United States Small Business Administration
Office of Hearings and Appeals

NAICS APPEAL OF:

ALON, Inc.
Appellant

Solicitation No. GSC-TFMG-10-32308

General Services Administration
FEDSIM DoD Acquisition
Arlington, Virginia

SBA No. NAICS-5148

Decided: August 2, 2010

APPEARANCES

Douglas L. Patin, Esq., Lewis P. Rhodes, Esq., Bradley Arant Boult Cummings LLP, Washington, D.C., for Appellant.
Liana D. Henry, Esq., GSA Office of General Counsel, for the General Services Administration.

DECISION(1)

I. Jurisdiction

This appeal is decided under the Small Business Act of 1958, 15 U.S.C. § 631 et seq.,
and 13 C.F.R. Parts 121 and 134.

II. Issue

Whether the Contracting Officer’s designation of North American Industry Classification System (NAICS) code 541611, Administrative Management and General Management Consulting Services, for a procurement for mission support services is based on a clear error of fact or law.

III. BACKGROUND

A. The Solicitation

On July 2, 2010, the General Services Administration (GSA) Federal Systems Integration and Management Center (FEDSIM), in Arlington, Virginia, issued Solicitation No. GSC-TFMG-10-32308 (RFP) to provide the Joint Improvised Explosive Device Defeat Organization (JIEDDO)/Counter Improvised Explosive Device Operations Integration Center (COIC) with mission support services. The Contracting Officer (CO) set the procurement aside for competition among eligible 8(a) concerns, and assigned to it NAICS code 541611, Administrative Management and General Management Consulting Services, with a corresponding small business size standard of $7 million in annual receipts. Proposals are due August 4, 2010.

B. The Statement of Work

The contractor shall provide services in support of the full range of COIC’s Mission Support Division (MSD). MSD supports COIC’s other four divisions, allowing them to focus on their mission in support of the Warfighter. There are 11 task areas, and for each, the Statement of Work (SOW) provides low and high workload estimates in hours, based on yearly estimated totals of 73,077 (low) and 76,059 (high) hours. The tasks, their “low” estimates of hours, and summary descriptions follow.(2)

1. Contract Program Management (468 hours) - One of the contractor’s Key Personnel shall also oversee all activities performed by contractor personnel and provide management, direction, administration, quality assurance, and leadership of the execution of this contract. This task includes preparing monthly reports tracking contractor activities and progress, hours, and costs.

2. Program Decision and Documentation Support (6,090 hours) - The contractor shall document JIEDDO/COIC’s emerging and continuing initiatives so the Government can make informed decisions on the merits of each initiative. Based upon technical input from functional personnel, the contractor shall develop, update, and archive quad charts, briefing packages, and other documentation that describe the technical characteristics, cost estimate, and proposed schedule for each initiative. The contractor shall prepare briefing materials and facilitate the participation of Government personnel at those meetings.

3. Acquisition Consulting and Contracting Support (14,053 hours) - The contractor shall provide acquisition support for existing and planned JIEDDO/COIC contract actions. The contractor shall prepare for Government approval preliminary documents, such as proposed labor category descriptions and limited competition memos, which reflect technical and operational requirements. The contractor shall help develop independent cost analyses and draft Quality Assurance Surveillance Plans subject to COIC approval to support the procurement process. The contractor shall assist in proposal evaluation by providing comparative analyses, doing compliance review of proposals, and documenting deficiencies.The contractor shall support JIEDDO/COIC in the post-award contract phase by preparing monthly status updates that reflect the status of deliverables, funds expended, and variance analyses to highlight significant issues. The contractor shall establish and maintain up-to-date contract files to include the basic contract, modifications, processed invoices, and other information. The contractor shall facilitate the processing of all contract invoices, and shall maintain records of when invoices are expected, received, and paid. Finally, the contractor shall ensure that services that may approach being considered to be “inherently governmental” (i.e., assisting in developing statements of work) are structured, performed, and managed so as to not be considered inherently governmental.

