Paradigm Eng'rs & Constructors, PLLC v. United States - 147 Fed. Cl. 487 (2020)

Rule:

The principal purpose principles in 48 C.F.R. § 19.303(a)(2) and 13 C.F.R. § 121.402(b) provide that a procurement is usually classified according to the component which accounts for the greatest percentage of contract value. 48 C.F.R. § 19.303(a)(2). The word "usually" does not require the Agency to classify according to the component which has the greatest contract value. The Agency is permitted to conduct its own analysis to determine the principal purpose of a procurement. The Agency's decision is not suspect just because it does not automatically apply the North American Industrial Classification System (NAICS) Code for the component accounting for the largest share of contract value. When two NAICS Codes may be plausibly related and the Agency's choice is upheld by the Office of Hearings and Appeals (OHA) with reasoned explanation for that choice, the Court of Federal Claims has nothing further to do. The OHA's affirmance of the Agency's decision is reasonable and not contrary to law. 

Facts:

The plaintiff, Paradigm Engineers and Constructors, PLLC ("Paradigm"), in this pre-award bid protest alleged 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 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 challenged the NAICS Code designation at this Court.

Issue:

Was VA required to classify according to the component which has the greatest contract value?

Answer:

No.

Conclusion:

The court granted VA’s cross-motion for judgment on the administrative record because the agency had rationally determined that the services sought aligned with the Architectural Services NAICS Code based on the Statement of Work and tasks required to accomplish the work, and was not at odds with the 48 C.F.R. § 19.3030(a)(2) as the agency was not required to classify according to the component which has the greatest contract value and was permitted to conduct its own analysis to determine the principal purpose of a procurement.