COURT: SBA’s REFUSAL TO PERMIT CORRECTION OF CLERICAL ERROR IN PROTESTER’S NAME IN A SIZE APPEAL WAS IMPROPER
by Jack Delman, Retired Judge
In Focus Revision Partners v. United States, _Fed. Cl._, 2022 WL 4137632 (9/12/22) the U.S. Court of Federal Claims ruled that it was error for SBA to dismiss a size appeal and to refuse to permit the correction of a clerical error in the protester’s name. The Court remanded the case to SBA to reinstate the size appeal and to examine the appeal on the merits. We provide a summary of the court’s opinion below.
Nature of the Procurement
In 2021, the Federal Emergency Management Agency (FEMA) sought architect and engineering services to support one of its many programs. FEMA planned to issue a single award with a 12-month base period and four annual options. The procurement was a small business set-aside, issued under the North American Industry Classification System Code 541330, with size standard $16.5 million. FEMA planned to evaluate offerors in two phases and to award a contract to the most qualified, responsible offeror with fair and reasonable costs and pricing. Insofar as pertinent, “Focus Revision Partners” (FRP) and “NWI&T Atkins” (NW) submitted proposals. After evaluation, the agency notified FRP that NW was selected as the apparent awardee.
Upon learning of the impending award, FRP filed a size protest with the agency contracting officer (CO), challenging NW’s status as a small business. The CO referred the matter to the relevant SBA area office. In brief, the nature of the challenge was that NW was noncompliant with SBA’s mentor-protégé regulations. However, the size protest documentation contained a clerical error; it incorrectly stated that the protester was “Focus Revision Partners JV, LLC”. Neither NW nor SBA questioned this matter at this time.
The SBA area office denied the size protest. FRP then filed a size appeal with SBA’s Office of Hearings and Appeals (OHA), using the same incorrect name above. At this juncture, NW filed a motion to dismiss the size appeal. NW contended that the LLC entity lacked standing to file the size appeal. The LLC was not an eligible offeror and did not submit a proposal, and therefore the appeal was filed by an entity that was not adversely affected by the size determination. In its response to the motion, FRP acknowledged the clerical error; it stated however that it was the real party in interest, and it moved to amend the caption of the case to reflect the correct name of the offeror.
OHA denied FRP’s motion to amend the caption and granted NW’s motion to dismiss the size appeal. OHA ruled that for purposes of the procurement the LLC entity did not exist and lacked the standing to protest or appeal in any manner. According to the OHA, even if the OHA caption could be fixed, it would not retroactively cure the problem with the initial size protest which also employed the incorrect name.
FRP filed a complaint with the Court of Federal Claims, contending, among other things, that OHA’s dismissal and its failure to permit the amending of the size appeal were arbitrary and capricious.
The Court Rules
Preliminarily, the court determined that FRP had the standing to bring this court action. FRP was an actual offeror whose direct economic interest was affected by the intended award to NW. On the merits, the court ruled that OHA’s denial of FRP’s motion to amend the caption of the size appeal was improper. FRP was the true protester and party in interest. FRP had an active SAM registration and was an actual offeror on the procurement. The CO notified FRP that its offer would not be accepted and recognized FRP as the size protester. Neither the agency, SBA or the awardee was confused or prejudiced by this clerical error. No SBA regulation precluded the simple correction FRP sought here. The court held that OHA erred in ruling that it lacked jurisdiction to permit this correction.
The Court remanded the case to SBA/OHA with direction to vacate its order dismissing the size appeal and denying the motion to amend the caption. Per the court’s order, the caption of the size appeal was to be amended and OHA was ordered to consider the appeal on the merits.
This decision is a “breath of fresh air” in a procurement world that– at times –may be seen as more attuned to technicality than to the fundamental values of common sense and fairness. The federal procurement system works best for all when its many rules are seen as promoting these basic values rather than frustrating them.