4. Financial Management Support (3,748 hours) - The contractor shall process financial transactions for Government approval, perform follow-up actions on commitments, outstanding obligations, and certified vouchers; record, reconcile, and verify entries into automated systems; maintain records for appropriated funds; and prepare schedules and financial reports. The contractor also shall prepare and process funding documents for Government approval, monitor purchase requests for funding issues, prepare customized financial reports, review financial data for accuracy, and resolve discrepancies in conjunction with Government approval. Also, the contractor shall analyze accounting reports and financial data, prepare inputs to the budget process based on projected funding requirements, and prepare budget documentation and execution reports for Government review and approval.

5. Security Assurance Support (7,495 hours) - The contractor shall support JIEDDO/COIC in overseeing, managing, and implementing the facility security program. This includes making recommendations for incorporating security requirements into the design, construction, modification, and accreditation of a secure facility. Task 5 also requires the contractor to coordinate with others to ensure all Personnel Security requirements are met for access to classified information and information systems, and to ensure the life-cycle process for resident personnel clearances is accomplished, including briefings. The contractor shall maintain records for all Personnel Security processing actions. Also, the contractor shall support development and implementation of the Information Security Program, including procedures for handling, marking, storage and disposition of classified material. The contractor shall support the Visitor Control program, and support the development and implementation of the Security Awareness Program. The contractor shall develop, implement and maintain an updated Operations Security Plan for control of critical program information, classified material, and sensitive data.

6. Configuration Management Support (5,621 hours) - The contractor shall maintain a database documenting all software and hardware in use, shall perform status accounting including record of purchase and licensing details, shall ensure software and hardware does not violate existing contracts, and shall ensure significant defects are documented. Also, the contractor shall facilitate meetings where the Government decides when and if new software and hardware releases will be implemented; and shall facilitate communications with stakeholders to ensure software and hardware actions efficiently and effectively enhance overall goals.

7. Information Assurance (IA) Support (1,874 hours) - The contractor shall contribute to the protection and defense of information and information systems by ensuring confidentiality, integrity, authentication, availability, and non-repudiation of software systems. The contractor also shall: (1) develop IA plans and schedules, (2) estimate IA resource requirements, (3) define IA milestones and deliverables, (4) monitor IA activities, and (5) evaluate and report on IA accomplishments. The contractor shall keep COIC informed of the status of ongoing IA activities and make recommendations for improvements.

8. Administrative and Organizational Effectiveness Support (14,990 hours) - Under Task 8, the contractor shall:

• Provide data collection, processing, and analysis;

• Manage correspondence; review, control, maintain records on, and coordinate responses;

• Edit and produce final copy of correspondence, summaries, briefings, reports and other analytical, process flow, spreadsheet, narrative, and statistical documents;

• Review documents for official signature, coordination or concurrence, accuracy and completeness, and conformance with style, format, or procedural requirements;

• Produce, coordinate, and distribute documents;

• Maintain facsimile records, and program and operate speed dial on fax machines;

• Maintain the calendar for senior management program officials;

• Distribute and track action items;

• Establish and maintain office files and databases;

• Provide assistance in preparing meetings and setting up teleconferences and videoconferences;

• Coordinate travel and training for staff members;

• Oversee all office administrative functions;

• Develop and maintain administrative data systems such as contact lists and shared calendars;

• Perform writing, editorial and layout services, graphic design, and scanning;

• Provide interface with other support services;

• Provide support in processing Freedom of Information Act requests and in responding to Inspector General reports;

• Provide support in legislative analysis, tracking and administrative support; review and edit transcripts, prepare briefing materials, reports, analytical tools and summaries; and

• Assist program offices in developing strategic and business plans, and other long-term planning documents.

9. Facilities Management Support (Optional Task Area) (1,874 hours) - The contractor shall provide support to ensure maintenance issues are brought to the attention of the facilities management company and then monitor the completion of those requests. The contractor shall ensure that the facilities planning process provides sufficient space, electrical power, electrical distribution, and heating and air conditioning. The contractor shall process requests for supplies, furniture, and equipment for Government approval. The contractor shall ensure Government-approved items are provided to organizations requiring those items. The contractor shall develop and process material action requests and obtain Government approvals for them.

10. Human Resources Management Support (Optional Task Area) (7,495 hours) - The contractor shall draft, administer and support the effective dissemination of sound policies, rules, and best practices that maintain compliance with Federal and DOD employment and labor laws, guidance and directives on human resource functions. The contractor shall draft performance awards and letters of recognition. Also, the contractor shall maintain existing databases of personnel records, and run specified reports using this data to allow the COIC to make informed decisions.

