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"Size Appeal of Smart Data Solutions, LLC"  September 28, 2009

SBA No. SIZ-5071 (2009) 

PilieroMazza represented Vero Technical Support, Inc. (Vero) in its successful size protest against Smart Data Solutions, LLC (Smart Data).  After the Small Business Administration (SBA) Area Office determined Smart Data to be other than small for an Air Force Air Combat Command procurement based on the ostensible subcontractor rule, Smart Data appealed to the SBA’s Office of Hearings and Appeals (OHA).  On appeal, Smart Data sought to overturn the Area Office’s decision by asserting, among other arguments, that Smart Data’s ostensible subcontractors were not the incumbents and that Smart Data would provide the key personnel and perform the project’s primary and vital requirements.  PilieroMazza intervened in the appeal on Vero’s behalf, reviewed the Area Office record, and filed a response to the appeal noting several reasons why the Area Office’s decision did not contain clear errors of fact or law. 

In agreeing with PilieroMazza’s arguments, OHA held that Smart Data was affiliated with its ostensible subcontractors because those firms were the incumbents and would perform the primary and vital requirements.  Based on Smart Data’s proposal, OHA found unusual reliance because the primary and vital weather forecasting and maintenance requirements would be performed by the subcontractors, not Smart Data, and all of the key personnel are employed by the subcontractors.  OHA also noted that Smart Data’s lack of experience with the primary and vital requirements, and the proposal’s repeated references to “we” and “our” when discussing the Smart Data “team’s” capabilities and experience, indicated that Smart Data “knew it did not have the requisite experience to gain award of the contract . . . unless it took credit for the experience of or combined with [the ostensible subcontractors.]”

Another reason OHA upheld the Area Office’s decision was because Smart Data’s teaming agreements with the ostensible subcontractors indicated that Smart Data did not have sufficient bargaining power.  This was because the teaming agreements permitted the subcontractors to walk away from the arrangement if the procurement’s NAICS code changed.  Furthermore, OHA found that Smart Data’s proposal was indicative of a joint venture, and thus affiliation, due to Smart Data’s repeated and overbroad references to “we” and “our,” the establishment of an “Executive Committee,” and because the proposal failed to specifically describe the work each party would perform.     

" NEQ, LLC Lata-Kemron Remediation, LLC" September 4, 2009

88 FED. CL. 38 (2009)

PilieroMazza assisted LATA-Kemron Remediation, LLC (LATA-Kemron) in defending a contract awarded to the company that was protested multiple times by NEQ, LLC (NEQ) to the Government Accountability Office (GAO) and then to the U.S. Court of Federal Claims (COFC).  The contract in question was awarded to LATA-Kemron by the Environmental Protection Agency (EPA) for the performance of emergency and rapid response services in EPA’s Region 5 (consisting of Illinois, Indiana, Ohio, Michigan, Wisconsin, and Minnesota). 

In protesting the award to LATA-Kemron, NEQ made a number of arguments, all of which the COFC rejected.  First, NEQ argued that the EPA improperly used unstated evaluation criteria when evaluating the offerors’ proposals by placing emphasis on LATA-Kemron’s proximity to major population centers in Region 5 while failing to give similar credit to NEQ for having its main bases of operation in rural areas.  Second, NEQ alleged that EPA erroneously gave LATA-Kemron credit for certain limited-purpose specialty subcontractors because those specialty subcontractors did not provide letters of intent in LATA-Kemron’s proposal.  Lastly, NEQ asserted a multitude of other arguments that purported to show the impropriety of the EPA’s award to LATA-Kemron. 

In its ruling, the COFC rejected all of the arguments put forth by NEQ.  Specifically, the COFC found that the EPA reasonably took LATA-Kemron’s proximity to major population centers into account when giving LATA-Kemon higher technical ratings than those given to NEQ.  The COFC based its decision upon the fact that, while the solicitation did not specifically indicate that proximity would be an evaluation factor, it did state that offerors had to respond to major population centers within four hours of an emergency being reported, but that they only had to respond in six hours to rural areas.  The COFC also stated that the EPA could rely upon LATA-Kemron’s specialty subcontractors despite the fact that no letters of intent were provided because the other language in that proposal made it clear that LATA-Kemron had an ongoing working relationship with such named specialty subcontractors.  The rest of NEQ’s arguments were summarily rejected by the COFC.
"FPM Remediations, Inc." April 16, 2009


PilieroMazza assisted LATA-Matrix Environmental and Munitions Services, LLC in defending a contract award that was protested by FPM Remediations, Inc. (FPM) to the U.S. Government Accountability Office (GAO).  The RFP in this case was a small business set-aside and contemplated multiple IDIQ contracts with award of at least one contract to a SDVOSB firm, one contract to an 8(a) firm, and one contract to a HUBZone firm, plus up to three contracts to small businesses.  Offerors that competed unsuccessfully for a SDVOSB, 8(a), or HUBZone award were then considered for one of the small business contracts. 

