# In the United States Court of Federal Claims

BID PROTEST

BTAS , INC.

,

Plaintiff,

v.

THE UNITED STATES OF AMERICA

,

Defendant

. ) ) ) ) ) ) ) ) ) ) ) No. 20

- 1176C (Filed Under Seal: January 21, 2021 |

R eissued: January 2 7, 2021 ) *

Samuel S. Finnerty , PilieroMazza PLLC, Washington, DC, for Plaintiff. Patrick R. Rothwell

, Timothy F. Val l ey, Meghan F. Leemon, and Anna R. Wright , Pi l ieroMazza PLLC, Washington, DC, Of Counsel.

Sonia W. Murphy

, U.S. Department of Justice, Civil Division, Commercial Litig ation Branch

, Washington, DC, with whom were Douglas K. Mickle , Assistant Director, Robert E. Kirschman,

Jr. , Director, Jeffrey Bossert Clark , Acting Assistant Attorney General, for Defendant.

OPINION AND ORDER

KAPLAN, Judge.

T he General Services Administration ( “ GSA ” ) awarded p laintiff

, BTAS, Inc. ( “ BTAS ” )

, a small business set

- aside contract . After one of BTAS ’ s competitors filed a size protest with the Small Business Administration ( “ SBA ” )

, the SBA ’ s regional office and then its Office of Hearings and Appeals ( “ OHA ” ) concluded that BTAS was in eligible to be treated as a small

business because BTAS ’ s average annual receipts over the preceding three years exceeded $38.5 million, the limit set forth in the applicable size standard

.

In this bid protest

, BTAS c ontend s that OHA ’ s ruling was inconsistent with law . It argues

that as a result of an amendment to the Small Business Act contained in the Small Business Runway Extension Act of 2018, Pub. L. No. 115

- 324 , 132 Stat. 4444 ( “ Runway Extension Act ” ),

the SBA was obligated to use a period of no less than five year s to calculate BTAS ’ s a verage

* This opinion was originally issued under seal and the parties were given the opportunity to request redactions. In a joint response, the part ies notified the Court that they had no proposed redactions and the opinion could be released in full.2 annual receipts. It is undisputed that i f a five

- year rather than three

- year period had been used,

BTAS ’ s average annual receipts would not have exceeded the $38.5 million ceiling

.

The government opposes BTAS ’ s claim on several grounds. First, it contends that BTAS waived its argument that the Runway Extension Act required the SBA to use the l onger averaging period b ecause BTAS did not raise it b efore the time for submitting offers had expired. In any event, according to the government, the provision of the Small Business Act that was amended by the Runway Extension Act , namely section 3(a)(2)(C)(ii), 15 U.S.C. § 632(a)(2)(C)(ii)

, does not apply to the SBA ’ s size standards but rather to alternative standards that other agencies are statutorily permitted to issue subject to SBA approval. Further, according to the government, even if secti on 3(a)(2)(C)(ii) were applicable here

, the five

- year averaging period did not apply to offers submitted before January 6, 2020

— the effective date of the final

rule the SBA ultimately issued, which adopt ed a five

- year averaging period.

For the reasons set forth below, the Court finds that the government ’ s waiver argument

lacks merit. It agrees , however, that section 3(a) (2)(C)(ii) does not impose limitations on the

SBA ’ s prescription of size standards ; instead it applies to agencies and departme nts other than

the SBA that lack independent statutory authority to promulgate size standards

. Moreover , even if section 3(a)(2)(C)(ii) d id apply to the SBA, the three

- year averaging period required under existing regulations remained in effect until the S BA

— after providing notice and an opportunity

for public comment

— amended it s regulations to codif y the five

- year averaging period

. Therefore, the government ’ s motion for judgment on the administrative record is GRANTED

, ECF No. 22, and BTAS ’ s cross

- motion is DENIED , ECF No. 21.

BACKGROUND

I. Statutory and Regulatory Overview

Under section 3(a)(1) of the Small Business Act, “ a small

- business concern ” is defined as an enterprise “ which is independently owned and operated and which is not dominant in its field of operation. ” 15 U.S.C. § 632(a) (1). S ection 3(a)(2) of the Act, 15 U.S.C. § 632(a)(2)

, governs the establishment of the criteria that determine which business concerns fall within this

definition.

First, s ubparagraph (A) of § 632( a)(2) states in pertinent part that “ the [ SBA ]

Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purpose of this c hapter or any other Act. ”

Sub paragraph (B) further specifies that t he standards that the SBA promulgates “ may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors. ” 15 U.S.C. § 632(a)(2)( B )

. 1

1 In specifying that the SBA may consider number of employees, dollar volume, etc., to

determine whether a business is “ small ,” section 3(a)(2)(B) references “ [t]he standards described in paragraph (1). ” 15 U.S.C. § 632(a)(2)(B). Although not especially material to the issues befo re the Court, the reference to “ paragraph (1) ” appears to be an error. Paragraph (1) provides a general definition of a “ small

- business concern. ” It is actually subsection (a)(2)(A) and not3 Pursuant to its statu tory authority under subparagraphs (A) and (B) of section 3(a)(2) , the SBA has issued regulat ory “ size standards ” that “ define whether a business entity is small and, thus, eligible for Government programs and preferences reserved for ‘ small business ’ concerns. ” 13 C.F.R. § 121.101(a). These “ [s] ize standards have been established for types of economic activity, or industry, generally under the North American Industry Classification System (NAICS). ” Id. The SBA ’ s size standards are generally based on e ither the number of employees

of the business or its annual receipts. 13 C.F.R. § 121.201 ; see also Palladian Partners, Inc. v.

