SmallGovCon: NAICS, The Final Frontier: OHA Rejects NAICS Size Standard Exception as Inapplicable to NASA Solicitation

“In Applewood Engineering, SBA No. NAICS-6119, in late July 2021, NASA issued a request for proposals seeking Support for Atmospheric Modeling and Data Assimilation II (‘SAMDA II’). It set aside this procurement for small businesses, and assigned it NAICS code 541715, ‘Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology.’ This code normally has a size standard of 1,000 employees. However, the agency stated that the procurement fit within the exception for ‘Guided Missiles and Space Vehicles, Their Propulsion Units and Propulsion Parts.’ This exception increased the size standard from 1,000 employees to 1,250 employees…”

“Applewood Engineering (‘Applewood’) filed a NAICS appeal with SBA OHA on August 6, 2021. While it agreed that the correct NAICS code was 541715, Applewood disagreed with the application of the exception for Guided Missiles and Space Vehicles, stating that the procurement’s principal purpose was the development of climate modules and forecast systems, not research and development into space vehicles and guided missiles. The fact the data would come from scientific instruments on satellite platforms does not mean space vehicle research is the primary purpose of the solicitation. Therefore, the exception is inapplicable…”

“Turning to the actual question, OHA noted that the burden rested on Applewood to prove the designation was erroneous, and Applewood met those burdens. While the NAICS code itself was correct, the exception was inapplicable. ‘OHA has long held that procurements classified under a research and development NAICS code “must be for research and development, and thus must look to creating new processes or products.”’ (quoting Dayton T. Brown, Inc., SBA No. NAICS-5164 (2010))…”

“in summary, the mere fact the solicitation involved space vehicles and satellites does not mean it called for research into those very vehicles and satellites. It calls for research into the Earth’s climate, atmosphere, and oceans. Although not outright stating such, OHA clearly rejected NASA’s argument that ‘principal purpose’ only applies to the NAICS code designation, not size standard exceptions that may fall under those codes.

While again notable for being a particularly fascinating subject for a solicitation, there is an important lesson in terms of government contracts law here: OHA will consider ‘principal purpose’ objections to size standard exceptions even if the protestor and agency agree on the actual NAICS code designation…” Read the full article here.

Source: NAICS, The Final Frontier: OHA Rejects NAICS Size Standard Exception as Inapplicable to NASA Solicitation – By John Holtz, October 11, 2021. SmallGovCon.


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