OHA determined the agency properly assigned a solicitation an NAICS code for consulting services. The COFC found OHA botched the ruling, and that the agency should’ve assigned a different research and development code.
Consolidated Safety Services Inc. v. United States, COFC No. 23-521C
- NAICS Codes – The agency issued a solicitation set aside for small businesses. The agency assigned the solicitation the NAICS Code for Environmental Consulting Services. A firm challenged the assigned code. The firm argued the agency should have assigned the code for research and development.
- OHA Decision – SBA’s Office of Hearing and Appeals determined the environmental consulting code was appropriate. OHA drew a line between data collection and research. OHA reasoned most of the work under the contract was data collection, not research. Thus, the environmental consulting code was reasonable. The firm filed suit with the COFC objecting to the OHA decision.
- Government Discretion is Not Unlimited – The court noted at the outset that the government doesn’t have maximum discretion in assigning an NAICS code. It is not enough that a code is plausible for a contract. SBA regulations require the agency to assign the code that “best” describes the primary purpose of the contract.
- Solicitation Sought Research and Development – Applying this standard, the court found the agency assigned the wrong code. As an initial matter, the solicitation primarily sought research. Most of the tasks entailed some type of research, that is, investigation undertaken on a systematic basis to gain new knowledge. While the agency and OHA had characterized the solicitation as consulting or advising, the solicitation contained few consulting tasks.
- Line Between Data Collection and Research Is Illusory – The court opined that OHA’s line between data collection and research was “pure sophistry.” If this were the case, then Darwin’s work on the Galapagos Islands could be characterized as mere data collection, not research. The court reasoned that data collection is a necessary component of research.
- OHA Could Not Reasonably Find the Consulting Applied – The court vociferously disputed OHA’s determination that the consulting code applied. The court found OHA didn’t compare the industry description of environmental consulting to the NAICS manual to the solicitation. OHA didn’t evaluate the relative importance of the solicitation’s components. Indeed, OHA’s claim that the solicitation involved 60% consultation was baseless. OHA ignored that about 85% of the work would be performed by scientists, which is powerful evidence of research work. The court further concluded the OHA decision was inconsistent with and failed to reconcile OHA precedent.
The protester is represented by Stephen P. Ramaley, Roget V. Abbot, and Lauren S. Fleming of Miles & Stockbridge. The government is represented by Vijaya S. Surampadi, Brian M. Boynton, Patricia M. McCarthy, and Corrine A. Niosi of the Department of Justice.
–Case summary by Craig LaChance, Senior Editor
