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Small Business Set-Asides OK Under the Workforce Investment Act

The Federal Circuit addressed an issue of pure statutory construction in this case, where it had to determine the meaning of "competitive basis" under the Workforce Investment Act.

Background

The Workforce Investment Act ("WIA") allows the Department of Labor ("DOL") to run the Job Corps program to educate and train at-risk youth to "become more responsible, employable, and productive citizens." Res-Care, Inc. ("Res-Care") operated the Blue Ridge Job Corps facility since 1998, and its contract was set to expire on March 31, 2013. In December 2011, the DOL sought bidders for the operation of the Blue Ridge facility. Res-Care, a large business, did not respond to the request, though one large business and four small businesses did respond.

Based on the responses, and after thorough review, the DOL contracting officer found that two small businesses met "all of the capability areas indentified in the Request" and would likely submit a bid with a fair market price. Because the "Rule of Two" had been met, she recommended the contract selection for Blue Ridge be categorized as a small business set-aside, which the DOL granted.

Less than a year before its contract expired, in April 2012, Res-Care filed a bid protest with the Claims Court arguing that the small business set-aside was in violation of the WIA. The Claims Court did not agree, and granted the Government's motion for judgment on the administrative record, and dismissed the case. Res-Care appealed.

What Is a "Competitive Basis?"

The Federal Circuit had to determine what "competitive basis" meant under the Workforce Investment Act, and what role, if any, the exceptions enumerated in the Competition in Contracting Act ("CICA") played in its interpretation. The Federal Circuit considered the "ordinary and established meaning" of "competitive basis" and found that "[a] selection process confined to multiple small businesses bidding to operate a JCC thus satisfies the statutory 'competitive basis' requirement." The court rejected all of Res-Care's arguments for alternative interpretations.

Repercussions

This case presents a small win for small business, because small business set-asides are permitted under this interpretation of the WIA. And, the court further noted established precedent that even though a small business may perform at lower levels than large business, that fact has no bearing on whether a contracting officer properly evaluated the capabilities of the small businesses.

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