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Appeal challenging an SBA size determination is denied. The SBA had found that based on the three-year average of the its annual receipts, the awardee of a small business set aside was not small. The awardee argued that the SBA had used the wrong standard to calculate size. The awardee contended that the Small Business Runway Extension Act of 2018 changed the three-year lookback period to five years. OHA, however, ruled that the Runway Extension Act’s five-year lookback period was not operative until SBA issued a final rule—through the notice and comment rulemaking process—that implemented five-year period.

The Department of Homeland Security awarded Diversified Protection Corporation a small business set aside contract to provide for security services. An unsuccessful offeror, Chenega Global Protection, filed a protest challenging Diversified’s size. In response to the protest, Diversified acknowledged that its average annual receipts for the last three years exceeded the $20.5 million size standard for the procurement. Nevertheless, Diversified argued, under the Small Runway Extension Act of 2018, the SBA was required to calculate size based on averaged receipts for the last five years.

The SBA Area Office determined that it was not required to apply the Runway Extension Act’s five-year lookback period. Accordingly, it sustained the protest, finding that Diversified was not a small business. Diversified then appealed to the SBA’s Office of Hearings and Appeals.

OHA agreed with the Area Office. Citing two previous decisions—Size Appeal of Cypher Analytics,SBA No. SIZ-6022, and Size Appeal of Advanced Technology Systems Company, SBA No. SIZ-6034—OHA noted that the Runway Extension Act’s five-year period was not operative at the time Diversified certified its size. The Small Business Runway Extension Act only amended one sentence concerning the promulgation of size standards. The Act did not change the provisions of the Small Business Act that require the SBA Administrator to change size standards through notice and comment rulemaking. Thus, until the SBA implemented a new five-year rule through the rulemaking process, the old three-year lookback period still governed.

SBA implemented a final rule adopting the five-year lookback. That rule, however, only became effective on January 6, 2020, after Diversified had submitted a proposal for the small business set aside.

Diversified is represented by Scott R. Williamson and Daniel R. Williamson of Williamson Law Group, LLC. The protester, Chenega Global Protection is represented by William K. Walker of Walker Reausaw.