It is the end of the federal government’s fiscal year and ‘tis the season for protests. Protest lawyers are sharpening their keyboards. And some unfortunate small businesses are about to lose a hard-won contract due to a successful size protest.
But the story for your business does not have to end with a lost contract and wasted proposal effort. Many size protest grounds can be adequately defended with a little advance planning, if you know what to look for.
Having been on both sides of many size protests, I know how a size protest lawyer thinks and how he or she would try to build a case against you. Although each protest is unique, in most cases a size protest lawyer will take the following steps:
Check your website. A company’s website often contains a treasure trove of fodder for a size protest. Your website may contain statements about your annual revenues and your partnerships with large businesses. Your website may contain contact information that is the same or similar to another business. Your website may contain a press release announcing a merger or acquisition, or the hiring of a key person from another firm. Your website may list the members of your management team, which includes individuals who are also involved in the management of another firm. A size protest lawyer will be looking for information like this to support arguments about your company’s revenues and affiliations with other businesses.
Google your company. A few simple internet searches will often turn up information useful for a size protest. For example, a size protest lawyer may find links to a webpage for a joint venture in which your company is a partner. Or the search may turn up outside business interests for your company’s key personnel, including links between your company and other businesses owned by you or your close family members. A size protest lawyer will also check websites and databases that track federal spending to get an idea of your contract volume and areas of focus with the federal government. This information can be used to argue that your company is affiliated with other businesses and that your company’s many contract wins has pushed it over the revenue limit for your industry.
Check your corporate records. In many states, your company’s corporate filings are available online. Your corporate filings may list individuals or other entities that are involved with the ownership and management of your company, as well as other entities. Your corporate filings may reveal that your company has used an address that is the same or similar to another company’s address. Your company’s profile on SAM.gov may point to the same address, or it may contain an outdated list of the NAICS codes in which you operate. A size protest lawyer will be looking for information like this to support arguments that your company is affiliated with another business due to common ownership, common management, or shared facilities, or that your company lacks the experience necessary to manage a project in a particular industry.
Determine if you are using a subcontractor. It is often common knowledge within an industry when a prime contractor is teamed with a subcontractor in pursuit of a project. Or at least there may be rumors. A size protest lawyer may be able to confirm the existence of your subcontractor through publicly-available documents such as the sign-in sheet from a site visit. But hard evidence is not necessary because a rumor will suffice. All your competitor must do is allege that your company is utilizing a subcontractor, even if they do not know the identity of your subcontractor. That is enough for SBA to open an investigation into ostensible subcontractor affiliation.
These steps underscore an important point about size protests: it is not difficult to file one. SBA will dismiss a size protest that does not contain specific allegations, but that is not a high bar for the protester. Chances are, your competitor can stitch together adequate arguments based on information gleaned from your website, simple internet searches, and industry rumors about you. When that happens, SBA will open an inquiry and conduct a full investigation, often going further or in more detail than the protest against you.
Because it is relatively easy for a competitor to trigger an SBA investigation of your company, it is critical to be proactive in minimizing the risks of a size protest. Make sure your website is up-to-date and does not reveal unnecessary or misleading information. Ditto for your corporate records on file with the states in which you operate, your Dun & Bradstreet and SAM.gov profiles, and other common public sources of information about your business. Be wary of issuing a press release that touts your revenue or a key acquisition, particularly if you will soon be submitting a proposal for a set-aside contract.
And when you hire a subcontractor, make sure the teaming agreement, the subcontract, and your proposal assigns discrete functions to the subcontractor and make clear that your company will perform the primary and vital requirements of the project.
The old adage is true for size protests: an ounce of prevention is worth a pound of cure. Take two and then call me to defend the protest.