Bundling of Agency’s Requirements Does Not Violate Government’s Commitment to Small Business Participation; Emergency Planning Management Inc. v. United States, COFC No. 19-1024

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Protest alleging that the agency had improperly bundled distinct agency requirements is denied. The agency had a rational basis for bundling the requirements. The agency had given offerors sufficient notice of its intent to bundle. The bundling did not violate the statutes or regulations that require small business participation. And the solicitation did not improperly favor HUBZone businesses at the expense of other small businesses.

Traditionally, the Department of Education solicited student loan servicing and student loan default collection services separately. But in 2019, ED issued a solicitation that consolidated loan servicing and joint debt collection, so contractors would have to be able to provide both services. Emergency Planning Management, Inc. protested the terms of the solicitation, contending that ED had inappropriately bundled loan servicing and debt collection. EPM and the government then both moved for judgment on the administrative record.

The court noted at the outset that it had already found, as part of another protest, that ED had a rational basis  for consolidating student loan servicing and collection processes. ED conducted market research and consulted with subject matter experts and determined that consolidation was feasible. An agency is given wide discretion in determining its needs. The court saw no reason to infringe on that discretion.

EPM argued that the bundling was improper because ED did not provide notice of its intent to bundle the contracts under FAR 7.107-5(a). But the court noted that FAR provision only requires that 30 day notice is given to incumbent contractors. Here, EPM was not an incumbent.

EPM also contended that ED erred in not consulting with the appropriate small business specialist before bundling and thus violated FAR 7.104(d). The court, however, noted that ED not only notified SBA about the solicitation, but it also provided SBA with draft of the small business participation plan.

EPM then argued that bundling loan servicing and debt collection will make it hard for small businesses to compete for awards and thus violates the statutory and regulatory provisions that commit the government to small business participation. The court was unpersuaded. ED was aware of the potential effects of consolidation on small businesses and made efforts to promote their participation in the new solicitation. For instance, the solicitation was open to all entities and permitted entities to associate as joint ventures when submitting proposals. It also required offerors to submit a Small Business Participation Plan, with the goal of having small businesses perform 32 percent of the subcontracted work.

ED’s solicitation required that the utilization of HUBZone businesses increase over the first two years of the contract. EPM alleged that this favored HUBZone businesses at the expense of other small businesses. The court disagreed, finding that the HUBZone set aside did not undermine the goals of the Small Business Act and they were not anti-competitive. No statute or regulation prohibits ED from establishing larger HUBZone participation goals. Additionally, SBA reviewed and endorsed ED’s HUBZone goals. What’s more, the court concluded, EPM could not establish that it had been prejudiced by the HUBZone goals; it had not articulated how these goals resulted in a competitive harm that was distinct from harm suffered by other entities.

EPM is represented by Joshua B. Duvall of Matross Edwards, LLC and Matthew R. Keller of Praemia Law, PLLC. The government is represented by David R. Pehlke, Joseph H. Hunt, Robert E. Kirschman, Jr., and Patricia M. McCarthy of the U.S. Department of Justice as well as Tracey Sasser of the U.S. Department of Education.

COFC – Emergency Planning Management