United States , 783 F.3d 1243, 1247 (Fed. Cir. 2015).

As the SBA ’ s regulations state

, “ [f] ederal agencies or departments promulgating regulations relating to small businesses usually use SBA size criteria

, ” but may employ their own

standards in “ limited circumstances ” where “the SBA size standard is not suitable for their

programs

. ” 13 C.F.R. § 121.903(a)

. This o ption is subject to subparagraph (C) of section 3(a)(2)

, which provides that f ederal agenc ies or department s that wish to employ their own size standards must comply with certain statutory conditions

. 15 U.S.C. § 632(a)(2) (C)

. Among other things, they must secur e the approval of the SBA Administrator through the regulatory procedures the

SBA has established

, 15 U.S.C. § 632(a)(2)(C)( iii )

, see also 13 C.F.R. § 121.903 (a)(5) , and they must provide notice of their proposed standards for public comment

, 15 U.S.C. § 632(a)(2)( C ) (i)

.

In addition, subclause (II) of section 3(a)(2) (C)(ii) provide s in pertinent part that

“ [u] nless specifically authorized by statute, no Federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard ” “ provides for determining . . . the size of a business concern providing services on the basis of the annual average gross receipts of the business concern ove r a period of

not less than 5 years

. ” 15 U.S.C. § 632(a)(2) (C)(ii) (II)

. Significantly for the purposes of the issues in this case, before t he Runway Extension Act was signed into law in December of 2018, the averaging period set forth in section 3 (a)(2) (C)(ii) (II) of the Small Business Act was three years. The Runway Extension Act directed that the number “ 5 ” be substituted for the number

“ 3

. ” Beyond that change, however, section 3(a)(2) , including the remainder of sub paragraph (C), were unchanged

.

II. The Procurement

GSA administers “ One Acquisition Solution for Integrated Services

— S mall Business ” ( “ OASIS SB ” )

, a multiple award, indefinite delivery/indefinite quantity contract program that federal agencies and other entities can use to secure a variety of professional, scientific, and

technical services. A dmin. R

. (“AR”) Tab 30 at 3938 , ECF No. 18 ; AR Tab 3 at 62 , ECF No. 15

. GSA originally awarded contracts under t he Solicitation

— N o. GS00Q

- 13

- DR

- 0002

— in 2014.

AR Tab 1 at 3 , ECF No. 15

. On April 29, 2019, GSA re

- opened the Solicitation and add ed approximately 160 additional contractors to the Pool 3 contract vehicle , which includes small

businesses that meet the size st andard of $38.5 million under NAICS code 541330 (engineering services)

. AR Tab 3 at 61

– 62

, 268.30

.

subsection (a)(1) that gives the SBA the authority to promulgate “ detailed definitions or

standards ” for determining whether a business concern is a small

- business concern

.4 On May 7, 2019, GSA held a presentation for potential offerors

. See AR Tab 13 at 1163

, ECF No. 15

. The presentation included a slide addressing the impact on the procurement of the then only recently

- enacted Runway Extension Act

. Id. at 1269. GSA advised attendees that until

the SBA issued further direction , agencies w ould continue to use the three

- year standard to
determine size status. Id. ; see also AR Tab 7 at 643 , ECF No. 1 5 ( June 6, 2019 GSA respon s e to question regarding the applicability of the Runway Extension Act stating that “ [t]he SBA has released their response on this matter, which states that until the SBA issues further direction, agencies will continue to use the previous standard of 3 years when determining size status ” ).

And GSA notified potential offerors that it “ lack [ed] the autho rity to deviate from the SBA ’ s current regulations, which specif y a 3 year size standard, absent coordination and concurrence

from the SBA. ” AR Tab 7 at 643 (Q&A 27) ; see also id. (Q&A 28); id. at 644 (Q&A 33); id. at 648 (Q&A 64); id. at 665

– 66 (Q&A 200).

In the meantime, on June 24, 2019, the SBA issued a notice in the Federal Register

propos ing that the three

- year averaging period be changed to a five

- year period. SBA Notice of Proposed Rulemaking

, 84 Fed. Reg. 29399 (June 24, 2019). In the notice, the SBA asserted that the change was discretionary and not statutorily required. The SBA observed that it ha d long been the agency ’ s position that the conditions set forth in section 3(a)(2) (C) of the Smal l Business Act (including the minimum averaging period) do not apply to the SBA ’ s regulat ions,

which are issued pursuant to section 3(a)(2)( A ) and ( B )

. According to the SBA , it was propos ing to adopt the new five

- year minimum averaging period “ to promote consistency ” with the size standards other agencies issued under section 3(a)(2)(C)

. Id.

On June 25, 2019, GSA issued A mendment 7 to the Solicitation. AR Tab 10 at 1102

, ECF No. 15 . Among other things , the A mendment stated that “ [c] onsistent with the terms of the Solicitation regarding size status, GSA will not make determinations regarding the status of a

concern as a small business. ” Id. at 1104. It further stated that “ [s] hould matters concerning size

stat us representations arise, they will be referred to the SBA in accordance with FAR Subpart

19.3. ” Id.

Plaintiff BTAS , a woman

- owned small business that provides information technology services to federal agencies, submitted its offer the next day, on Jun e 26, 2019. AR Tab 14b at 1339, 1357 , ECF No. 16

. Its offer included the required self

- certification that it was a small

business concern and that it met the $38.5 million small business size standard specified in the

Solicitation. Id. at 1357. 2 On May 29, 2020, GSA i ssued a list of awardees for the OASIS SB

Pool 3 Contract

. AR Tab 22 at 306 4, ECF No. 18; AR Tab 24 at 3210, ECF No. 18. BTAS was

named as an awardee on the list. AR Tab 22 at 3065.

