Lack of final rule nixes bid protests

In the Runway Extension Act, Congress changed how a small business status is calculated. Instead of a three-year period, Congress said the Small Business Administration should use a five-year period for determining size according to revenue.

Pretty straightforward there, and I’ve heard different arguments on both sides that this will either help or hurt small businesses. Now that question has reared its head in a new Government Accountability Office decision.

That question at GAO involved when the regulation took effect. Two companies, TechAnax and Rigil Corp., protested the on-ramp solicitation for the governmentwide OASIS professional services contract because GSA used the old, three-year calculation rather than the five-year calculation.

GSA said it used the old calculation because SBA has not issued a final rule on how it will implement the change. SBA has issued draft rules but not a final rule, and has told agencies to use the old rule until the final rule is published.

TechAnax and Rigil argued that the five-year calculation went into effect the day the act was signed into law.

GAO sided with SBA and GSA, and said that the Small Business Act requires new regulations be finalized before the Runway Extension Act is implemented.

GAO also said that it is agreeing with SBA’s and GSA’s “interpretation” of the Small Business Act.

I bring this up because I had a brief conversation a few months back with an executive complaining that SBA was wasting everyone's time. The change in the Runway Extension Act is very simple -- switch the "three" to a "five" and the rest of the regulations stay the same.

There was no reason for SBA to wait to implement the law. It didn’t need a final rule. In fact, the act doesn’t ask SBA to write new regulations. It just says to strike "three" and insert "five."

What I find interesting here is that you can make a reasonable argument for both positions. GAO had to pick one and they support that decision it well. Some other authority, such as the U.S. Court of Federal Claims, could make the opposite finding and it would be just as reasonable.

A court decision in favor of TechAnax and Rigil could have broader implications on the role of rulemaking and when acts of Congress take effect. That’s a bit outside of my expertise, but it’s an interesting question to ponder.