Res. Mgmt. Concepts v. U.S. Small Bus. Admin.

• Decision Date: 31 March 2022
• Docket Number: 1:20-cv-3416-RCL
• Parties: RESOURCE MANAGEMENT CONCEPTS, INC., Plaintiff, v. U.S. SMALL BUSINESS ADMINISTRATION, et al., Defendants.
• Court: U.S. District Court — District of Columbia

RESOURCE MANAGEMENT CONCEPTS, INC., Plaintiff,
v.
U.S. SMALL BUSINESS ADMINISTRATION, et al., Defendants.

No. 1:20-cv-3416-RCL

United States District Court, District of Columbia

March 31, 2022

MEMORANDUM ORDER

ROYCE C. LAMBERTH UNITED STATES DISTRICT JUDGE

Plaintiff Resource Management Concepts filed the present lawsuit against the Small Business Administration ("SB A") and its Administrator to challenge SB A regulations that diminished the value of plaintiff s government contract. While this litigation was ongoing, the SB A issued a "correction" to the challenged regulatory framework. Plaintiff believes that this . correction fixes the issue that formed the basis of its suit, so the case is now moot. But even though plaintiff started this fight, the SB A is determined to keep it going-it contends that this case is not moot because the challenged regulations still apply. The parties cross-moved for summary judgment. Upon consideration of the parties' filings, Pl.'s Mot. for Summary J. ("Pl.'s Mot"), ECF No. 13, Defs.' Cross Mot. for Summary J. ("Defs.' Mot."), ECF Nos. 16 & 17, Pl.'s Reply, ECF Nos. 22 & 23, Defs' Reply, ECF No. 28, applicable law, and the entire record herein, the Court will DENY WITHOUT PREJUDICE the parties' cross motions for summary judgment.

I. BACKGROUND

A. Statutory And Regulatory Background

The Small Business Act, codified at 15 U.S.C. §§ 631-57, declares that "[i]t is the policy of the United States that small business concerns . . . shall have the maximum practicable

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opportunity to participate in the performance of contracts let by any Federal agency." 15 U.S.C. § 637(d)(1). To further this policy goal, certain contracts are reserved, or "set aside," for small business concerns. See Id. § 644. The Small Business Act also created the SBA to oversee Congress's policy objectives and furnished the SBA's Administrator with broad powers to "make such rules and regulations as he deems necessary to carry out the authority vested in him by or pursuant to" the Small Business Act. Id. § 634(b)(6).

Of course, the first step in achieving the Small Business Act's policy objectives is to determine which businesses are "small." If a business wants to be eligible for government contracts reserved for small businesses, it must certify itself as a "small business concern," and qualify under the standards set forth by the Small Business Act and the SBA's regulations. See, e.g., Id. § 632(a)(1); 13 C.F.R. § 121. The SBA has also enacted regulations that establish when- or at what point in time-a business must satisfy the relevant criteria to receive small business treatment. See Id. § 121.404. These time-focused regulations are at issue in this case.

In 2010, Congress passed the Small Business Jobs Act, which required the SBA to issue regulatory guidance under which federal agencies may set aside orders for multiple-award'' contracts (or "MACs"). See 15 U.S.C. § 644(r). A MAC is a type of indefinite-quantity contract which is awarded to several contractors from a single solicitation. See generally 13 C.F.R. § 125.1. MAC awardees commonly compete for individual task orders involving the delivery of supplies or the performance of services. These task orders are placed against the MAC.

In 2013, the SBA promulgated its initial regulations for setting aside task and delivery orders under MACs. These regulations provided that business size would be determined "at the time of the initial offer submitted in response to the solicitation for the contract." 78 Fed.Reg. 61, 114. The relevant initial regulations stated:

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SB A determines the size status of a concern, including its affiliates, as of the date the concern submits a written self-certification that it is small to the procuring activity, as part of its initial offer (or other formal response to a solicitation), which includes price

(1) With respect to Multiple Award Contracts and orders issued against a Multiple Award Contract

(i) [the Agency] determines size at the time of initial offer (or other formal response to solicitation), which includes price, for a Multiple Award Contract... [i]f a business is small at the time of offer for the Multiple Award Contract, it is small for each order issued against the contract, Unless a contracting officer requests a new size certification in connection with a specific order.

13 C.F.R. § 121.404(a) (2014) (emphasis added); see id § 121.404(g) (2014). Accordingly, if a business was certified as small at the time it submitted an offer for the MAC, it did not need to recertify its size status for task orders specifically set aside for small businesses under the same MAC, unless the federal contracting officer requested recertification.

In 2020, the SBA amended these regulations. The new rules (the "2020 Regulations") provide that for MACs that are open to businesses of all sizes ("unrestricted MACs") and that require price at the time of the initial offer, business size is determined at the time the business' submits its proposal for each task order. See 13 C.F.R. § 121.404(a)(1)(i)(A), (a)(1)(ii)(A) (effective Nov. 16, 2020). Now, even if a business certified itself as small when it submitted a bid for the MAC, it must "recertify its size status and qualify as a small business at the time it submits its initial offer, which includes price, for the particular order." Id. § 121.404(a)(1)(i)(A), (a)(1)(ii)(A).

B. Factual And Procedural Background

Plaintiff is the holder of a MAC known as Seaport-NxG, which was awarded on an unrestricted basis in January 2019. Kevin Cooley Decl. ("Cooley Decl.") ¶¶ 2, 6. Seaport NxG is

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the Department of the Navy's "mandatory vehicle for procurement of professional services." Id. ¶ 2. Various agencies within the Navy contract their service requirements to the more than 1, 870 Seaport-NxG firms. Id. When Plaintiff was awarded its Seaport-NxG contract, it qualified and was recognized as a small business. Id. ¶ 3. In anticipation of competing for the Seaport-NxG task orders set aside for small businesses, plaintiff invested between $1 and 1.5 million. Id. ¶5. By January 1, 2021, plaintiff outgrew its size status and could no longer qualify as a small business. Id. ¶3....