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The appellant filed a size protest, alleging the awardee of a small business contract relied on an ostensible subcontractor. The SBA Area Office denied the protest. The appellant appealed to OHA, arguing the Area Office failed to specify the primary and vital functions of the procurement when it found the awardee did not violate the ostensible subcontractor rule. OHA dismissed the argument because the Area Office had discussed the issue in a prior size protest.
Size Appeal of Kupono Government Services, LLC, SBA No. SIZ-6349 (2025)
- Context – The appeal involved two size determinations, which the SBA Area Office twice concluded, the awardee, Eagle Harbor, LLC was not in violation of the “ostensible subcontractor” rule, 13 C.F.R. § 121.103(h)(3). The primary and vital functions of the procurement were to provide “management services and oversight duties to support and oversee the training operations and maintenance” at the National Training Center (NTC).
- Safe Harbor Provision – The parties first disputed whether Eagle Harbor needed to show that it would adhere to the limitations on subcontracting restrictions at 13 C.F.R. § 125.6. SBA clarified that this “safe harbor” provision would only be effective after May 30, 2023. The provision was not applicable because the RFP was issued well before this date.
- Unspecified Functions – The Area Office made two size determinations. After the first determination, the agency took corrective action, evaluated revised proposals, and again awarded the contract to Ealge Harbor. The appellant filed a second size protest. The Area Office found the contractor had not violated the ostensible subcontractor rule. The appellant argued that the second determination did not specify the primary and vital functions of the procurement. While this was true, OHA thought it was immaterial because the first determination discussed the primary and vital functions, and that portion of the RFP remained unchanged by the second determination.
- Different Requirements – The appellant asserted the Area Office should have found training services alone to be the primary and vital requirements of the contract. OHA disagreed as the RFP explicitly stated that the agency’s objective was to acquire “management services to support and oversee the operations and maintenance of the NTC.”
- Inconsistency – The appellant also pointed out that the Area Office’s analysis of primary and vital contract requirements was inconsistent with OHA’s decision in a predecessor procurement for similar work. OHA held that a contract’s requirements are ascertained from the solicitation itself, not from prior solicitations.
- Four Factors – OHA ruled that the Area Office reasonably applied the four-factor test in assessing the potential existence of unusual reliance on a subcontractor: (1) The proposed subcontractor was an incumbent ineligible to compete, (2) the prime contractor planned to hire the large majority of its workforce from the subcontractor, (3) the prime contractor’s proposed management served with the subcontractor on the incumbent contract, and (4) the prime contractor lacked relevant experience and must rely upon its more experienced subcontractor to win the contract. Because none of these four factors existed, OHA affirmed the Area Office’s size determinations that Eagle Harbor did not violate the “ostensible subcontractor” rule.
Robert K. Tompkins, Hillary J. Freund, Kelsey M. Hayes, and Richard Ariel of Holland & Knight LLP appeared for the Appellant. James Y. Boland and Caleb E. McCallum of Venable LLP appeared for Eagle Harbor.
— Case summary by Joshua Lim, Assistant Editor.
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