III. The S ize Protest Before the SBA

2 Pursuant to the SBA ’ s regulations, an offeror ’ s size status is determined “ as of the date the [offeror] submits a written self

- certification that it is small . . . as part of its initial offer. ” 13 C.F.R. § 121.404( h ); see also FAR 19.301

- 1(a) (discussing self

- certification). After self

certification, the qualifying business is “ considered to be a small business throughout th e life of

that contract. ” 13 C.F.R. § 121.404(g).5 On June 1, 2020, an unsuccessful offeror for the OASIS SB Pool 3 procurement filed a size protest with the SBA , challenging BTAS ’ s designation as a small business and t herefore its eligibility for an award under the terms of the S olicitation. AR Tab 27 at 3221 , ECF No. 18 ; see AR Tab 28 at 3492

– 93 , ECF No. 18 ; see also 13 C.F.R. § 121.1001(a)(1). 3 The protester alleged that BTAS was ineligible for an award because its average revenue over the three years preceding the Solicitation was greater than $38.5 million. AR Tab 27 at 322 5.

On June 18, 2020, Area Office IV issued Size Determination No. 04

- 2020

- 027

. AR Tab

30 at 3938

– 40. The Area Office found that

— in accordance with the rule that the SBA issued in

final form on December 5, 2019

— the new five

- year averaging period would not apply to proposal s submitted before January 6, 2020

. AR Tab 31 at 3940 , ECF No. 18 ; s ee 84 Fed. Reg.

66561 ( December 5, 2019 )

. Because the SBA found that BTAS did not meet the $38.5 million

limit as calculated on the basis of its last three years of annual receipts, GSA removed BTAS

from its list of awardees for the Pool 3 contract. AR Ta b 30 at 3938

– 40.

BTAS appealed the A rea O ffice ’ s decision to OHA

. Size Appeal of BTAS, Inc.

, SBA

No. SIZ

- 6063, 2020 WL 5093292 (Aug. 11, 2020) ( “ Size Appeal ” )

. On appeal

, BTAS contended

that the Area Office ’ s decision was contrary to law to the extent that it was based upon the

SBA ’ s position that sub section (a)(2)(C)(ii)(II) of the Small Business Act does not apply to the

SBA . It also argued that the effect of the amendment to that provision contained in the Runway

Extens ion Act was to immediately nullify the then

- existing regulation which provided for a

three

- year averaging period

.

Expressly declining to address whether section 3(a)(2)(C) of the Small Business Act appl ies to the SBA, OHA denied BTAS ’ s appeal. Relying on prior OHA precedent, 4 it rejected

BTAS ’ s argument that the three

- year averaging period was immediately superseded and replaced

with a five

- year period upon the enactment of the Runway Extension Act

. Size Appeal at 12

. OHA reasoned tha t “ the Runway Extension Act amended only a single sentence of the Small

Business Act

, and the provision amended pertains specifically to the promulgation of size standards, not to the methodology used to calculate the size of a particular business

. ” Id. at 11. I n addition, i t agreed that the amendment “ did not alter the requirements for notice

- and

- comment rulemaking and approval by the SBA Administrator. ” Id. at 12. B ecause new size standards “ can only be implemented by adhering to these requirements

, ” OHA concluded, there was no merit to

BTAS ’ s argument that the Runway Extension Act “ overrule [ d ] ” the SBA ’ s existing regulations

. Id. Therefore, OHA held, the applicable size standard at the time of BTAS ’ s self

- certification

was based on the three

- year averaging period and BTAS ’ s appeal was rejected

. Id. at 13.

3 An unsuccessful offeror in a procurement set

- aside for small businesses may lodge a size status

protest. 13 C.F.R. § 121.1001(a)(1); FAR 19.301

- 1(b). Size protests are adjudicated by the appropriate SBA Area Office. 13 C.F.R. § 121.1002; FAR 19.301

- 1(c); FAR 19.302(f)(1), (h).

The Area Office ’ s decision is subject to review by OHA, whose decision constitutes “ the final

decision of the SBA. ” 13 C.F.R. § 134.316(d).

4 Size Appeal of Cypher Analytics, Inc. d /b/a Crown Point Sys tems , SBA No. SIZ

- 6022 (Aug. 27, 2019)

, Size Appeal of Advanced Technology Systems Co

. , SBA No. SIZ

- 6034 (Oct. 25, 2019) , and Size Appeal of Diversified Protection Corp

. , SBA No. SIZ

- 6042 (Dec. 20, 2019).6 IV. This Action

BTAS filed its bid protest here on September 10, 2020

. ECF No. 1. It contend s that the

SBA ’ s decision that a three

- year averaging period must be used to determine whether BTAS ’ s annual receipts were less than $38.5 million is contrary to law

. T he government filed the administrative record on October 5, 2020

, ECF No. 13, and on October 19, 2020

, BTAS filed a motion for judgment on th e admin i strative record

, ECF No. 21. The government filed its cross

motion and response in opposition to Plaintiff ’ s motion on November 2, 2020

. ECF No. 22. O ral argument on the parties ’ cross

- motions was held via video conferen ce on December 17, 2020

. In addition, at the Court ’ s request , the parties filed simultaneous supplemental briefs after oral argument addressing the impact of the court of appeals ’ decision in Boeing Co

. v. United States

, 968 F.3d 1371 (Fed. Cir. 2020) on the government ’ s waiver argument.

