Shaping Ground Rules: Protest Options Before Proposal Submission

Being competitive begins with understanding the ground rules of the game being played. In federal contracts, competitive ground rules are established by the solicitation. A duo of protest and appeal options provide powerful tools to influence the competitive ground rules and improve competitive standing.

NAICS Code Appeals

In one of the more masterful displays of bureaucracy, the Small Business Administration (“SBA”) leveraged the Census Bureau’s North American Industry Classification System (“NAICS”) codes to assign a corresponding size limit to each industry. These thresholds establish bright-line limits on size. Exceed the size standard by as little as a dollar, and the contractor will no longer qualify as small for federal procurements.

The FAR requires a NAICS code to be assigned to every solicitation. This assignment will determine the size threshold for a business to be considered small. If the procurement is set-aside for competition among small businesses, the NAICS code selection will exclude some contractors.

According to the FAR, “[t]he contracting officer shall determine the appropriate NAICS code by classifying the product or service being acquired in the one industry that best describes the principal purpose of the supply or service being acquired.” When selecting a code, contracting officers are directed to consider the descriptions in the NAICS Manual (another bureaucratic master class), the character of the goods or services being procured, the relative value and importance of the components, and the intended function of the items being procured.

Contractors disagreeing with the assigned code have an option for challenging the selection. Any contractor—including those excluded because they exceed the size standard of the selected code—may appeal the assignment to the SBA’s Office of Hearings and Appeals (“OHA”). If OHA grants the appeal, the contracting officer is required to amend the solicitation to reflect a new code. You can learn more about the NAICS appeal process here.

The trick with NAICS code appeals is that offerors must act quickly to preserve their rights. A NAICS appeal must be filed within 10 days of the solicitation being issued, or an amendment changing the NAICS code being issued. Missing these deadlines will close the window for an offeror to challenge a NAICS assignment.

NAICS appeals can be a powerful tool for small business contractors. If the NAICS code is changed to one with a higher size standard, new businesses may be able to participate. Alternatively, if the new NAICS code carries a smaller size, it can limit the number of competitors who qualify.

Solicitation Term Challenges

Agencies are given broad discretion to develop solicitations that adequately reflect their needs. The idea is agencies are best positioned to understand their unique needs, as well as how to meet those needs.

Discretion notwithstanding, there are some minimum requirements for solicitation content. For example, solicitations are required to provide sufficient information for offerors to compete intelligently. In the context of negotiated procurements, the FAR requires solicitations, at minimum, describe the Government’s requirements, anticipated terms of the resulting contract, instructions regarding the minimum contents of an offeror’s proposal, and the pertinent evaluation factors and their relative importance.

While agencies undoubtedly strive to create solicitations that provide offerors with adequate information to compete, there are circumstances where requirements are unclear, or terms limit competitor offerings. In these circumstances, prospective bidders may take concerns to the Government Accountability Office (“GAO”) or the Court of Federal Claims in the form of a protest.

Common grounds for challenging the terms of a solicitation at GAO include ambiguous requirements, or unduly restrictive requirements. To the extent GAO finds the terms of a solicitation ambiguous or unduly restrictive, it will recommend the agency revise the solicitation to clarify requirements.

Contractors that identify obvious ambiguities or unduly restrictive procurement terms must move promptly to preserve their rights. GAO’s bid protest regulations require protests raising glaring ambiguities in a solicitation or challenging restrictive terms to be filed before the deadline for proposal submission. Once this deadline passes, competitors can no longer raise these issues. The Court of Federal Claims has adopted a similar approach in a series of case decisions.

Take Home

Contractors have options for challenging the ground rules established by a solicitation. NAICS code appeals provide a way for contractors to challenge the size limitations of a small business set-aside procurement. Similarly, challenges to solicitation terms allow offerors to shape the competitive environment. In our experience, these tools get underutilized. Understanding how and when to employ NAICS appeals and solicitation protests can take a competitive proposal to a winning one.