Unsuccessful Bidder Has Challenged Winner’s Ability to Meet Size Standard
Mike Nartker
WC Monitor
12/12/2014
A lengthy dispute over a small Department of Energy support contract may now be over, with the Small Business Administration’s Office of Hearings and Appeals denying this week a second appeal filed by an unsuccessful bidder challenging the contract winner’s ability to meet the size standard used for the procurement. MCH Corporation has been challenging Synergy Solutions’ win this summer of a $6 million contract to provide technical and administrative support at the Denver Federal Center’s Building 55. “After the long wait through the SBA protest process and the recent OHA dismissal of the final appeal, Synergy is now in full transition and is looking forward to the full assumption of contract performance upon completion of transition activities,” Synergy Solutions Vice President for Business Operations Rick Lyons said in a written response to WC Monitor this week.
In a separate response to WC Monitor late this week, MCH Corporation CEO Michael Hamilton said, “We understand that administrative rulings are based on incredibly high standards of proof and timeliness and don’t seem to always provide an Agency such as the SBA the ability to hold individuals accountable for how they might conduct their business.”
Familial Relationships at Issue in Challenge
The procurement for the Building 55 contract was set-aside for 8(a) small businesses and used a size standard of $7 million. DOE awarded the contract to Synergy Solutions in late June, and soon after MCH filed its initial challenge to the Small Business Administration, alleging that Synergy Solutions exceeded the size standard used because of alleged affiliation in several areas with the now-dormant PAI Corporation and several charities. In late July, an SBA area office denied MCH’s challenge, a decision the company appealed to the SBA Office of Hearings and Appeals.
In mid-October, the SBA Office of Hearings and Appeals largely denied MCH’s appeal, but did find that the SBA area office had not adequately considered whether the owner of Synergy Solutions, Thu-Anh L. Nelson, had a “familial identity of interest” with her parents, who are the owners of PAI Corporation. As a result, the SBA Office of Hearings and Appeals remanded the issue back to the SBA area office for further review. “Synergy maintains that the Area Office did presume a familial identity of interest, yet found a clear line of fracture. Such analysis, though is completely absent from the size determination, and Synergy’s response to the protest likewise did not argue against the presumption of affiliation. It therefore is not evident from the record that the Area Office considered the issue at all or that Synergy has had the opportunity to argue that there is clear fracture,” the Oct. 15 decision says.
In late October, the SBA area office again ruled that Synergy Solutions had met the size standard used for the procurement, prompting MCH’s second appeal. “In summary, Ms. Nelson has shown that there is a clear fracture between herself and the business interests of her parents; Synergy and PAI no longer do business together; Synergy and PAI are in different locations. The presumption of identity of interest has been rebutted,” the Oct. 27 decision says. A copy of the SBA Office of Hearings and Appeals’ decision on the second appeal was not available late this week.
Explaining why MCH had persisted in its challenge, Hamilton said earlier this week, “We’ve been very persistent in this protest because we feel the lack of recognition of any affiliation has impacted us now multiple times. So we would really like to see a proper decision that’s rendered independent of Synergy somehow having acquired 8(a) status even through PAI already graduated from the 8(a) program. We would like to see a fair decision regarding their size that takes into account the history they have with PAI and the relationship between the family owned companies.”
Transition Set to be Completed This Month
Building 55 is used for operation of the DOE Office of Environmental Management Consolidated Business Center’s Classification Office, its support functions, and the maintenance and management of classified and litigation records from the former Rocky Flats Environmental Technology Site. DOE began moving forward in late October with transition of the new contract to SynergySolutions from incumbent PM Tech, which chose not to participate in the recompete, and transition is expected to be completed by the end of this month. “DOE issued a Notice to Proceed to Synergy Solutions, Inc., on Oct. 29. Transition started once the Notice to Proceed was issued, and Synergy is currently performing work while the issue is being resolved,” Bill Taylor, a spokesman for the DOE Office of Environmental Management’s Consolidated Business Center, said in a written response. “DOE has given Synergy a Notice to Proceed in order to avoid any further delays and move forward with the contract as awarded.”
Synergy Solutions appears to have experienced some issues, though, as transition has proceeded, such as having to change its proposed Project Manager before becoming fully responsible for the contract. “Synergy has replaced the individual it proposed for the Project Manager Key Personnel position as that individual has accepted another position. Synergy has provided a suitable replacement in accordance with the contract’s terms and conditions. DOE will not impose any sort of contractual financial penalty as a result of this replacement,” Taylor said. According to Lyons, the incumbent personnel are “moving en masse to another contract,” though he said that Synergy Solutions has “successfully hired new, highly qualified personnel who will participate in the transition process to ensure a successful transfer of activities.”
DOE appears to be pleased with how transition has moved forward so far. “The contract transition activities have proceeded satisfactorily in accordance with the terms and conditions of both the concluding and newly awarded contracts. No issues have been identified that would prevent Synergy from assuming full responsibility of all newly awarded contract activities on or before January 1, 2015,” Taylor said. Lyons said, “We are very pleased with the progress that we have made to date and we look forward to the successful transfer and performance of this contract.”