DISCUSSION

I. Subject Matter Jurisdiction

The Court of Federal Claims has jurisdiction over bid protests in accordance with the Tucker Act, 28 U.S.C. § 1491, as amended by the Administra tive Dispute Resolution Act of 1996, 28 U.S.C. § 1491(b). That statute grants the Court the authority to “ render judgment on an action by an interested party objecting to

. . . a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed

procurement. ” 28 U.S.C. § 1491(b)(1); see also Sys. Application & Techs., Inc. v. United States

, 691 F.3d 1374, 1380

– 81 (Fed. Cir. 2012) (observing that § 1491(b)(1) “ grants jurisdiction over objections to a solicitation, objections to a proposed award, objections to an award, and objections related to a statutory or regulatory violation so long as these objections are in connection with a procurement or proposed procurement ” ). OHA determinations that an offeror does not meet required size standards “ are actions ‘ in connection with a proposed procurement, ’”

and thus “ within the scope of jurisdiction granted under the Tucker Act. ” Palladian Partners , 783

F.3d at 1254 ( quoting 28 U.S.C. § 1491); see also Dorado Servs., Inc. v. United States , 128 Fed. Cl. 375, 383 (2016) (explaining that SBA determinations regarding a business concern ’ s eligibility for s et

- aside contracts are made “ in connection with a procurement ” ).

As required by the statute, a plaintiff must be an “ interested party ”

— i.e., an actual or prospective offeror

— to have standing to invoke the Court ’ s bid protest jurisdiction. CGI Fed.

Inc. v . United States , 779 F.3d 1346, 1348 (Fed. Cir. 2015) (quoting 28 U.S.C. § 1491(b)(1)) ; Myers Investigative & Sec. Servs., Inc. v. United States , 275 F.3d 1366, 1369

– 70 (Fed. Cir. 2002). An interested party has standing if it has incurred “ a non

- trivial co mpetitive injury ” as a result of alleged errors in the procurement. CGI Fed. Inc. , 779 F.3d at 1351 (quoting Weeks

Marine Inc. v. United States , 575 F.3d 1352, 1361

– 62 (Fed. Cir. 2009)); see also Myers Investigative & Sec. Servs., Inc. , 275 F.3d at 1370 (holding that “ prejudice (or injury) is a necessary element of standing ” ).7 BTAS is an interested party and thus has standing to bring this protest. I t submitted a n offer and was selected as an awardee for an OASIS Small Business Pool 3 contract

, AR Tab 22

at 306 5 , and was therefore “ an actual

. . . bidder ” with “ a direct economic interest in the

procurement, ” Distributed Sols., Inc. v. United States , 539 F.3d 1340, 1344 (Fed. Cir. 2008) (citing Rex. Serv. Corp. v. United States , 448 F.3d 1305, 1307 (Fed. Cir. 2006) ) . B ut for what it alleges was the SBA ’ s erroneous determination, BTAS ’ s contract award would not have been set

aside. S ee Sys

. Application & Tech s. , Inc. , 691 F.3d at 1382 (finding standing where the awardee

suffered a “ non

- trivial competitive injury, ” when the procuring agency deprived that awardee of

the contract). Thus, BTAS has standing to bring this protest.

II. Standard for Granting Judgment on the Administrative Record

Pursuant to Rule 52.1 of the Rules of the Court of Federal Claims ( “ RCFC ” ), the Court reviews an agency ’ s procurement decision based on the administrative record. Bannum, Inc. v.

United States , 404 F.3d 1346, 1353

– 54 (Fed. Cir. 2005); see also 28 U.S.C. § 1491(b)(4) (stating

that “ [i]n any action under this subsection, the courts shall review the agency ’ s decision pursuant

to the standards set forth in section 706 of title 5 ” ). The court makes “ factual findings under RCFC [52.1] from the record evidence as if it were conducting a t rial on the record. ” Bannum,

Inc. , 404 F.3d at 1357. Thus, “ resolution of a motion respecting the administrative record is akin to an expedited trial on the paper record, and the Court must make fact findings where

necessary. ” Baird v. United States , 77 Fed. Cl. 114, 116 (2007), aff ’ d , 285 Fed. App ’ x 746 (Fed. Cir. 2008) (citing A&D Fire Prot

. , Inc. v. United States

, 72 Fed. Cl. 126, 131 (2006) ) . The

C ourt ’ s inquiry is thus “ whether, given all the disputed and undisputed facts, a party has met its

bu rden of proof based on the evidence in the record. ” A&D Fire Prot., Inc. , 72 Fed. Cl. at 131 (citing Bannum , 404 F.3d at 1356)

.

III. Standard of Review in Bid Protest Cases

The Court reviews challenges to procurement decisions under the same standards used to evaluate agency actions under the Administrative Procedure Act, 5 U.S.C. § 706 (“APA”). See 28 U.S.C. § 1491(b)(4) (stating that “[i]n any action under this subsection, the courts shall review the agency’s decision pursuant to the standar ds set forth in section 706 of title 5”). Therefore, i n order to successfully challenge an agency ’ s procurement decision

, a p rotestor must show that the agency ’ s decision was “ arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance wi th law. ” 5 U.S.C. § 706(2)(A); see Bannum, Inc. , 404 F.3d at 1351. This

“ highly deferential ” standard “ requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors. ” Advanced Data Concepts, Inc. v.

United States , 216 F.3d 1054, 1058 (Fed. Cir. 2000) (citing Bowman Transp., Inc. v. Ark

. - Best Freight Sys., Inc. , 419 U.S. 281, 285 (1974)).



