In a recent size appeal case, Federal Performance Management Solutions, LLC (Appellant) has contested a determination that found them not to be a small business. Cognito Systems, LLC (Cognito) filed a size protest against Appellant, alleging a violation of the "2 year rule" for joint ventures. Let's delve into the key arguments presented by both parties and the subsequent ruling.
Analyzing the Arguments
The appellant is challenging the determination made by the Area Office regarding their violation of the "2 year rule" for joint ventures in the context of small business eligibility. They argue that they did not violate the rule because they did not receive a second contract after the rule came into effect. However, the Area Office concluded that the appellant is not a small business based on the date of their initial offer and their first award. According to the Area Office's findings, the appellant indeed violated the "2 year rule," regardless of the version of the rule applied.
The appellant raises two objections to the decision of the Area Office. Firstly, they claim that the incorrect version of the rule was applied and that the Area Office retroactively enforced the current version, which only became effective in November 2020. Secondly, the appellant argues that they did not violate the "3-in-2 rule," which was in place before November 2020, as they had only received one contract award during that period.
On the other hand, Cognito maintains that the specific date for determining small business status is irrelevant in this case, as the appellant violated the "2 year rule" regardless of the date. They argue that the Area Office correctly applied the two-year limitation that has been in effect since September 2018.
Furthermore, the appellant asserts that the Area Office's decision contradicts the statement made by the Small Business Administration (SBA) that the rule change would not have a retroactive effect. They deny any intention of misleading the Office of Hearings and Appeals (OHA), claiming that they quoted from the core part of the regulation. Additionally, the appellant argues that Cognito relies on language that no longer existed in the regulation as of the relevant date.
OHA's Conclusion
In response to Appellant's motion to reply, OHA denies the motion, citing the absence of new substantive issues introduced by Cognito's response. OHA acknowledges an error made by the Area Office in assessing Appellant's size. Although the size determination should have been made as of June 2022 instead of February 2023, OHA concludes that this error did not affect the case's outcome, as Appellant violated the "2 year rule" regardless.
To summarize, Appellant and Cognito presented contrasting arguments regarding the violation of the "2 year rule" for joint ventures. Appellant challenges the retroactive enforcement of the rule change and asserts that they did not violate the "3-in-2 rule." Conversely, Cognito contends that the specific date for determining size is inconsequential, as the violation of the "2 year rule" remains irrespective of the date. OHA acknowledges an error by the Area Office but maintains that it did not impact the ultimate decision.
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