Protest of SBA Determination

B-204093: Sep 4, 1981

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A firm protested the Small Business Administration (SBA) Size Appeals Board's determination that another firm was a small business under applicable size standards established by SBA. The protester alleged that the Board failed to consider information which indicated that the firm was awarded contracts totaling more than $58 million over the past 3 years, even though the applicable size standard provided that average annual receipts could not exceed $12 million per year over the past 3 years. Instead, the protester asserted, the Board relied on the firm's tax returns to determine its size. The protester stated that, under SBA regulations, a firm's annual receipts must be established in accordance with general accounting principles and argued that any completed operations accounting method that blatantly understates the gross receipts of a firm is not in accordance with such principles. GAO generally does not review size status determinations because SBA is empowered to conclusively determine the size status of bidders. Although the protester alleged that the Board misapplied its own regulations and thus GAO should review this matter, the protester's objections essentially related to the Board's applications of a size standard and to the Board's decision that the other firm satisfied the standard. In this regard, GAO noted that SBA regulations permit the use of a completed contracts accounting method and also contemplate the consideration of a firm's tax returns in determining annual receipts. Thus, it appeared that the protester's objections did not relate to any failure of the Board to follow its own published regulations. Since the protester had not made a prima facie showing of bad faith or fraud, GAO would not consider the matter. Accordingly, the protest was dismissed.