### IV. Waiver

As noted, BTAS contends that the SBA committed legal error when it used a three

- year rather than five

- year period to determine BTAS ’ s average annual receipts. The government

argues , however, that under the reasoning of Blue & Gold Fleet, L.P. v. United States 492 F.3d 1308, 1313 (Fed. Cir. 2007)

, BTAS waived its right to judicial review of this legal issue by8 failing to file a protest with either GAO or this court before the Solicitation closed. See Def. ’ s Mot. for J. on the Admin. R. and Opp’n to Pl.’s Cross

- Mot. for J. on the Admin. R. at 19

– 20

, ECF No. 22 ; Def. ’ s Reply in Supp. of its Cross

- Mot. for J. on the Admin. R. at 3

– 6 , ECF No. 24

. The government ’ s waiver argument lack s merit. Blue & Gold established a general rule

that to challenge the terms of a solicitation before this c ourt, the protestor must raise its objection s before the solicitation close s . 492 F.3d at 1313; see also COMINT Sys

. Corp. v.

United States , 700 F.3d 1377, 1382 (Fed. Cir. 2012)

. But in this case BTAS is not challenging

the terms of the Solicitation ; it is appealing the size determination t he SBA made after the award decision in the context of a size protest filed by one of BTAS ’ s competitors

.

In deed, t he Solicitation expressly disclaims any role by GSA in size determination

matters. As noted above, Amendment 7 states that “ GSA will not make determinations regarding

the status of a concern as a small business ” and that “ [s] hould matters concerning size status representations arise, they will be referred to the SBA in accordance with FAR Subpart 19.3. ”

AR Tab 10 at 1104. And w hile Amendment 4 advised prospective offerors of the SBA ’ s position

that agencies would continue to use a three

- year period until the SBA issued further direction , by so advising them GSA did not make the three

- year period a term of the Solicitation; it me rely

communicated to them the SBA ’ s views and intentions, as well as its own lack of authority on

the matter

.

F urthermore , the Court notes that b ecause the appropriate averaging period is not addressed in the Solicitation, and because it is the SBA in the first instance that has the exclusive authority to make size determinations, it is difficult to see what relief the Court could have given BTAS had it filed a protest before the Solici tation closed , as the government claims it was required to do

. Ordinarily

, if the terms of a solicitation are defective, then the Court can preclude

an agency from proceeding with the procurement unless it correct s the defect. The point of the

Blue and Gol d rule is that by c orrecting the defect before the s olicitation period ends, the agency

can avoid spending time and resources evaluating proposals and making award decisions that may have to be reversed because of defects in the Solicitation. See 492 F.3d at 1313 (“[r] ecognition of a waiver rule, which requires that a party object to solicitation terms during the bidding process, furthers this statutory mandate ” for the “‘expeditious resolution’” of bid protests) (quoting 28 U.S.C. §1491(b)(3) )

. But here it would not have been efficient to hav e had BTAS file an earlier protest because t he party whose actions BTAS would have be en protesting

would be GSA , which lack s the authority to make size determinations. No matter what GSA

stated in its Solicitati on, an unsuccessful offeror w ould have the right to file a size protest with

the SBA after the award decision was made, leading us to the same place we are now. For that reason, among others, the issue BTAS presses here would not have been ripe for review had BTAS filed a pre

- award protest as the government states it was required to do.

Finally, the Court is cognizant of the fact that GAO considered two protests in this procurement that were filed before the Solicitation closed and in which the protester s argued that the Runway Extension Act required the use of a five

- year averaging period to determine their

size status. TechAnax, LLC; Rigil Corp

. , 2019 CPD P 294

, B

- 408685.22 ( Comp. Gen. Aug. 16, 2019). GSA argu ed that GAO should dismiss the protests because GSA “ issued the RFP based on guidance provided by SBA, and because that guidance concerns matters within the exclusive jurisdiction of SBA that [GAO] does not review as part of [its] bid protest function. ” Id. at 3.9 GAO rejected GSA ’s argument , reasoning that “[a]lthough [it] w[ould] not review SBA ’ s issuance or amendment of size standards, the protesters argue primarily that the effective date of the Runway Extension Act applies to this solicitation.” Id. at 4. “ Ther efore, ” GAO stated, it would consider “whether the Runway Extension Act imposed requirements that obligated GSA to include terms in the solicitation implementing the change to the number of years to be considered in calculating a firm ’ s average revenue. ” Id.

Respectfully, the Court is not persuaded by the distinction GAO drew between “ review [of] SBA ’ s issuance or amendment of size standards ” (which it acknowledges is outside of its purview) and review of whether “ the effective date of the Runway Extension Act applies to this

solicitation. ” Id. at 4. In fact, the Court is not sure what it means for a statutory effective date to “appl[y]” to a solicitation. Id. Moreover, because GAO ruled against the protesters, it was not required to fashion corrective action for GSA to take as GAO would have if it had sustained the

protest. Requiring GSA to state in the Solicitation that the Runway Extension A ct mandated the

use of a five

- year averaging period would have be en an empty promise

, given that size

determination s are made by the SBA and not GSA.

In short, the government ’s waiver argument is unpersuasive. The Court turns, therefore,

to the merits of BTAS ’ s arguments.

V. Merits

The SBA is not Subject to the Restrictions Contained at Section 3(a)(2)(C) of

the Small Business Act as Amended by the Runway Extension Act

The first issue before the Court on the merits is whether section 3(a)(2)(C) o f the Small

Business Act —which was amended by the Runway Extension Act—applies to the SBA ’ s promulgation of standards for categorizing businesses as “ small .” 15 U.S.C. § 632(a)(2)(C)(ii)(II) . While OHA found it unnecessary to address the issue, in the Court ’ s view

this is a threshold question that should be addressed because answering it will determine whether the Runway Extension Act has any bearing on this matter in the first instance

.

