not make actual determinations of responsibility or decisions tantamount to determinations of responsibility; rather, they need only make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from small business concerns that are capable of performing the contract. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review is limited to determining whether that official abused his or her discretion. We will not question a small business set aside determination where the record shows that the evidence before the contracting officer was adequate to support the reasonableness of the conclusion that small business competition reasonably could be expected.

Mountain West Helicopters, LLC, B-408150, B-408150.2, July 1, 2013.

Contracting officers generally are required to set aside for small business all procurements exceeding $150,000 [the current simplified acquisition threshold] if there is a reasonable expectation of receiving fair market price offers from at least two responsible small business concerns. Federal Acquisition Regulation (FAR) § 19.502-2(b). A partial set-aside must be made if a total set-aside is not appropriate, the requirement is severable into two or more economic production runs or reasonable lots, and one or more small business concerns are expected to have the technical competence and productive capacity to satisfy the set-aside portion at a reasonable price. FAR § 19.502-3(a). FAR § 19.202-2 generally requires contracting officers, before issuing solicitations, to make “every reasonable effort to find additional small business concerns” and to maximize small business participation. According to the agency, [it] chose to conduct the pilot project in Michigan and Florida, before expanding the project nationally, because schools in those states had complained about the distribution of produce under the [agency] program.

As a general matter, we regard such a determination as a matter of business judgment within the contracting officer’s discretion that we will not disturb absent a showing that it was unreasonable. However, a contracting officer must make reasonable efforts to ascertain whether it is likely that offers will be received from at least two small businesses capable of performing the work. Our Office will review a protest to determine whether a contracting officer has made such efforts. In this regard, we have found unreasonable the determination to issue a solicitation on an unrestricted basis where that determination is based upon outdated or incomplete information. While the use of any particular method of assessing the availability of small businesses is not required, and measures such as prior procurement history, market surveys and/or advice from the agency’s small business specialist and technical personnel may all constitute adequate grounds for a contracting officer’s decision not to set aside a procurement, the assessment must be based on sufficient facts so as to establish its reasonableness.

DNO, Inc., B-406256.2, March 22, 2012.

Under Federal Acquisition Regulation (FAR) §19.502-2(b), a procurement with an anticipated dollar value of more than $150,000, such as the one here, must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at fair market prices. The use of any particular method of assessing the availability of small businesses is not required so long as the agency undertakes reasonable efforts to locate responsible small business competitors. The decision whether to set aside a procurement may be based on an analysis of factors such as the prior procurement history, the recommendations of appropriate small business specialists, and market surveys that include responses to sources-sought announcements. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review generally is limited to ascertaining whether that official abused his or her discretion.

Marshall & Swift-Boeckh, LLC, B-407329, B-407329.2, Dec. 18, 2012.

In making set-aside decisions, agencies need not make actual determinations of responsibility or decisions tantamount to determinations of responsibility; rather, they need only make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from small business concerns that are capable of performing the contract. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review is limited to determining whether that official abused his or her discretion. We will not question a small business set aside determination where the record shows that the evidence before the contracting officer was adequate to support the reasonableness of the conclusion that small business competition reasonably could be expected.

Walden Security, B-407022, B-407022.2, Oct. 10, 2012.

[The large business protester] contends that the CO could not reasonably find that [another potential small business’s] post-award debriefing [from a recently cancelled award] would enable the firm to overcome the weaknesses and deficiencies in its technical proposal. As discussed above, however, a CO need only make a reasonable business judgment that a prospective offeror capable of performing the work is likely to submit a proposal; the CO is not required to conduct an actual determination of responsibility as part of this review. Here, the CO reasonably exercised his business judgment in concluding that the debriefing provided to [deleted] would permit the firm to submit an acceptable proposal. On this record, the protester’s disagreement with the agency’s judgment does not provide a basis to sustain the protest.

…

Nothing in the FAR requires a CO to consider only those prospective offerors who have successfully completed the identical requirements to be performed under the set-aside contract, nor does the FAR require a CO to exclude from consideration prospective offerors who have not reviewed a proposed statement of work. Instead, as discussed above, the CO may use any reasonable method to identify responsible prospective offerors. Here, the CO reasonably considered [deleted]’s statement of capabilities, and concluded that its experience performing automation and order fulfillment systems for commercial customers provided an adequate basis to expect that the firm would submit an acceptable proposal. On this record, the protester’s disagreement with the agency’s judgment does not provide a basis to sustain the protest.

