Government Contracts Monitor

You Can’t Always Rely on the Kindness of Strangers, or Contracting Officers

October 5, 2015

By: Eric Whytsell

Disappointed small business offerors sometimes turn to the certificate of competency (COC) procedures of the Small Business Administration (SBA) when their proposals are found technically unacceptable. Arguing that the unacceptability is actually a matter responsibility that must be considered by SBA, these offerors hope that a favorable COC determination will save the day. Sometimes that’s what happens. But the recent decision in N3 Government Solutions, LLC, B-411303.2 (September 9, 2015) points out an important limitation of this strategy: its success relies on (i) completion of the SBA’s COC process within 15 days; and/or (ii) the agency’s willingness to wait for a COC determination if the SBA’s efforts take longer than that.

The case involved a Defense Threat Reduction Agency (DTRA) request for proposals (RFP) seeking offers from service-disabled veteran-owned small businesses (SDVOSB) to provide administrative support services at several DTRA locations. Award was to be made to the offeror that submitted the lowest-priced technically acceptable proposal. Among other things, technical acceptability turned on the offeror’s ability to hold a TOP SECRET facility clearance at time of proposal submission. Of the 24 proposals received, DTRA found 18 to be technically acceptable. But the proposal of N3 Government Solutions (N3GS), while it offered the lowest price, was rated unacceptable because N3GS had only an interim top secret facility security clearance, rather than a final clearance.

When N3GS learned of the reason for DTRA’s rejection of its proposal, it protested, arguing that the agency’s finding that N3GS had an unacceptable facility security clearance amounted to an adverse determination of responsibility -- and that DTRA had failed to refer the issue to the SBA for consideration under COC process. In response, DTRA took corrective action in the form of referring the issue to the SBA under its COC procedures and the initial protest was dismissed as academic.

In response to DTRA’s formal referral of N3GS’s responsibility to SBA for consideration under the COC process, SBA initially informed N3GS that it would decline to issue a COC because possession of a final top secret clearance at the time of proposal submission was required by the RFP. But when N3GS confirmed that it wished to continue with the COC process, the SBA promised to send an application letter and instructions. Before the SBA process was complete, however, DTRA notified the SBA it had decided to proceed with the contract award because DTRA had not received a response from the SBA within 15 working days, the minimum period for which agencies must hold an award under 13 C.F.R. § 125.5(c)(2) and FAR § 19.602-2 (“15 business days,” or longer by agreement). Although the SBA’s COC coordinator asked the DTRA contracting officer (CO) to agree to allow the SBA another 9 days to consider the COC referral (as contemplated by the regulations), the contracting officer ultimately declined that request. As a result, the SBA informed N3GS and DTRA it was closing the COC file and DTRA directed the awardee to resume contract performance.

N3GS filed this protest, challenging DTRA’s failure to fulfill the corrective action announced in response to N3GS’s earlier protest because the CO lacked a valid basis to deny the SBA additional time to consider issuing a COC. The Government Accountability Office (GAO) made short work of this argument, first pointing out that it has previously held that “the granting of such extensions is entirely discretionary with [the contracting agency].” GAO went on to explain that it will not review a contracting officer’s discretion in denying an extension for the COC process “absent a showing that the decision to deny the request may have been influenced by fraud or bad faith. Since N3GS did not show, or even allege, that either the SBA’s failure to timely complete the COC process within 15 days or the contracting officer’s decision not to extend that time was caused by fraud or bad faith, GAO found no basis to question the CO’s decision -- and denied the protest.

While the SBA’s COC procedure does provide a potential protest strategy for disappointed small business offerors in certain circumstances, it is important to remember the limitations of that approach. Protesters pursuing a COC argument need to (i) do everything they can to make the SBA’s process run smoothly and quickly; and (ii) avoid relying too heavily on the CO to give the SBA extra time if it proves necessary.

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