Small Business Size and Status Protests Are Better Late Than Never

Many small businesses have encountered set-aside competitions where they either strongly believe, or know for certain, that a competitor has misrepresented its size or status. Some feel that agencies sometimes look the other way, or even purposely sidestep the small business rules, to allow favored firms of questionable size to compete for these contracts.

Although the small business size protest is an available remedy, the five-day deadline for filing a well supported, "non-speculative" size protest often presents a barrier for small companies. It is very challenging to research and draft a quality size protest in just five working days. Also, what if the company does not learn that the competitor is large or ineligible until after the five-day deadline? What can be done in that situation?

Two little known contracting regulations could come to the rescue. The first rule is that there is no time limit on size or status protests filed by the Small Business Administration (SBA) itself. The second rule is that the contracting officer is required to transmit every size protest, filed within the five-day window or not, to the SBA. So even if a small business is past the five-day window, if it has actionable information, it still may file a size protest. Accordingly, the contracting officer is required to send it to the SBA for review. The SBA receives these "untimely" protests because the SBA can choose to adopt the protest as its own without regard to the time limits that apply to contractor size protests. The SBA will dismiss the contractor's protest, but if the SBA chooses to take the ball, the protesting contractor actually can end up with a stronger advocate than its own firm.

Filing late is only a fallback strategy. Filing on time is much preferred because the contract award can be prevented, and review by the SBA is required. On a late protest, review is discretionary, and obtaining relief is not a high probability. On the other hand, if the late protest is strong enough, the contracting officer might even terminate the existing contract.

So, if a company has information suggesting that a competitor who received an award was not eligible because of size or status, it may be better to file a late size or status protest than none at all—if the claim is strong—because there is at least a chance for relief if the SBA itself adopts the protest as its own.

Finally, a size protest is not the only recourse. In some situations, it may be possible to file a Qui Tam whistleblower case and recover a share of the contract revenues the misrepresenting contractor has improperly received.

Al Krachman, Esq., is a partner at Blank Rome LLP. He can be reached at Krachman@blankrome.com.

How many small business contract challenges have died on the vine because of a too-short deadline period?