…

As our Office has held, a CO may reasonably rely on an expectation that there will be adequate price competition to conclude that the competition will result in a fair market price. In this regard, the FAR provides that adequate price competition exists where two or more responsible offerors submit proposals that satisfy the government’s requirements, award is based on a best value evaluation where price is a substantial factor, and the price of the successful offeror is not unreasonable. FAR §§ 15.403-1(c)(1); 15.404-1(b)(2)(i). A CO may reasonably rely on information concerning prior procurements, as well as the expectation of adequate price competition, to conclude that a procurement set aside for small businesses will be made at a fair market price. Based on this record, we think that the CO reasonably relied on the fact that [a small business] had been previously awarded the contract at a fair and reasonable price, and his conclusion concerning the prospective offerors’ commercial experience, to conclude that there was an expectation of adequate price competition, and therefore an award at a fair market price.

KNAPP Logistics Automation, B-406303, March 23, 2012.

At the outset, we note that the protester incorrectly asserts that before making a small business set-aside determination, a contracting officer must determine that offers will be received from two or more responsible small businesses. The FAR does not require a determination that offers will be received from two or more responsible small businesses—it requires only a determination that offers from two or more responsible small businesses may reasonably be expected. Moreover, in making set-aside decisions, agencies need not make either actual determinations of responsibility or decisions tantamount to determinations of responsibility with regard to prospective offerors; they need only make an informed business judgment that there are small businesses expected to submit offers that are capable of performing.

Six3 Systems, Inc., B-404885.2, Oct. 20, 2011.

[The small business protester] further argues that even if the agency did not have a reasonable expectation of offers from two or more capable small business concerns (and thus was not required to set the total requirement aside for small businesses), it did have a reasonable expectation of an offer from one capable small business firm (i.e., itself) and thus should have set aside a portion of the acquisition. We need not determine whether the protester’s complaints regarding the assessment of its own capabilities are valid given that FAR § 19.502-3 requires an agency to set aside a portion of an acquisition for exclusive small business participation only when the requirement is severable. Here, the agency determined that the requirement was not severable “because the delivery orders under the contract are so integrally related that only a single source can reasonably perform the work.”

…

….In determining whether a requirement is severable, it is reasonable for agency contracting officials to consider not simply whether the services may be defined in a way that would permit them to be awarded separately from other services, but also whether it is in the government’s best interest to award them separately.

Metasoft, LLC, B-402800, July 23, 2010.

We find the agency determination to continue with performance under [the awardee’s] contract to be unobjectionable. As an initial matter, we note that consistent with the FAR, the [agency] did not award a contract until more than 10 business days after furnishing the SBA with a copy of [the] size protest. See FAR § 19.302(h)(1). Further, the FAR does not require termination of a contract based on a subsequent SBA determination that an awardee is other than small. FAR § 19.302(h)(2). In this regard, we generally have not questioned the propriety of an award made by an agency before a decision by the SBA on a size protest had been issued, where the 10 business day period for issuing such decisions had expired, even where the awardee was later determined by the SBA to be other than a small business concern.

We have recognized, however, that even where the requirements of FAR § 19.302 have been satisfied by the agency in making an award, termination of the awardee’s contract may be appropriate where a timely size protest was filed, there was no appeal of the SBA size ruling that the awardee was not a small business, and there are no countervailing circumstances that weighed in favor of allowing a business concern that is not small to continue performance. We have found that under such circumstances, when there are no countervailing reasons for preserving an award to a business that is not small, it would be inconsistent with the integrity of the procurement system and the intent of the Small Business Act, 15 U.S.C. §§ 631-657a, for an agency to permit a business that is ineligible under the terms of the solicitation to continue contract performance.

TrustComm, Inc., B-408456, B-408456.2, Sept. 20, 2013.

The duties of a contracting agency following a size status protest determination are set forth in the SBA’s regulations at 13 C.F.R. § 121.1009 (2012). As relevant here, the regulations state:

…

Moreover, we are not aware of, nor has [the protester] cited, any statute or regulation that expressly requires an agency to reinstate a terminated contract on the basis of an SBA OHA reversal of a negative size status determination. As noted above, FAR § 19.302(i), merely provides that “[t]he SBA [OHA] decision, if received before award, will apply to the pending acquisition.” Thus, in the absence of any such regulation, the agency did not err in simply readmitting [the protester] to the ongoing procurement and providing all offerors, including [the protester], with an opportunity to submit revised proposals in response to solicitation amendments incorporating changed agency requirements, a new wage determination, and new evaluation criteria.

Trident³, LLC, B-405781.3, July 5, 2012.

