US Court of Federal Claims releases decision in protest denial of Army Credentialing and IT Services requirement

Federal Performance Management Solutions (“FPMS”) protests the Department of the Army’s (“Army”) denial of its bid for a contract to provide credentialing and information technology (“IT”) services for Army Reserve medical providers.  Compl., ECF No. 1.  The Small Business Administration’s (“SBA”) Office of Hearings and Appeals (“OHA”) determined that FPMS did not qualify as a small business and thus was ineligible for award.  Compl.  FPMS argues that OHA’s decision reflects a misinterpretation of 13 C.F.R. § 121.103(h)—the regulation defining when a joint venture of two or more businesses may submit an offer as a small business for a federal procurement.  Id.  According to FPMS, OHA’s decision is arbitrary, contrary to law, and prejudicial…. For the reasons below, Plaintiff’s Motion for Judgment on the Administrative Record is DENIED.  Defendant’s and Defendant-Intervenor’s cross-motions are GRANTED…

On May 8, 2023, Cognito filed a size protest challenging FPMS’s status as a small business.  AR 590, 3162.  According to Cognito, a JV under the SBA’s Mentor-Protégé program “cannot continue to submit proposals and receive awards 2 years after its first award.”  AR 601, 2517.  It asserted that because FPMS is a JV and received its first contract award in September 2018, its submission for the instant procurement “is well pas[t] the allowable two-year period.”  Id.  Accordingly, “FPMS is not eligible for award” of this small-business set aside procurement.  Id.   On June 26, 2023, the SBA Area Office sustained Cognito’s protest.  AR 2516–22.  The Area Office found that February 23, 2023—the date FPMS submitted its final proposal—was the applicable date for the instant size determination.  AR 2518.  However, since FPMS offered its proposal well over two years after its first contract award in September 2018, the Area Office concluded that FPMS violated 13 C.F.R. § 121.103(h), under either its previous or current version.  AR 2518–22.  Because Apprio and PM Consulting are affiliated, and Apprio is a large business, FPMS was not eligible for the small business set-aside procurement under the size standard.  Id.  The Area Office found “absurd” FPMS’s arguments to the contrary, remarking that FPMS was essentially trying to argue it “should not be bound by the 3-in-2 Rule in effect when it received its first award.”  AR 3165. D. FPMS’s Appeal to OHA FPMS appealed to OHA.  AR 3139.  FPMS maintained that June 7, 2022, was the effective date for its size determination, and that the Area Office improperly used February 23, 2023, as the date of its initial proposal submission.  AR 3146.  FPMS also argued that the Area Office erroneously considered FPMS’s September 2018 contract award in its affiliation determination, which contradicted “the plain text of the regulation.”  AR 3151.  Thus, FPMS claimed it had not violated the regulation and should not be barred from award.  AR 3149–56. Finding “no merit” to FPMS’s contentions, OHA affirmed the Area Office’s decision.  AR 3640–41.  OHA agreed that “the Area Office erred in concluding that [FPMS’s] size should be assessed as of February 23, 2023, rather than as of June 7, 2022.”  AR 3640.  Nonetheless, such error was harmless because either date precludes FMPS’s eligibility for procurement.  AR 3641, 3643.  In other words, FPMS “has not shown that this error on the part of the Area Office might in any way have affected the outcome of the case.”…

See the decision here.

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