Small Business Set-Asides are Themselves “Competitive.”

If the law requires competitive bidding for a government contract, and an agency designates a contract as one for small businesses only, does the removal of large businesses from the contracting pool itself render the solicitation non-competitive? The Court of Federal Claims says “no.”

A bid protest attorney from Dave Albo – Attorney herein digests, in plain English, the most recent decision from the Court of Federal Claims. The case is Res-Care, Inc. v. United States, 107 Fed. Cl. 136 (November 6, 2012).

Res-Care, Inc. was the incumbent contractor for the operation of the Blue Ridge Job Corps Center (“Blue Ridge”). The agency decided to designate the contract as a small business set-aside. Res-Care was not a small business and had evidence that, as the incumbent, it was doing a great job and that small businesses, as a group, have not done as good a job. It filed a filed a pre-solicitation bid protest.

It argued that the Workforce Investment Act (“WIA”), 29 U.S.C. § 2887(a)(2)(A) precluded small-business set-asides because that law required that awards be made on a “competitive basis.” It cited 2887, which reads: “Except as provided in subsections (a) to (c) of section 3304 of Title 41, the Secretary shall select on a competitive basis an entity to operate a Job Corps center . . . .” The 3304 exceptions clearly were inapplicable.

The Court of Federal Claims, however, disagreed with the premise. It found that small business set-asides, with two potential bidders, are in fact conducted on a competitive basis under a different statute, 41 U.S.C. § 3303. It wrote that these set-asides are themselves a type of competitive procurement; so, there was no tension between WIA and the use of section 3303 procedures. It denied Res-Care’s protest.

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