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Paradigm Eng'rs & Constructors, PLLC v. United States

United States Court of Federal Claims

March 10, 2020, Filed Under Seal

No. 19-2014C




The plaintiff, Paradigm Engineers and Constructors, PLLC ("Paradigm"), in this pre-award bid protest alleges that the defendant, the United States, acting through the Department of Veterans Affairs ("VA" or the "Agency"), arbitrarily and capriciously classified the procurement under the North American Industrial Classification System ("NAICS") Code as Architectural Services rather than Engineering Services. Paradigm, a Service-Disabled Veteran-Owned Small [*2]  Business ("SDVOSB"), qualified to compete under the Engineering Services NAICS Code, but not the other. Paradigm challenged the VA's determination before the U.S. Small Business Administration ("SBA") Office of Hearings and Appeals ("OHA"), and OHA upheld the VA's determination. Paradigm now challenges the NAICS Code designation at this Court.

Under the deferential standard of review applied to the OHA's decision, the Court rejects Paradigm's protest and grants the VA's cross-motion for judgment on the administrative record.


A. Legal Background

The Small Business Act, 15 U.S.C. §§ 631 et seq., allows the SBA to set aside certain contracts for small businesses.2 Congress specifically empowered the SBA to "specify detailed definitions or standards by which a business concern may be determined to be a small business concern." 15 U.S.C. § 632(a)(2)(A); see also 15 U.S.C. § 637(b)(6) (granting the SBA authority "to determine within any industry the concerns, firms, persons, corporations, partnerships, cooperatives, or other business enterprises which are to be designated 'small-business concerns' for the purpose of effectuating the provisions of this chapter"). Other government agencies must "accept as conclusive the [SBA's] determination as to [*3]  which enterprises are to be designated 'small-business concerns[.]'" 15 U.S.C. § 637(b)(6).

The SBA uses the NAICS to "determine which entities qualify as small business concerns. The Office of Management and Budget assigns NAICS [C]odes to various industry sectors, and SBA determines which firms qualify as small businesses 'to assure that a fair proportion of government contracts for goods and services [is] performed by such entities in each industry category.'" Palladian Partners, Inc. v. United States, 783 F.3d 1243, 1247 (Fed. Cir. 2015) (quoting Advanced Sys. Tech., Inc. v. United States, 69 Fed. Cl. 474, 476 (2006)). As relevant here, the SBA determines the maximum average annual receipts that a business may have in order to qualify as a small business within each NAICS Code. See 13 C.F.R. § 121.201. The SBA calculates average annual receipts over the three most recent fiscal years. See 13 C.F.R. § 121.104(c).

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2020 U.S. Claims LEXIS 408 *


Subsequent History: Reissued: March 25, 20201 [*1] .


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