Since the issue raised, regarding an SBA OHA’s reversal of an SBA area office formal size determination after an award has been made, concerns a matter of interpretation involving SBA’s regulations, we requested a report on the protest from SBA. SBA explains that the size protest and appeal procedures, at 13 C.F.R. § 121.1009, have been set up to allow for quick resolution of size status protests without unduly delaying procurements. In this regard, the regulations state that an SBA area office formal size determination becomes effective immediately, and a contracting officer may award a contract based on that determination, 13 C.F.R. §§ 121.1009(g)(1), (2). SBA’s regulations further instruct that if an award has been made, and the formal size determination is, as here, reversed upon appeal by the SBA OHA, the OHA decision is not to apply to that procurement, but, instead, is to have prospective effect only, unless the contracting officer chooses to apply the OHA’s decision to the procurement. 13 C.F.R. § 121.1009(g)(3). Further, and consistent with the SBA regulations, Federal Acquisition Regulation (FAR) § 19.302(g)(2) provides that “[i]f an award was made before the time the contracting officer received notice of the [size determination] appeal, the contract shall be presumed to be valid.” Accordingly, we conclude that, under the applicable regulations, since the SBA OHA decision here was received after award, there was no requirement for the agency to terminate the award to [the awardee].

ONS21 Security Services, B-403067, Sept. 16, 2010.

We view it as inconsistent with the integrity of the procurement system and the intent of the Small Business Act, 15 U.S.C. §§ 631-657a (2006), for an agency to allow a firm to continue performing a contract where the firm was determined after award to be other than small, unless there are countervailing reasons for allowing the award to remain in place. A key consideration is whether there is another offeror in line for award who can step in and perform if the contract is terminated.

In this case, since all three remaining proposals (including the protester’s) were found unacceptable, there is no offeror to which award could be made if [the awardee’s] contract were terminated at this juncture. In this regard, as noted above, [the protester] does not challenge the agency’s finding that its proposal was unacceptable, and concurs that the agency has a legitimate need for uninterrupted roleplayer services, such that continued performance by [the awardee] is required to meet the agency’s needs. Under these circumstances, we see no basis to object to the agency’s decision not to terminate [the awardee’s] contract.

Greystones Consulting Group, Inc., B-402835, June 28, 2010.

To the extent [the protester], in essence, is challenging [the awardee’s] status as an SDB, the proper forum for such challenges is SBA, not our Office. See 4 C.F.R. § 21.5(b) (2007). Any protest of a firm’s SDB status must be filed with the contracting officer within 5 business days after receiving notice of the prospective awardee’s identity. 13 C.F.R. § 124.1020(b)(c). There is nothing in the record to indicate that [the protester] has filed any challenge with the contracting officer.

Synergetics, Inc., B-299904, Sep. 14, 2007.

Under SBA’s regulations, “A timely filed protest applies to the procurement in question even though a contracting officer awarded the contract prior to receipt of the protest.” 13 C.F.R. § 121.1004(c). There are no time limitations on the SBA (or the contracting officer) on filing size protests, either before or after award, so SBA protests are considered timely by definition.

…

Termination of even an otherwise properly awarded contract is appropriate, where a timely size protest was filed, the SBA ruled that the awardee was not a small business and that ruling was not appealed, and there were no countervailing circumstances that weighed in favor of allowing a business concern that is not small to continue performance. In the absence of countervailing reasons, we view it as inconsistent with the integrity of the Small Business Act, 15 U.S.C. §§ 631-657a (2000), for an agency to permit a large business, which was ineligible under the terms of the solicitation, to continue contract performance.

Alliance Detective & Security Service, Inc., B-299342, April 13, 2007.

Under the SBA’s regulations, “[a] timely filed protest applies to the procurement in question, even though a contracting officer awarded the contract prior to receipt of the protest.” 13 C.F.R. § 121.1004(c). Nevertheless, we generally have not questioned the propriety of an award made by an agency before a decision by the SBA on a size protest had been issued, where the 10 business day period for issuing such decisions had expired, even where the awardee was determined by the SBA to be other than a small business concern.

However, we have recognized that in certain circumstances, even where the requirements of FAR § 19.302 have been satisfied by the agency in making an award, termination of the awardee’s contract is appropriate, where a timely size protest was filed, there was no appeal of the SBA size ruling that the awardee was not a small business, and there were no countervailing circumstances that weighed in favor of allowing a business concern that is not small to continue performance. We [have previously] found that under such circumstances, when there are no countervailing reasons for preserving an award to a business that is not small, it would be inconsistent with the integrity of the procurement system and the intent of the Small Business Act, 15 U.S.C. §§ 631-657a (2000), for an agency to permit a business that is ineligible under the terms of the solicitation to continue contract performance.

ALATEC, Inc., B-298730, Dec. 4, 2006.

The Federal Acquisition Regulation (FAR), the principal regulation governing federal procurements, provides as follows regarding situations where a protest challenging the proposed awardee’s size status has been filed:

FAR § 19.302(h)(1). SBA’s regulations similarly recognize the 10-day period for making a decision. See 13 C.F.R. § 121.1009(a) (2006).

