Government Contracts Monitor

How Well Do You Answer the Mail, and Are You Willing to Pay the Price of Failure?

February 29, 2016

We all know that time is of the essence in government contracting. Compliance with time deadlines is critical, and missing the same can cost you big time, whether in lost work, lost rights or worse. A threshold issue is how you receive and respond to government communications, since it is receipt, whether by hand, mail, email or fax, that triggers your obligation to respond. What procedures do you have in place to ensure that incoming communications are properly monitored, logged in and given to a real person for response? How well do you let those with whom you deal know who to contact, particularly if their normal contact is unavailable? How well do you instruct those receiving communications to ensure that something important does not simply get placed on the desk of someone who is unavailable or otherwise ignored? You may think you are too small or too big to worry about such issues. However, smaller companies are often more at risk due to limited staffing. On the other hand, larger companies can fall prey to the vagaries of the receptionist or mail room. You need to put systems in place and to train your staff and management personnel. Moreover, you need to approach this as if your business’s continuing existence is at stake, because it may well be.

Two recent size appeal decisions by the Small Business Administration (SBA)’s Office of Hearings and Appeals (OHA) demonstrate both (1) the general lack of sympathy for mail response failures; and (2) the high costs in lost work and bidding ineligibility. Both cases involved a size protest based on affiliation in which the challenged company was duly notified of the size protests by the respective Area Office and asked to respond within a short, specified, time period – all in accordance with SBA’s regulations. Moreover, while the companies in both cases actually knew that their size was being challenged, in neither case did they respond. As a result, and as permitted by SBA’s regulations, the Area Office in each case drew an adverse inference, and found the protested company affiliated and other than small.

Needless to say, once the horse was out of the barn and they had been disqualified, both companies went out and hired big name law firms, and were willing to do whatever it took to undo things and get to make their case. In each case the company appealed to OHA, and tried to raise arguments and present evidence that, of course, had not been presented to the Area Office. By that point, however, it was already too late. The sad part is that some of their arguments might have carried the day if they been timely raised. However, as we have discussed here, OHA generally will not hear arguments and receive evidence not presented initially to the Area Office.

So what happened in each of these cases, and where did things go wrong for these companies? In OxyHeal Medical Systems, Inc., SBA No. SIZ-5707, decided Jan. 19, 2016, the Area Office duly notified OxyHeal of a size protest on October 27, 2015, by both email and overnight United Parcel Service (UPS), and requested a response by November 2^nd. Both of these communications were duly received and receipted by OxyHeal. Unfortunately, the recipient, OxyHeal’s Director of Finance, was also serving as OxyHeal’s Accounting Manager and Human Resources Manager due to recent vacancies, and was “frantically busy” trying to catch up on “important work” left undone by her predecessors, including quarterly payroll tax reports. The individual therefore was “only skimming emails” sent to the three accounts for the three full-time positions she held, and took action only on those emails flagged as “high importance.” When OxyHeal did not respond by November 2^nd, the Area Office followed-up by further email on November 3^rd, warning that if SBA did not receive a response by 3:00 pm that day, an adverse inference would be drawn. No response was provided.

On appeal, OxyHeal argued that fundamental principles of notice and due process required the Area Office to take additional steps, and pointed out it had listed two other individuals in SAM as Points of Contact (POCs), and “intended to ensure that all three would be contacted with urgent and time-sensitive requests for information.” OxyHeal also argued that it previously had been in contact with the contracting agency as to the size protest and offered to provide them any needed info, and thought the issue had gone away since they heard nothing further.

OHA was not moved by any of these arguments, and put the blame squarely on OxyHeal – “The real error here was Appellant’s, in failing to properly monitor its communications.” (Emphasis added.) OHA specifically rejected, “as a matter of policy,” OxyHeal’s suggestion that the Area Office should have done more. OHA pointed out that the Area Office had properly addressed its communications to OxyHeal, and that company had actually received them. To require more was “neither required by due process nor practical.” OHA also noted that SBA, not the contracting agency, adjudicates size protests and appeals. Therefore, any confusion caused by the contracting agency, while unfortunate, was not chargeable to SBA. OHA therefore denied the appeal and affirmed the Area Office’s finding that OxyHeal was other than small, not only costing the company the instant contract, but also rendering it ineligible to self-certify as small under the same or smaller size standards until future recertification.

In Erickson Helicopters, Inc., SBA No. SIZ-5704, decided Jan. 6, 2016, the Area Office sent a communication to the company’s General Counsel, giving the company one-week to respond to a proposed adverse ruling on remand from an earlier OHA appeal. When no response was received, the Area Office followed up by requesting a response by the following day. Still, no response was provided. The problem here was that the General Counsel (GC) was no longer with the company. However, the company had not notified SBA of this, and no one was monitoring the former GC’s mail.

Again, OHA had little sympathy, stating that “it is entirely Appellant’s fault that it did not receive the Area Office’s communications.” (Emphasis added.) As in OxyHeal, OHA noted that the Area Office properly addressed its email to the right address on file. OHA pointed out that Erickson provided no reason as to why it had not notified the Area Office of the former GC’s departure, or arranged to have emails to him forwarded automatically to someone else who could respond. OHA found this failure “particularly egregious” here, where Erickson knew that an issue had been remanded and should have expected the Area Office to be following-up. Again, the net result was an adverse ruling finding Erickson other than small, which barred the company from self-certifying as small in any similar or smaller size standard procurements until recertified as small.

In short, it is your responsibility to have appropriate procedures in place to ensure the proper receipt, routing and timely response to all incoming communications to your company. Special attention should be given, of course, to communications received by certified mail, return receipt requested, and the date of receipt should be noted right on the incoming envelop. However, not all important communications requiring responses are so obviously marked. Precautions must be taken to ensure that someone knowledgeable reviews every incoming communication and that every required response is calendared and delegated to someone who is available to respond. This is particularly important when people are out of the office or diverted on other projects, even for short times, and certainly where people leave the company, as in Erickson.