11. Property Management Support (Optional Task Area) (9,369 hours) - The contractor shall provide property management support. The contractor shall provide recommendations for the implementation and execution of Government property administration policies to include: the receipt, identification, consumption, utilization, and disposition of Government property; maintaining records, preparing reports, and conducting physical inventories of Government property; the management of property control systems, and materiel management and accounting.

Solicitation at C1-C13 (descriptions); Attachment I at J-24 (hours). The last 3 tasks are designated as Optional Task Areas. Id.

C. Key Personnel

The RFP designates eight positions to be proposed as Key Personnel. These include:

• Three Senior Contract Specialists, who will contribute to the execution of procurement strategies and monitor contractor performance;

• One Acquisition Cell Technical Lead, who will have extensive experience directly related to the DoD acquisition process and extensive experience managing projects in a technical environment;

• One Senior Configuration Manager, who will have extensive experience performing configuration management functions in support of governmental organizations, and who has an in-depth understanding of configuration management best practices;

• One Information Assurance Project Manager, who will manage information-related risks; and

• Two Senior Security Specialists, who will have experience in implementing security programs and security education programs, and who will have experience relating to Information and Physical Security.

Solicitation at H4-H8.

D. The Appeal

On July 12, 2010, ALON, Inc. (Appellant), filed the instant NAICS appeal with the Small Business Administration’s (SBA) Office of Hearings and Appeals (OHA). Appellant asserts that NAICS code 541611, chosen by the CO, is incorrect. Appellant asserts that the correct NAICS code for this solicitation is either 561210, Facilities Support Services, with a small business size standard of $35.5 million in annual receipts, or 541519, Other Computer Related Services, with a small business size standard of $25 million in annual receipts.

Appellant first asserts that the RFP’s 11 tasks can be compartmentalized into three categories as follows: facility management (Tasks 5, 9, 11); professional services (Tasks 1, 2, 3, 4, 8, 10); and computer services (Tasks 6, 7). Next, Appellant calculates, first in hours and then in dollars (based on its own current billing rates) the percentages of the total workload owing to each category, as follows:

See attached document for the table.

Appellant then asserts that much of the “professional services” category, such as everything in Task 2, Decision and Documentation Support, and everything performed by the Acquisition Cell Technical Lead (who must have experience supervising people in a technical environment), should be considered computer related services and reclassified into that category. Appellant bases these reclassifications on its experience as the incumbent, noting that 96% of the dollar value of the contracts is information technology and computer specific.

Further, Appellant asserts that because Task 3, Acquisition Consulting and Contracting Support, also requires computer-related knowledge and services, large portions of Task 3 (along with much work performed by Senior Contract Specialists), also should be reclassified into the computer services category. After these reclassifications, Appellant asserts, the percentages of workload owing to each category are:

See attached document for the table.

Next, Appellant assets, because the RFP requires three different categories of services, each of which falls into a different industry and none of which is dominant, that NAICS code 56120, Facilities Support Services, is the appropriate NAICS code for the RFP.

Alternatively, Appellant asserts NAICS code 541519, Other Computer Related Services, is the appropriate code because this procurement requires more than “some” computer services, thus overcoming the line of OHA decisions holding that the existence of “some” computer services does not mean the procurement should be classified under NAICS code 541519.

E. The GSA’s Response to the Appeal

On July 27, 2010, the GSA filed its response in opposition to the appeal. The GSA asserts that the CO’s designation of NAICS code 541611 was not based on clear error of fact or law and that both of Appellant’s requested NAICS codes are incorrect. In support, the GSA submits the CO’s Declaration in which she states the technical team found only two of the 11 tasks, Tasks 6 and 7, Configuration Management Support and Information Assurance Support, associated with a NAICS code other than 541611. Further, the RFP requires many of the services that NAICS code 541611 specifically includes, such as strategic planning and administrative management.

The GSA also asserts the Independent Government Cost Estimate (IGCE) shows that the preponderance of the RFP is in NAICS code 541611. Specifically, only about 8,000 of the 76,000 estimated labor hours are outside of NAICS code 541611. Thus, even though the subject matter of the services required by the RFP may involve information technology, the actual nature of the services required is administrative. Therefore, the CO made no clear error in her designation of NAICS code 541611.

