Growing Out of Small Business Size Status

A recent Comptroller General decision highlights what should happen under procurement regulations when a company grows out of its small business status and holds a contract that was awarded prior to growing out of its small business status.+

In 2009, the Air Force issued a solicitation for  IT services. The solicitation was set aside for service-disabled, veteran-owned small businesses (SDVOBs) holding ID/IQ (Indefinite-Delivery/Indefinite-Order) contracts with GSA. The solicitation called for a base period of five years and a five year option.

A company named OBXtek won the award. Five years later (in 2014), the Air Force exercised the five year option. However, when the Air Force exercised the option, OBXtek was no longer a small business - it had grown.

Another company protested the Air Force's option exercise on the basis that OBXtek was no longer a small business and the award was set aside for small businesses. The protestor argued that the contracting officer failed to exercise due diligence with respect to OBXtek's SDVOSB status (among other things).

The Comptroller General (CG) denied the protest. Essentially, the CG (with help from the Small Business Administration) ruled that an offeror's size status is determined at the time it submits its proposal, not at the time that it is issued a task order.