Acquisition nixes chance at FDA contract
Synchrogenix Information Strategies used to be GlobalSubmit, one of two small businesses in pursuit of a Food and Drug Administration contract.
The FSA sought support for software licenses, maintenance and support services related to the implementation of an electronic common technical document validation and review software that is used to submit electronic documents.
GlobalSubmit lost the contract to Lorenz and quickly filed a bid protest. The protest apparently had some merit because the FDA pulled the award back for a corrective action.
The agency said it wanted new proposals and with the new proposals they wanted bidders to resubmit their small business certification.
And here is the rub for GlobalSubmit.
GlobalSubmit handed in its first bid in the summer of 2016. The FDA asked for new bids in April 2017. In between, GlobalSubmit was acquired by a large business Certara and renamed Synchrogenix.
Synchrogenix asked that the FDA drop the requirement to recertify as a small business. They argued that because it was small business at the time of the original bid they should still be eligible.
The FDA declined, then the company then filed a protest that claimed the agency no longer had a reasonable expectation that it would receive two offers from small businesses, so it should drop the requirement.
GAO denied the protest and the FDA moved forward with a new award to Lorenz.
And again Synchrogenix protested. This time, they argued that Lorenz’s software posed a risk and should have been found to not be technically acceptable.
In denying this protest, GAO said that Synchrogenix was not an “interested party” because as a large business it could not bid on the protest.
To be an interested party, a company has to show it has a direct economic interest in the award. Because Synchrogenix could not bid, it did not have an economic interest.
There are narrow circumstances where a large business can challenge a set-aside contract -- either an unreasonable price or when there is only one bidder. But GAO said that Synchrogenix did not raise either of those objections in its protest. It objected to Lorenz technical evaluation.
GAO dismissed the protest but also commented that a large business can object to a contract when it is set-aside. But the large business has to raise that argument at the beginning. Without that prohibition, a large business could object at any time and force a restart of the process.
Synchrogenix was in a unique position however. It was small at the beginning and then large.
But more than anything, this decision speaks to how small business status can complicate an acquisition. It is another reason why small business work is not valued at a discount in mergers and acquisitions.
A small business really cannot count any set aside work in its pipeline of potential work when talking to potential suitors.
It makes me wonder that if you are close to being sold, why even pursue this work?
Posted by Nick Wakeman on Jan 30, 2018 at 1:20 PM