As described above, section 3(a)(2)(C) of the Small Business Act states in pertinent part

that “[u] nless specifically authorized by statute, no F ederal department or agency may prescribe a size standard for categorizing a business concern as a small business concern ” unless the proposed size standard meets certain requ irements, including (as amended by the Runway Extension Act) that the standard “provides for determining . . . the size of the business concern providing services on the basis of annual average gross receipts of the business concern over a period of not le ss than 5 years. ” 15 U.S.C. § 632(a)(2)(C)(ii)(II).

The SBA ’ s longstanding position is that section 3(a)(2)(C) does not apply to the size

standards the SBA promulgates , but rather to alternative size standards that other federal agencies and departments propose to use, and which the SBA must approve. In the Court’ s view,

the SBA ’ s interpretation is correct.10 “ [T]he ‘ starting point in every case involving construction of a statute is the language

itself

. ’” Gilead Scis., Inc. v. Lee , 778 F.3d 1341, 1347 (Fed. Cir. 2015) (quoting United States v.

Hohri

, 482 U.S. 64, 69 (1987) ). “ The first step ‘ is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispu te in the case. ’ ” Applications in Internet Time, LLC v. RPX Corp. , 897 F.3d 1336, 1346 (Fed. Cir. 2018) (quoting Barnhart v. Sigmon Coal Co. , 534 U.S. 438, 450 (2002)). In making that determination

, the Court must read the words of a statute “ in their cont ext and with a view to their place in the overall statutory scheme. ” Applications in Internet Time, LLC , 897 F.3d at 1346 (quoting King

v. Burwell

, 576 U.S. 473

, 486 (2015)). “ This is because statutory ‘ [a]mbiguity is a creature not [just] of definitional possibilities but [also] of statutory context .’ ” Id. (quoting Brown v. Gardner

, 513 U.S. 115, 118 (1994)).

According to the government, section 3 (a)(2)(C)(ii)(II) of the Small Business Act does not apply because the SBA is “ specifically authorized by statute ” to prescribe size standards that are not subject to the limitations set forth in section 3(a)(2)(C), including the limitation imposed by section 3 (a)(2) (C) (ii )(II) as amended by the Runway Extension Act. The Court agrees with this interpretation of the statute because section 3(a)(2)(A) provides the SBA with specific authority to “ specify detailed definitions or standards ” for categorizing a business concern as

small

. In addition, section 3(a)(2)( B ) gives the SBA specific authority to employ a broad range

of relevant factors when crafting its standards , including “ number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors

. ” The

SBA , in short, is not bound by the limitations imposed by sub paragraph (C) because its authority to regulate is governed by sub paragraphs (A) and (B). See also 15 U.S.C. § 634(b)(6) (giving the

SBA Administrator the authority to “ make such rules and regulations as he deems necessary to carry out the authority vested in him ” ).

The Court is not persuaded by BTAS ’ s contention that the broad grant of regulatory authority and discretion given to the SBA under subparagraphs (A) and (B) of section 3(a)(2) do

not supply “ specific [] authoriz[ation] ” to deviate from the limitations imposed by

section 3(a)(2)(C) because neither subparagraph (A) nor (B) expressly authorizes the SBA to employ a three

- year averaging per iod

. 15 U.S.C. § 632(a)(2)(C). As noted, in interpreting particular statutory language, the Court must read the language in context. In addition, t he C ourt is required to avoid interpreting one part of a statute in a way that makes another provision

incons istent, meaningless, or superfluous. TRW Inc. v. Andrews

, 534 U.S. 19 , 31 (2001) . Under

section 3(a)(2)(C)

, federal agencies, unless specifically authorized to do so, may not prescrib e size standards unless they are “ approved by the Administrator. ” 15 U.S.C. § 632(a)(2)(C) (iii).

BTAS ’ s argument that section 3(a)(2)(C) applies to size standards issued by the SBA itself

renders the separate approval requirement superfluous

.

Indeed, a textual analysis reveals that section 3(a)(2) assi gns the SBA two distinct sets of responsibilities with respect to the prescription of size standards

. Sub paragraphs (A) and (B) give

the SBA the authority to establish standards and sub paragraph (C) assigns the SBA the job of

approv ing the standards other agencies propose to establish

. See also 15 U.S.C. § 632(a)(3) (referring to the Administrator ’ s authority to “ establish[] or approv[e] any size standard pursuant

to [ section 3(a)(2)] ” ) (emphasis supplied).11 BTAS ’ s conten tion that its interpretation of the statutory language is supported by the legislative history is equally unpersuasive . Thus, it cites the initial draft of section 3(a)(2)(C) which was reported out by the Senate Committee on Small Business in 1 994

. That draft state d

that “ [u]nless specifically authorized by statute, the Secretary of a department or the head of a Federal agency, other than the Administrator of the Small Business Administration , may not prescribe for the use of such department or agency a size st andard for categorizing a business concern as a small business concern, unless such proposed size standard . . . provides for determining . . . the size of a concern providing services on [the] ba sis of the annual average gross receipts of the concern over a period of not less than three years[.] ” S. 2060, 103d Cong. § 507 (as reported by S. Comm. on Small Bus., Aug. 11, 1994 ) (emphasis supplied)

. BTAS points out that t he language “ other than the Administrator of the Small Business Administration[,] ” was re moved before the 1994 act was finalized. Compare id.

