One of the primary benefits of the SBA's 8(a) Business Development Program is the ability of the program participant to pursue and receive sole-source contracts with various Federal Agencies. A sole-source contract is generally defined as any contract entered into without resort to the competitive process, based on a specific justification (i.e., it is authorized by law, or there is only one known source that can perform the work or supply the contract requirements).
8(a) contracts can also be awarded on a competitive basis and such contracts are subject to normal protest procedures/bases. However, it has generally been understood that protesting an 8(a) sole-source award is challenging and can only be done on the basis that "bad faith" was involved. A recent GAO protest confirmed that this is still the applicable standard.
On December 28, 2016, the GAO issued a decision in the matter of NTELX, Inc., B-413837 which involved a protest by NTELX, Inc., of the award of a contract to TTW Solutions Inc., an 8(a) small business out of Potomac, Maryland for the operation and maintenance of the Consumer Product Safety Commission's (CPSC) international trade data system risk assessment methodology software system.
The relevant facts of this case are:
- In August 2010, CPSC issued an 8(a) sole-source award to TTW for development of a Ram 1.0 system. NTELX acted a subcontractor to TTW on the contract and the system was developed using NTELX's proprietary software for which CPSC was granted a license.
- Thereafter, CPSC awarded an 8(a) sole-source award to TTW for the development of RAM 2.0, which would have the same functionality of RAM 1.0 but which used open source software.
- After RAM 2.0 was completed, CPSC awarded another 8(a) sole-source award to TTW for the continued operation and maintenance of the RAM 2.0 system (note that it is this contract that is the subject of the protest).
Ultimately, the GAO denied the protest, finding that although NTELX may disagree with the agency's business decision to award the third contract to TTW, the agency had not acted in bad faith in making the award. The agency represented that RAM 2.0 was fully functional and was developed without the need for proprietary software (which was a primary reason for RAM 2.0) and that the agency properly accepted the RAM 2.0 system and paid the final invoice. In rendering its decision, the GAO stated:
"Because of the broad discretion afforded the SBA and the contracting agencies under the applicable statute and regulations, our review of actions under the 8(a) program generally is limited to determining whether government officials have violated regulations or engaged in fraud or bad faith. Government officials are presumed to act in good faith and a protestor's claim that contracting officials were motivated by bias or bad faith must be supported by convincing proof; our Office will not attribute unfair or prejudicial motives to procurement officials on the basis of inference or supposition."
The 8(a) program is often criticized based on the argument that sole-source contracts may be awarded to companies that are not qualified and/or lack the proper qualifications/past performance to perform the contract and this decision is not good news to those companies. However, this decision is good news for many well-qualified, deserving 8(a) firms that seek to avoid frivolous protests. In addition, it serves as further reinforcement of the benefits of the 8(a) program for qualified firms.
For questions about the 8(a) program, sole-source contracts and other government contract issues, please contact us at firstname.lastname@example.org.