Protest challenging awardee’s size and the agency’s evaluation is dismissed in part and denied in part. The protester argued that the awardee had an ostensible subcontractor and that the agency should have referred the matter to the SBA for a size determination. The court found that this argument was barred by the doctrine of exhaustion of administrative remedies. The protester’s allegations were effectively a size protest that should have first been filed with the SBA. The protester also challenged a risk assigned to its proposal arguing that it was irrational for the agency to assign a strength and a risk for the same proposal feature. The court, however, found that this was not a contradiction. A proposal feature can provide benefits and pose risks simultaneously.
The Census Bureau issued a solicitation seeking IT support for it Enterprise Reporting System. The solicitation was set aside for women-owned small businesses. Three offerors, including Harmonia Holdings Group and Alethix, LLC submitted proposals. The Census Board determined that Alethix had the highest-rated technical proposal. Although Alethix’s price was slightly higher than Harmonia’s, the agency determined that Alethix’s proposal represented by best value. Harmonia filed a protest with the Court of Federal Claims, challenging the award to Alethix.
Harmonia claimed in one of its protest counts that Alethix’s proposed subcontractor was an ostensible subcontractor that would perform the vital parts of the contract. This indicated that Alethix was not a small business. Thus, Harmonia argued, the Census Bureau should have referred Alethix to the small business administration for a size determination.
The government moved to dismiss this protest ground, arguing that Harmonia was effectively making a size protest. Under the doctrine of exhaustion of administrative remedies, a protester cannot assert a size protest in court until it has filed and completed a size protest with SBA.
The court agreed with the government. SBA regulations set forth a procedure for protesting size. The protester must file a size protest with the contracting officer, who forwards it to an SBA Area Office. The Area Office makes a size determination. If the protester disputes the size determination it can then appeal to the SBA’s Office of Hearings and Appeals. Harmonia had not filed a size protest and not followed the SBA procedures. The court could not consider a challenge to Alethix’s size until Harmonia had gone through the size protest process.
Harmonia attempted to argue that it was not asserting a size protest. Rather, the company argued, it was challenging the agency’s failure to recognize the ostensible subcontractor issue and refer the matter to the SBA. The court, however, didn’t buy this distinction. Harmonia was essentially asking the court to refer the matter to the SBA for a size determination, which was the equivalent of filing a size protest and seeking a size determination. The court accordingly dismissed this portion of the protest.
Harmonia also challenged a risk it received for proposing to cross-train development staff. The Census Bureau had opined that cross-training staff could cause delays in delivery of software. Although the agency had found that cross-training staff created a risk of delayed delivery, it also assigned a strength for the cross-training on the grounds that it could make the team more efficient. Harmonia argued that it was irrational for the government to assign a strength and a risk to the same feature of its proposal.
But the court opined that a proposal could simultaneously have benefits and post some risk. The agency saw the benefits cross-training could provide to the operation of team but also believed it could cause a risk of delay with software delivery. The Census Bureau had also noted that the cross-training presented only a low risk, so it was not as incongruous as it appeared. What’s more, the agency had been consistent in its approach to cross-training; it had also assigned Alethix a strength and a weakness for proposing cross-training.
Harmonia further challenged a risk it had received due to the type of the data warehousing and development suite it proposed. Harmonia argued that it did not propose that it would necessarily use the suite but only listed that suite as example of the types of suites it could use.
The court rejected this argument, reasoning that if the agency misunderstood Harmonia, it was Harmonia’s fault. Harmonia had the obligation to submit a well-written proposal to make it clear what kind of suite it was using.
Finally, Harmonia objected to the best value tradeoff arguing that it should have received award because it had a higher rated technical proposal and lower price than Alethix. But this argument hinged on the success of Harmonia’ other arguments. Harmonia only had a higher-rated proposal than Alethix if the court accepted the agency had erred in assigning risks to Harmonia’s technical approach. Because the court did not believe the agency had erred in assigning risks, the challenge to the best value tradeoff was meritless.
Harmonia is represented by W. Brad English, Emily J. Chancey, and Michael W. Rich of Maynard Cooper & Gale. The intervenor, Alethix, is represented by Jonathan M. Baker, Eric M. Ransom, and Zachary H. Schroeder of Crowell & Moring LLP. The government is represented by Bryan M. Byrd, Zachary J. Sullivan, Patricia McCarthy, Robert E. Kirschman, Jr., and Joseph H. Hunt of the Department of Justice as well as Wilmary Bernal and James Latoff of the Small Business Administration.