, with Small Business Administration Reauthorization and Amendments Act of 1994, Pub. L. No. 103

- 403,

108 Stat

. 4175. According to BTAS

, this shows that in the end “ Congress did not intend to except SBA from also complying with, among other things, the 3 (now 5

- year) period of

measurement outlined in [s] ection 3(a)(2)(C ). ” Pl.’s Reply in Supp. of its Mot. for J. on the Admin. R. and Opp’n to Def.’s Cross

- Mot. for J. o n the Admin. R. at 15 , ECF No. 23

.

The Court does not find this piece of legislative history especially illuminating . As the Supreme Court has “ repeatedly held, the authoritative statement is the statutory text, not the legislative history or any other extrinsic material. ” Exxon Mobil Corp. v. Allapattah Servs., Inc.

, 545 U.S. 546, 568 (2005). That is because “ legislative history is itself often murky, ambiguous, and contradictory. ” Id. “ Judicial investigation of legislative history has a tendency to bec ome, to borrow Judge Leventhal ’ s memorable phrase, an exercise in ‘ looking over a crowd and picking out your friends. ’ ” Id.

The kind of history upon which BTAS relies is especially unreliable as an indicator of Congressional inten t. A change in the wording of a statutory provision after it is first reported out of committee does not really reveal much of anything about the intent of the entire Congress when it passed t he final bill

. Further, the implication BTAS draws from the change is no t the only one that might be drawn. I t is entirely possible that some time between the committee report

and the bill ’ s final passage it was decided by the drafters that the committee la nguage explicitly excepting the SBA from section 3 (a) (2)(C) was redundant and therefore unnecessary.

Moreover, the inference BTAS would have the Court draw ba sed on this history is undermined by language in the Senate Report on the final bill . It states that the purpose of the

1994 amendment was to “ clarif[ y ] that a Federal Department or agency, other than the [SBA]

, may issue a size standard set in terms of number of employees, average annual gross receipts, or

otherwise , only under certain conditions

. ” S. Rep

. No. 103

- 332, at 13 (1994) (emphasis added).

“ Those conditions

, ” the Senate Report explained, “ are that the standard is set by rulemaking, including a proposal and an opportunity for public comment, and that the SBA Administrator has

ap proved the standard. ” Id.

For similar reasons

, the Court rejects BTAS ’ s reliance on language in the 2018 report of the House Committee on Small Business concerning the Runway Extension Act , stating that

“ H.R. 6330 lengthens the time in which the Small B usiness Administration (SBA) measures size12 through revenue, from the average of the past 3 years to the average of the past 5 years. ” H

. R

. Rep. No. 115

- 939

, at 2 (2018)

. It may well be that House Committee members who drafted the

report believed that by amending section 3(a)(2)(C) they would be mandating that the SBA adopt

at least a five

- year average when prescribing its own standards ( as opposed to merely mandating

that it not approve size standards proposed by other federal agencies that do no t adopt that longer averaging period). But if that were their intent, the language of the bill Congress ultimately passed did not reflect it. And the floor statements BTAS cites to the same effect “ rank among the least illuminating forms of legislative history

. ” N.L.R.B. v. SW Gen., Inc. , 137 S. Ct. 929, 943 (2017)

.

Finally, even if the Court were to find the statutory language ambiguous

, it would be required to defer to the SBA ’ s interpretation of section 3(a)(2)(C) because it is based on a

“ permissible ” and reasonable interpretation of the statute. Chevron, U.S.A., Inc. v. Nat

. Res

. Def

. Council, Inc. , 467 U.S. 837, 84 3 (1984)

. An agency ’ s interpretation of a statute it is charged with administering need only be a reasonable one, and it is controlling “ unless [it is] arbitrary, capricious, or manifestly contrary to the statute. ” Id. at 844 ; see Entergy Corp. v. Riverkeeper,

Inc. , 556 U.S. 208, 218 (2009) (explaining that Chevron deference does not require that the

agency ’ s interpretation be “ the only possible interpretation, nor even the interpretation deemed

most reasonable by the courts ” ).

In this case, the SBA has long interpreted section 3(a)(2)(C) as inapplicable to the SBA ’ s own standards

. Indeed, it has reiterated this understanding of the statute in the Federal Register

dozens of times

. SBA Notice of Proposed Rulemaking, 84 Fed. Reg. 29399

- 01 (June 24, 2019) ( “ Since 2002, SBA has repeated this interpretation of section 3(a)(2)(C) in the Federal Register

52 times. ” ). Because the SBA ’ s interpretation of section 3(a)(2)(C) is at the very least a

reasonable one

, the agency is entitled to Chevron deference.

In short, section 3(a)(2)(C)(ii)(II) of the Small Business Act does not apply to size

standards that the SBA itself promulgat es. Therefore, the SBA ’s decision finding that it was proper to apply a three

- year period to determine BTAS ’ s average annual receipts was correct,

and BTAS ’ s protest must fail.