IV. DISCUSSION

A. Preliminary Matters

Appellant filed the instant appeal within 10 days after GSA issued the solicitation. Thus, the appeal is timely. 13 C.F.R. §§ 121.1103(b)(1); 134.304(a)(3).
Appellant has the burden of proving, by a preponderance of the evidence, all elements of its appeal. Specifically, it must prove the NAICS code designation assigned to the solicitation is based on a clear error of fact or law. 13 C.F.R. § 134.314; NAICS Appeal of Durodyne, Inc., SBA No. NAICS-4536, at 4 (2003). The correct NAICS code is that which best describes the principal purpose of the services being procured, in light of the industry description in the NAICS Manual(3), the description in the solicitation, and the relative weight of each element in the solicitation. 13 C.F.R. § 121.402(b); Durodyne, SBA No. NAICS-4536, at 4.

B. The Merits of the Appeal

The CO’s designated NAICS code, 541611, Administrative Management and General Management Consulting Services, covers:

[E]stablishments primarily engaged in providing operating advice and assistance to businesses and other organizations on administrative management issues, such as financial planning and budgeting, equity and asset management, records management, office planning, strategic and organizational planning, site selection, new business startup, and business process improvement. This industry also in-cludes establishments of general management consultants that provide a full range of administrative; human resource; marketing; process, physical distribution, and logistics; or other management consulting services to clients.

Illustrative Examples:

Administrative management consulting services
Site selection consulting services
Financial management (except investment advice) consulting services
Strategic planning consulting services
General management consulting services

NAICS Manual, at 743.

This NAICS code corresponds closely with the services GSA seeks to procure here. This SOW largely calls for administrative management services. Task 1 requires management services. Task 2 requires the contractor to provide documentation of the initiatives and the preparation of briefing materials, clearly administrative functions. Task 3 requires the contractor to provide acquisition consulting support. The contractor will prepare documentation in the acquisition planning phase, assist in proposal evaluation, and assist in monitoring performance in the post-award phase. All of these tasks are properly characterized as administrative management consulting services, such as are covered by NAICS code 541611.

Task 4 is Financial Management Support, and requires the contractor to process financial transactions for the Government, perform follow-up actions on the transactions, analyze accounting data and prepare budget documentation. All of this is covered by financial management consulting services, included in the NAICS code 541611 description. Task 5 requires the contractor to oversee, manage and implement a facility security program. The tasks describe the administrative functions of handling a security program, such as would be included under NAICS code 541611.

Task 6 requires maintenance of a database. While this is an information technology function, it is also part administration. The same is true of Task 7, which requires ensuring the integrity of information and information systems. These two Tasks amount to less than 8,000 hours in a 73,000-hour estimated workload.
The contractor’s duties under Task 8 are entirely administrative services, all properly categorized under 541611. The optional tasks 9 through 11 also call for management support of various types.

It is clear then, that the tasks in the SOW closely correspond to the tasks the NAICS Manual characterizes as covered by NAICS code 541611. In addition, the Key Personnel designated by the SOW are largely performing administrative and consulting functions, in overseeing performance of the contract.
Further, I must give significant weight to the IGCE. This estimate was prepared prior to this litigation, and represents GSA’s own best analysis of the procurement. The IGCE shows that the great majority of the work falls under NAICS code 541611. NAICS Appeal of Master Key Resources, LLC, SBA No. NAICS-4862 (2007).

I must conclude that the administrative tasks in the instant SOW are precisely the same type of tasks which this Office has previously found to be properly designated under NAICS code 541611. See, e.g., NAICS Appeal of 1st American Systems and Services, LLC, SBA No. NAICS-5119 (2010); NAICS Appeal of Engineering Services Network, Inc., SBA No. NAICS-5064 (2009); NAICS Appeal of Information Ventures, Inc., SBA No. NAICS-4713 (2005). It is thus clear that 5421611 is the appropriate NAICS code for this procurement.