FPM, which was initially selected by the Army Corps of Engineers (Corps) as the HUBZone awardee but subsequently lost the award due to a successful HUBZone protest against it, claimed that the Corps improperly failed to consider FPM for one of the small business awards.  Ruling against FPM, the GAO found that FPM did not establish a valid basis for challenging the Corps’ actions since FPM’s inaccurate representation that it was an eligible HUBZone firm resulted in its selection for the HUBZone award, which in turn made FPM unavailable when the remaining small business awards were made.  Therefore, GAO held that FPM, not the Corps, was responsible for FPM not being considered for a small business award and the protest was dismissed.           

"Delex Systems, Inc."  October 8, 2008

GAO B-400403

PilieroMazza represented Delex Systems, Inc. in its successful and well-publicized bid protest to the U.S. Government Accountability Office (GAO).  This protest was the first of its kind under the GAO's new authority to hear protests of task orders valued in excess of $10 million.  Ruling in our client's favor, the GAO established significant precedent for the application of small business set-aside requirements to task orders

The protest alleged that the agency (1) failed to comply with the set-aside provisions of Federal Acquisition Regulation (FAR) § 19.502-2(b), when issuing, on an unrestricted basis, the solicitation for a delivery order under multiple-award contracts; and (2) erred in concluding that it had no reasonable expectation of receiving offers from two small businesses is sustained where the record shows that the agency's set-aside determination is not adequately supported by the record.  In sustaining the protest, GAO specifically determined that the set-aside provisions of the FAR apply to competitions for task and delivery orders issued under multiple-award contracts.

"WRS Infrastructure and Environment, Inc."  October 1, 2008

SBA No. SIZ-5007

PilieroMazza represented WRS Infrastructure and Environment, Inc. in its challenge of an SBA size ruling.  In this case the Office of Hearing Appeals (OHA) determined that two parties to a nonbinding Letter of Intent (LOI) were affiliated at the time one of the companies submitted a proposal on a small business set-aside contract even though the proposal was submitted before the acquisition was finalized but after the LOI was executed.  The deal was consummated prior to award of the contract, and a size protest filed.

OHA held that the LOI constituted an “agreement in principle” between the parties and, thus, must be given present effect.  Because an agreement in principle was found as of the date the proposal was submitted, the two entities were deemed to be affiliated and the small business was deemed ineligible for the small business set-aside.  Upon appeal, the U.S. Court of Federal Claims upheld the OHA ruling.

This ruling is a departure from practitioner understanding of the present effect rule.  Small businesses need to keep this ruling in mind when considering mergers and acquisitions that will affect their size status.

"Size Appeal of TCE Inc."  September 24, 2008

SBA No. SIZ-5003 (2008) 

PilieroMazza represented TCE, Inc. in its successful appeal of an Small Business Administration (SBA) Area Office's determination that its proposal violated the ostensible subcontractor rule.  The ostensible subcontractor rule provides that when a subcontractor is actually performing the primary and vital requirements of the contract, or the prime contractor is unusually reliant upon the subcontractor, the two firms must be found to be affiliated.  In making its determination, the Area Office relied primarily on the the fact that the subcontractor had greater experience in the field.

In overturning the Area Office's finding of affiliation, the Office of Hearings and Appeals (OHA) stated that the Area Office "comes perilously close to making a responsibility determination, in making its own judgments as to Appellant's capacity to perform the contract."  OHA specifically states that these judgments should be left to the contracting officer and are outside the purview of the size appeal process.  Notably, OHA recognized that "[t]o place too much emphasis on the challenged firm's prior experience in making an ostensible subcontractor determination runs the risk of closing the door on new small firms entirely."

"SES-TECH Global Solutions"   May 7, 2008

SBA No. SIZ-4951 (2008)

PilieroMazza represented SES-TECH Global Solutions in its successful appeal of an adverse U.S. Small Business Administration (SBA) size determinations.  This appeal confirmed important parameters regarding the application of the SBA's 8(a) joint venture regulations to joint ventures for non-8(a) contracts.

SES was a joint venture seeking to compete for a small business set-aside, not an 8(a) procurement. The Area Office reviewed the joint venture agreement under the regulations targeted to joint ventures performing 8(a) contracts. Because it found that a protégé firm brought little to a joint venture arrangement, it determined that the firm did not meet the joint venture requirements and thus, was not entitled to the joint venture exception from affiliation.  On appeal, the Office of Hearings and Appeals (OHA) reversed the Area Office’s size determination and found that SES, an SBA-approved joint venture between an 8(a) protégé firm and mentor was a small business for the procurement.       

OHA has consistently held that 8(a) regulations do not apply to procurements that are outside the 8(a) program.  Further, because OHA had recently determined that it will not review mentor-protégé issues (See White Hawk/Todd, A Joint Venture , supra ), it stated that it had no authority to review the present case.




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