B. In Any Event, the F ive

- Y ear A veraging R equirement Contained in the Runway Extension Act Did Not Go into Effect U ntil the C hange W as
P ublished in F inal F orm A fter a P eriod of N otice and C omment

BTAS argues that the Runway Extension Act was effective upon enactment and that it immediately superseded the SBA ’ s existing regulation at 13 C.F.R. § 121.104(c)(1)

, which then

direct ed the use of a three

- year averaging period to calculate a business concern ’ s annual receipts. Pl. ’ s M ot. for J. on the Admin

. R. at 7 , ECF No. 21

. For the reasons set forth above, the

Court is of the view that section 3(a)(2)(C)(ii)(II) of the Small Business Act as amended by the Runway Extension Act is inapplicable to the SB A. But even if the Court were to find the provision applicable

, there is no merit to BTAS ’ s argument that the Runway Extension Act

amendment would have the effect of immediately superseding existing regulations.13 As BTAS observes, the “ general rule ” is that “ when a statute has no effective date . . . it

takes effect on the date of its enactment. ” Johnson v. United States , 529 U.S. 694, 702 (2000) ( quoting Gozlon

- Peretz v. United States , 498 U.S. 395, 404 (1991) )

. Therefore, BTAS is correct that the Runway Extension Act became effective December 17, 2018. But acknowledging that

the amendment to the Small Business Act became effective on December 17, 2018 begs the

critical question of what effect the amendment had on the existing size standard regulations

, which used a three

- year averaging period for annual receipts

.

The answer to this question cannot be , as BTAS argues, that the Runway Extension Act immediately nullified the existing three

- year averaging period and replaced it with a five

- year averaging period . Congress could not have intended that the new requirement imposed by the

amendment would immediately supersede the existing regulations because, for one thing, the Runway Extension Act ’ s substitutio n of the number “ 5 ” for the number “ 3 ” was not self

executing. As amended, section 3(a)(2)(C)(ii)(II) does not require that average annual receipts be

calculated on the bas is o f a specific time period (i.e.

, five years). Rather, assuming its applicability to the SBA

, its effect was to cabin the SBA ’ s discretion so that whatever averaging period it chose would be at least five years long. To effect this new requirement, therefore, the agency would necessarily have to promulgate new regulations.

Moreover, t he very section of the Small Business Act that the Runway Extension Act

amended ( section 3(a)(2)(C)) prohibits agencies from prescribing new size standards unless the y

are promulgated in final form after notice and an opportunity for public comment. 15 U.S .C. § 632(a)(2)(C) (i). The Runway Extension Act had no effect on this requirement. And

section 3(a)(6) of the Small Business Act similarly requires the SBA to use notice and comment rulemaking “ to revise, modify or establish size standards. ” 15 U.S.C. § 632(a)(6).

Further, had Congress intended the change in the averaging period to be implemented

immedia tely , it c ould have so indicated in the Runway Extension Act . But the Act did not direct

the SBA to promulgate interim regulations that wou ld be immediately effective

. To the contrary, as noted, it amended a section of the statute that explicitly requires that notice and comment rulemaking procedures be followed

. And

, although Congress has done so in other instances

under the Small Business A ct , it did not set a deadline for the SBA to take administrative action in the Runway Extension Act

. See 15 U.S.C. § 632 (a)(4)(A) ( “ Not later than 30 days after January 6, 2006, the Administrator shall review the application of size standards established pursuant to paragraph (2)

. ” ) ; National Defense Authorization Act for Fiscal Year 2017, Pub. L.

No. 114

- 328 , 130 Stat. 2000 ( “ Not later than 180 days after the date of enactment of this Act, the

Administrator of the Small Business Administration

. . . shall issue guidance pertaining to the amendments made by this title to the Small Business Act and

. . . shall provide notice and opportunity for comment on such guidance for a period of not less than 60 days. ” ). 5

5 See also Puerto Rico Oversight, Management, and Economic Stability Act, Pub. L. 114

- 187

, 130 Stat. 549 ( “ The Administrator of the Small Business Administration shall issue regulations to implement the amendment [to 15 U

. S

. C

. § 632] not later than 90 days after the date of the

enactment of this Act. ” ); National Defense Authorization Act for Fiscal Year 2014, Pub. L. 113

- 66 , 127 Stat. 672 ( “ No later than 18 months after the date of the enactment of this Act, the

Administrator of the Small Business Administration shall promulgate any regulations necessary,14 Finally, for the reasons set fort h above, the SBA is entitled to Chevron deference with respect to this issue of statutory construction as well. Therefore, even assuming that the Runway Extension Act were viewed as ambiguous as to th is point, the SBA ’ s determination that new regulations w ere required to effect the statutory change in the averaging period was reasonable

and must be sustained.

In short, the Court concludes that the Runway Extension Act ’ s no less than five

- year averaging period was intended to be implemented through the promulgat ion of new regulations. Until new regulations were prescribed, the existing regulations controlled. Assuming, therefore,

that the SBA ’ s regulatory authority is li mited by the provision of the Small Business Act that the Runway Extension Act amended, BTAS ’ s protest must still be rejected.

CONCLUSION

Based on the foregoing, BTAS ’ s motion for judgment on the administrative record, ECF

No. 21 , is DENIED . The governm ent ’ s cross

- motion for judgment on the administrative record and response in opposition to Plaintiff ’ s motion, ECF No. 22, is GRANTED . The Clerk is directed to enter judgment accordingly. Each side will bear its own costs.

IT IS SO ORDERED.

s/ Elaine D. Kaplan

ELAINE D. KAPLAN Judge

and the Federal Acquisition Regulation shall be revised, to implement this section and the amendments made by this section. ” ); National Defense Authorization Act for Fiscal Year 2013,

Pub. L. 112

- 239 , 126 Stat. 1632 ( “ Not later than 180 days after the date of enactment of this part, the Administrator of the Small Business Administration shall issue guidance with respect to the changes made to the Small Business Act by the amendments in this subtitle, with opportunities

for notice and comment. ” ); National Defense Authorization Act for Fiscal Year 2006, Pub. L.

109

- 163 , 119 Stat. 3136 ( “ Not later than 45 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall promulgate f inal rules to carry out this section and the amendments made by this section. ” ).