Appellant’s requested NAICS code 561210, Facilities Support Services, covers:

[E]stablishments primarily engaged in providing operating staff to perform a combination of support services within a client’s facilities. Establishments in this industry typically provide a combination of services, such as janitorial, main-tenance, trash disposal, guard and security, mail routing, reception, laundry, and related services to support operations within facilities. These establishments provide operating staff to carry out these support activities; but are not involved with or responsible for the core business or activities of the client. Establishments providing facilities (except computer and/or data processing) operation support services and establishments providing private jail services or operating correc-tional facilities (i.e., jails) on a contract or fee basis are included in this industry.

NAICS Manual, at 767-68. The NAICS Manual includes no illustrative examples for NAICS code 561210; however, the size regulations include additional requirements at footnote 12:

(a) If one or more activities of Facilities Support Services as defined in paragraph (b) (below in this footnote) can be identified with a specific industry and that industry accounts for 50% or more of the value of an entire procurement, then the proper classification of the procurement is that of the specific industry, not Facilities Support Services.

(b) “Facilities Support Services” requires the performance of three or more separate activities in the areas of services or specialty trade contractors industries. If services are performed, these service activities must each be in a separate NAICS industry. If the procurement requires the use of specialty trade contrac-tors (plumbing, painting, plastering, carpentry, etc.), all such specialty trade con-tractors activities are considered a single activity and classified as “Building and Property Specialty Trade Services.” Since “Building and Property Specialty Trade Services” is only one activity, two additional activities of separate NAICS industries are required for a procurement to be classified as “Facilities Support Services.”

13 C.F.R. § 121.201, n.12.

It is clear from the description of NAICS code 561210 that the establishments covered by this code are not of the administrative and professional nature called for by this procurement. Rather, it covers establishments which provide a combination of support services, e.g., maintenance, janitorial and clerical (such as mail routing), but are not involved with the core business of the client. NAICS Appeal of JBS International, Inc., SBA No. NAICS-5021 at 8 (2008). Here, the procurement is not for facilities support services, but for administration of an important program. Further, in order for a procurement to qualify under the code, no one NAICS code may account for more than 50% of the work. Despite Appellant’s efforts to render all activities below 50%, one NAICS code, 541611, dominates this procurement. Thus, this procurement could not be classified under NAICS code 561210.

Appellant’s alternate NAICS code 541519, Other Computer Related Services, covers:

[E]stablishments primarily engaged in providing computer related services (except custom programming, systems integration design, and facilities manage-ment services). Establishments providing computer disaster recovery services or software installation services are included in this industry.
NAICS Manual, at 741.

It is clear that this code covers procurements which are primarily computer related. It is true that Tasks 6 and 7 in the instant SOW are largely computer-related. Nevertheless, in today’s business environment nearly all administrative tasks will require some significant amount of computer-related work, and the fact that a solicitation calls for some work in information technology does not mean that the entire procurement is computer-related. See NAICS Appeal of Panacea Consulting, Inc., SBA No. NAICS-4582 (2003) (quoting NAICS Appeal of Eagle Design and Management, Inc., SBA No. NAICS-4510, at 4, remanded to SBA No. NAICS-4521; aff’d sub nom. Eagle Design and Management, Inc. v. United States, 57 Fed. Cl. 271 (2002)). In this procurement, the computer related tasks are a minority of the work, only two out of eleven tasks, and thus this SOW cannot support a NAICS code 541519 designation.

Appellant has failed to meet its burden of establishing clear error in the CO’s designation. Accordingly, I conclude that I must deny the instant appeal.

V. CONCLUSION

For the above reasons, the instant appeal is DENIED, and the CO’s designated NAICS code 541611, Administrative Management and General Management Consulting Services is AFFIRMED.

This is the final decision of the Small Business Administration. See 13 C.F.R. § 134.316(b).
________________________________
CHRISTOPHER HOLLEMAN
Administrative Judge

FOOTNOTES

1 This Decision was issued under a Protective Order to prevent the disclosure of confidential or proprietary information. On August 2, 2010, I issued an Order for Redactions directing each party to file a request for redactions by August 9, 2010, if that party desired to have any information redacted from the published Decision. OHA has received no timely request from any party requesting that the original Decision be redacted in any way. Thus, OHA now publishes the Decision in its entirety.

2 Regardless of whether the “low” or “high” estimate of hours is used, a particular task’s percentage of yearly estimated total hours is the same.

3 Executive Office of the President, Office of Management and Budget, North American Industry Classification System-United States (2007) (NAICS Manual), available at www.census.gov.