The decision on whether or not to set-aside a procurement for small business is based on Federal Acquisition Regulation (“FAR”) Subpart 19.5. When a business is upset because a procurement was set-aside, or because it was not set-aside, this matter can be protested.
Some contractors have taken their set-aside protest to the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”). The mission statement of OHA is: “The Office of Hearings and Appeals' mission is to provide an independent, quasi-judicial appeal of certain SBA program decisions.” The key here is “certain SBA program decisions.” This would include OHA’s consideration of whether a business is small or not, under SBA’s size standards. The initial determination of “smallness” is made by an SBA area office, and then can be appealed to OHA. However, OHA has made it clear on numerous occasions that “OHA has no jurisdiction to review a contracting officer’s decision not to set aside a procurement for small business.” Nor does OHA review a decision to set aside. Latvian Connection, LLC, SBA No. NAICS-5534 (Feb. 20, 2014).
However, the Government Accountability Office (“GAO”) has jurisdiction to determine if a decision to set aside or not set aside a procurement was made in accordance with law and regulation and was rational. For example, see Walden Security, B-407022, Oct. 10, 2012, 2012 CPD para 291 (GAO considers a protest challenging an agency’s decision to set aside a procurement for small business) or American Medical Equipment Company, B-407113, November 8, 2012, 2013 CPD para 51(GAO considers an agency determination not to set aside a procurement for small business). The GAO, however, will not consider a protest of the size of a contractor (whether it is small or not), or whether a proper North American Industry Classification Code (“NAICS”) has been selected, since the SBA (and OHA) are assigned that responsibility by law. 15 U.S.C. Sec. 637(b)(6)..
TIPS: (1) If you want to protest a contractor’s size, submit your protest to the Contracting Officer (as required by SBA rules), and he or she is required to transmit that size protest to the Area Office, whose opinion can be appealed to OHA. OHA has specific jurisdiction.
(2) If you want to protest a decision to set aside or not set aside a procurement, submit your protest to the GAO. You could also go to the Court of Federal Claims, but GAO is the more likely forum.
(3) Do not submit size protests to GAO, and do not submit decisions on set asides to OHA.