by Sheryl Birsky, SJ&A

A recent bid protest decision by the GAO held that an agency had improperly issued a solicitation as a small business set-aside because the agency’s market research did not reasonably consider whether the identified small businesses were capable of performing the contract requirements. The decision (Triad Isotopes, Inc., July 2015) can be found at http://www.gao.gov/assets/680/671626.pdf. It is not enough to determine that there were at least two small business concerns who could meet the RFQ requirements. Agency procurement officials must also make reasonable efforts to ascertain whether those small businesses are able to perform the work.

In the protest, Triad (a large business) contended that searching the VetBiz and DSBS databases for small companies under NAICS code 325412 could not support a set-aside for the Department of Veterans Affairs because NAICS code 325412 includes businesses manufacturing all types of pharmaceuticals, “including cold medicines and lip balms”  — not the specific type of pharmaceutical required in the RFQ. Triad argued that the VA’s market research was flawed and inadequate. GAO agreed.

The GAO wrote that under the FAR’s “rule of two,” a procurement with an anticipated dollar value of more than $150,000 must be set aside for small businesses when there is a reasonable expectation that offers will be received from at least two responsible small business concerns, and award will be made at a fair market price. The “reasonable expectation” determination, in turn, rests on market research.

Specifically, “the agency’s database searches were based solely on the RFQ’s NAICS code, which as mentioned above, covers a wide range of pharmaceutical manufacturing – from the manufacturing of lip balms, to the manufacturing of nuclear medicine (e.g., radioisotopes).”  There was “no indication in the market research report, or otherwise, that any of the identified companies are radiopharmaceutical providers or have the required nuclear pharmacy licenses to perform under the contract.”

In short, GAO sustained the protest, concluding that “it was not reasonable for the agency to base its assessment of the availability of small business concerns on search results that merely identified the existence of small businesses under the pertinent NAICS code.”

What does this mean for Small Businesses seeking set aside work? You can help the Government meet their set-aside goals by providing the right data for their research, including the following:

1. Respond to Requests for Information (RFI) fully – address the specific requirements and do not just forward corporate boilerplate! Put time into tailoring them for the effort. These responses are dual-purposed for the Government: They may determine the procurement strategy for the Contracting Officer, as well as provide valuable technical information for the Government Program Manager. On both counts, this is an opportunity to sway decision making—make your RFI count!
2. Ensure that the corporate information you provide in Government databases are accurate. Be as specific as you can wherever you can. There may not be an RFI – but only cursory research done by a Contracting Officer. As well, ensure that your website is detailed and updated.
3. When making your marketing Call Plans and implementing your Opportunity Capture activities, be sure to include the Contracting Officer and relevant COTRs. Provide detailed specifics related to past performance, licenses, and certifications, as well as the corporate vehicles and NAICs codes that are applicable to your company.

For more information about Small Business Set Aside strategies, contact Sheryl Birsky at Sheryl@sidjaffe.com or phone 202-785-5811.