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The SBA Area Office determined the awardee violated the ostensible subcontractor rule. However, OHA reversed based on the awardee’s teaming agreement with the subcontractor. The protester appealed to the COFC, which upheld OHA’s reversal. The teaming agreement not only showed that the awardee would perform most of the construction work but also gave the awardee overall management and supervision over contract performance.
Daniels Building Company, Inc. v. United States, COFC No. 24-1787
- Context – The SBA Area Office (AO) determined the awardee’s subcontractor would be performing the primary and vital requirements of the contract in violation of the ostensible subcontractor rule. The awardee appealed to OHA, which reversed. The protester then appealed to the COFC.
- Appeal to COFC – The protester claimed OHA erred when it determined the awardee qualified as an eligible small business for the award. It alleged the decision was arbitrary and capricious and violated the ostensible contractor rule. COFC disagreed and granted judgment in favor of the government and the awardee.
- Primary and Vital Determination – The protester contended that OHA improperly believed that performing a significant portion of the actual construction work equated to performing the primary and vital requirements of the contract. It supported its claim by citing a section of OHA’s decision. COFC noted that the protester omitted several preceding sentences that also considered that the awardee’s teaming agreement gave it overall management and supervision control over contract performance.
- Unusually Reliant Determination – The protester argued OHA’s review of unusual reliance was improper. The AO did not consider this issue because it had already determined that the subcontractor would perform the primary and vital requirements of the contract. The Court ruled OHA could properly determine the issue. When the awardee appealed the AO’s decision, both parties continued to present arguments under the unusual reliance prong. This indicated the issue was neither moot nor abandoned.
- Evidence of Unusual Reliance – The protester also alleged OHA erred when it found “no evidence” that the awardee relied on its subcontractor to win the contract. It maintained that the awardee relied on the subcontractor’s experience and connections to obtain quotes from subcontractors. The Court noted a subcontractor helping a prime contractor obtain bids points to a probable existence of unusual reliance, though not certain. OHA addressed this issue in its decision. Thus, COFC refused to disturb the determination.
- Limited Analysis – The protester finally contended that OHA improperly limited its analysis to the four factors in Dover Staffing. The Court promptly disagreed finding the awardee’s teaming agreement was the primary basis of OHA’s decision to reverse the AO’s decision. As such, the Court ruled in favor of the government and the awardee.
— Case summary by Joshua Lim, Assistant Editor.
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