Paradigm Engineers and Constructors, Pllc v. United States

CourtUnited States Court of Federal Claims
DecidedMarch 25, 2020
Docket19-2014
StatusPublished

This text of Paradigm Engineers and Constructors, Pllc v. United States (Paradigm Engineers and Constructors, Pllc v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Paradigm Engineers and Constructors, Pllc v. United States, (uscfc 2020).

Opinion

In the United States Court of Federal Claims No. 19-2014C Filed Under Seal: March 10, 2020 Reissued: March 25, 2020 ∗

PARADIGM ENGINEERS AND CONSTRUCTORS, PLLC, Keywords: Motion for Judgment on the Plaintiff, Administrative Record; RCFC 52.1; NAICS Code Protest; v. Small Business Administration UNITED STATES, Office of Hearings and Appeals Defendant.

Holly L. Clarke, Frost Brown Todd LLC, Dallas, TX, for the plaintiff, with whom was Daniel F. Edwards, Frost Brown Todd LLC, Columbus, OH, of counsel.

Antonia R. Soares, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for the defendant, with whom was Tracy J. Downing, District Contract Law National Practice Group, U.S. Department of Veterans Affairs, and Christopher J. McClintock, Office of Litigation, U.S. Small Business Administration, of counsel.

MEMORANDUM OPINION

HERTLING, Judge

The plaintiff, Paradigm Engineers and Constructors, PLLC (“Paradigm”), in this pre- award bid protest alleges that the defendant, the United States, acting through the Department of Veterans Affairs (“VA” or the “Agency”), arbitrarily and capriciously classified the procurement under the North American Industrial Classification System (“NAICS”) Code as Architectural Services rather than Engineering Services. Paradigm, a Service-Disabled Veteran-Owned Small Business (“SDVOSB”), qualified to compete under the Engineering Services NAICS Code, but not the other. Paradigm challenged the VA’s determination before the U.S. Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”), and OHA upheld the VA’s determination. Paradigm now challenges the NAICS Code designation at this Court.

∗ Pursuant to the protective order in this case, the Court initially filed this opinion under seal for the parties to propose redactions of confidential or proprietary information. The parties did not propose any redactions and the opinion is released in full. Under the deferential standard of review applied to the OHA’s decision, the Court rejects Paradigm’s protest and grants the VA’s cross-motion for judgment on the administrative record.

I. BACKGROUND

A. Legal Background

The Small Business Act, 15 U.S.C. §§ 631 et seq., allows the SBA to set aside certain contracts for small businesses. 1 Congress specifically empowered the SBA to “specify detailed definitions or standards by which a business concern may be determined to be a small business concern.” 15 U.S.C. § 632(a)(2)(A); see also 15 U.S.C. § 637(b)(6) (granting the SBA authority “to determine within any industry the concerns, firms, persons, corporations, partnerships, cooperatives, or other business enterprises which are to be designated ‘small-business concerns’ for the purpose of effectuating the provisions of this chapter”). Other government agencies must “accept as conclusive the [SBA’s] determination as to which enterprises are to be designated ‘small-business concerns[.]’” 15 U.S.C. § 637(b)(6).

The SBA uses the NAICS to “determine which entities qualify as small business concerns. The Office of Management and Budget assigns NAICS [C]odes to various industry sectors, and SBA determines which firms qualify as small businesses ‘to assure that a fair proportion of government contracts for goods and services [is] performed by such entities in each industry category.’” Palladian Partners, Inc. v. United States, 783 F.3d 1243, 1247 (Fed. Cir. 2015) (quoting Advanced Sys. Tech., Inc. v. United States, 69 Fed. Cl. 474, 476 (2006)). As relevant here, the SBA determines the maximum average annual receipts that a business may have in order to qualify as a small business within each NAICS Code. See 13 C.F.R. § 121.201. The SBA calculates average annual receipts over the three most recent fiscal years. See 13 C.F.R. § 121.104(c).

For each procurement, the contracting officer must “designate[] the proper NAICS code and corresponding size standard in a solicitation, selecting the single NAICS code which best describes the principal purpose of the . . . service being acquired.” 13 C.F.R. § 121.402(b). Only businesses that do not exceed the size standard for the specified NAICS Code are qualified to bid on that solicitation. 13 C.F.R. § 121.402(a). The designated NAICS Code and corresponding size standard are “final unless timely appealed” to the SBA’s OHA. 13 C.F.R. § 121.402(d).

If a NAICS Code designation is challenged, the OHA’s decision is final, 13 C.F.R. § 134.316(d), (f), unless appealed to a court. See 13 C.F.R. § 121.1102 (providing for judicial review after the exhaustion of administrative remedies at the OHA).

1 The VA also has authority to set aside contracts for SDVOSBs. 38 U.S.C. § 8127. The VA must follow the SBA’s regulations on size, appeals, and NAICS Codes for such set-aside contracts. 38 U.S.C. § 8127(f).

2 B. The Solicitation

In October 2019, the VA issued a pre-solicitation notice requesting Standard Forms 330 (“SF330”) from architect and engineering firms for Solicitation Number 36C24920R0003 (the “Solicitation”). 2 The Solicitation, which the VA set aside for SDVOSBs under 38 U.S.C. § 8127(d), sought design services for the renovation of a building at the VA Medical Center in Lexington, Kentucky. (See ECF 14 at AR88.) The Solicitation’s Statement of Work specifically sought designs for a renovation of the space and a replacement of the second-story windows and the heating, ventilation, and air-conditioning systems in the building. The Solicitation also contemplated that the contractor would prepare drawings and specifications, provide a register of needed permits, and adhere to the VA’s design and construction criteria.

Despite the requirement that the contracting officer designate a “single NAICS code,” 13 C.F.R. § 121.402(b), the pre-solicitation notice referenced both the Architectural Services NAICS Code, which carries a size standard of $8 million in average annual receipts, and the Engineering Services NAICS Code, which carries a size standard of $16.5 million in average annual receipts. The Engineering Services NAICS Code, 541330 provides:

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