Here, the protests challenging [the original awardee/protester] size status were forwarded to SBA on December 21, and [the original awardee/protester] acknowledges that SBA contacted it for information regarding its size status on December 22. This being the case, the [procuring agency] was permitted to make an award to [the subsequent awardee] after January 9, that is, 10 business days later. Since the agency made award to [the subsequent awardee] on March 16, which is more than 50 business days after the size protests were received by SBA, the award was permissible under the applicable regulations. FAR § 19.302(h)(1). In accordance with FAR § 19.302(i), the OHA ruling received by the agency after award did not apply to the protested acquisition. See also 13 C.F.R. § 121.1009(g)(3) (OHA decision received after award does not apply to the current procurement). Since the award was made in accordance with the FAR and SBA regulations, and since OHA’s decision on appeal did not apply to the procurement, the agency was not required to terminate [the subsequent awardee’s] contract in favor of an award to [the original awardee/protester].

Technical Support Services, B-298527, Oct. 12, 2006.

As noted above, under FAR § 15.503(a)(2), in procurements that have been set aside for small businesses, the contracting agency is required to inform each unsuccessful offeror, in writing, of the identity of the apparent successful offeror prior to making award. The purpose for this pre-award notice is to allow unsuccessful offerors the opportunity to have SBA review the prospective awardee’s size status before award. The FAR provides that a contracting officer may not make an award after receiving a size protest until (1) SBA has made a size determination, (2) 10 business days have expired since SBA’s receipt of the size protest, or (3) where the contracting officer determines in writing that an award must be made to protect the “public interest.” See FAR § 19.302(h)(1).

Here, [the procuring agency] violated the pre-award notice regulation, thus precluding [the protester] from being able to file a size status protest until after award and denying SBA the opportunity to issue its size determination before award. Under similar circumstances where the agency failed to give the required pre-award notice, we have sustained protests and recommended the termination of contracts awarded to the concerns that were determined to be large businesses.

[The Agency] nevertheless argues that termination of [the original awardee’s] contract is not appropriate despite SBA’s determination that [the original awardee] is not a small business concern for this procurement. [The agency] first points out that the FAR allows the contracting officer to make award pending SBA’s size determination after 10 business days have expired since SBA’s receipt of the size protest, see FAR § 19.302(h)(1), and that, here, SBA took 14 business days to issue its size determination. [The agency] suggests that SBA’s failure to issue its size determination within 10 business days excuses the agency’s failure to provide the pre-award notice.

We disagree. As we have noted in prior decisions, we are unwilling to speculate whether SBA would not have provided its formal determination within 10 business days of receipt had [the procuring agency] complied with the pre-award notice requirement. Rather, we think it is more reasonable to assume—given that the 10-day period for SBA’s size decisions is premised upon agency compliance with the pre-award notice requirement—that SBA would have issued its size determination within the 10-day period had the agency been delaying award pending SBA’s determination. Accordingly, we do not find that SBA’s failure to issue its size determination within 10 business days excuses [the procuring agency’s] failure to provide pre-award notice and to stay award pending SBA’s decision.

Spectrum Security Services, Inc., B-297320.2, B-297320.3, Dec. 29, 2005.

We find that the award to [the original awardee later determined to the “other than small” by the SBA] was legally unobjectionable. The Federal Acquisition Regulation (FAR), the principal regulation governing federal procurements, provides as follows regarding situations where a protest challenging the proposed awardee’s size status has been filed:

FAR § 19.302(h)(1). While SBA’s regulations provide that a size determination based on a timely filed size status protest applies to the procurement in question, 13 C.F.R. § 121.1004 (2003), those regulations also recognize the 10-day period provided for in the FAR, stating that “SBA will make a formal size determination within 10 working days, if possible.” 13 C.F.R. § 121.1009.

[The protester’s] timely protest of [the original awardee’s] size status was received in the appropriate office at SBA on August 28. Thus, according to its own regulations, if possible, SBA was to render a decision on the size protest within 10 business days thereafter, that is, by September 12; SBA’s subsequent request to [the procuring agency] that this time be extended 10 days moved the due date for SBA’s decision to September 24. SBA did not issue the size determination by the September 24 due date. Indeed, SBA did not issue its decision until November 6. This was inconsistent with SBA’s regulations; there is no indication—and SBA does not assert—that it was not possible to issue the determination by September 24. [The procuring agency] did not make award until more than 1 month after the size determination due date, on October 31, the day after our decision on [the] protest was issued and the stay of award was lifted. Under these circumstances, since [the procuring agency] delayed the award as required by the FAR, and SBA had not issued the size status determination as of the award date, the award… was proper and the delivery order need not be canceled.

Planned Systems International, Inc., B-292319.7, Feb. 24, 2004.