"The Bigger They Come, The Easier They Fall: An Introduction to the World of Size Protests" by Alexander Gorelik Excerpt from CM Magazine, May 2018
For the last two decades, the Small Business Administration (SBA) has continually sought to address the oversights resulting in large firms receiving U.S. federal government contracts set aside for small businesses.
Those efforts, however, have not been particularly successful. The latest data show that in 2016 alone, as many as 5,000 contractors received a small business set-aside when they did not qualify for “small business” status. For small businesses in the federal space, which often depend on such awards for significant portions of their revenue, statistics of this sort are more than frustrating. However, vigilant offerors have a means of protecting themselves from falling victim to their outsized competitors: the size protest.
The Solicitation
The size protest process begins with the solicitation. The Federal Acquisition Regulation (FAR) requires that all small business set-aside solicitations above the micro-purchase threshold specify an applicable Northern American Industry Classification System (NAICS) code, which ultimately functions as an identifier for the relevant industry. The codes themselves come with an associated size standard that the solicitation will also identify per the FAR. Those standards then establish specified limits for determining whether a certain company may participate as a “small business.” These limits are most often set at a required average number of employees or average annual receipts.
In practice, however, the “small business” qualification is mostly based on a bidder’s own representations of its status under the criteria.10 While the FAR requires “good faith”11 in these representations, and various laws heavily punish fraudulent representations, these measures do not completely deter size status misrepresentations. This is where a timely size protest can often play the deciding role in protecting the interests of a qualified small business.
Those efforts, however, have not been particularly successful. The latest data show that in 2016 alone, as many as 5,000 contractors received a small business set-aside when they did not qualify for “small business” status. For small businesses in the federal space, which often depend on such awards for significant portions of their revenue, statistics of this sort are more than frustrating. However, vigilant offerors have a means of protecting themselves from falling victim to their outsized competitors: the size protest.
The Solicitation
The size protest process begins with the solicitation. The Federal Acquisition Regulation (FAR) requires that all small business set-aside solicitations above the micro-purchase threshold specify an applicable Northern American Industry Classification System (NAICS) code, which ultimately functions as an identifier for the relevant industry. The codes themselves come with an associated size standard that the solicitation will also identify per the FAR. Those standards then establish specified limits for determining whether a certain company may participate as a “small business.” These limits are most often set at a required average number of employees or average annual receipts.
In practice, however, the “small business” qualification is mostly based on a bidder’s own representations of its status under the criteria.10 While the FAR requires “good faith”11 in these representations, and various laws heavily punish fraudulent representations, these measures do not completely deter size status misrepresentations. This is where a timely size protest can often play the deciding role in protecting the interests of a qualified small business.
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