OHA Finds Prime Contractor Unduly Reliant on Subcontractor
The Centers for Disease Control and Prevention (CDC) issued a solicitation for security guard services at CDC facilities in and around Atlanta, Georgia. The SBA Area Office issued a determination, concluding that the prime contractor Professional Security Corporation is affiliated with its subcontractor Metropolitan Security Service. OHA agreed on appeal.
Although the prime contractor was to perform 53% of the work, OHA still found that the prime contractor was unduly reliant on the subcontractor in violation of the ostensible subcontractor rule. OHA identified the following four factors in support of this finding:
- The proposed subcontractor was the incumbent contractor and was not eligible to compete for the procurement itself.
- The prime contractor planned to hire the large majority of its workforce from the subcontractor.
- The prime contractor's proposed program manager previously served as program manager for the subcontractor on the incumbent contract.
- The prime contractor was a relatively new firm with modest revenues and scant experience.
While OHA indicated it is not always improper to hire incumbent personnel, this does not permit the prime contractor to rely on the subcontractor “for virtually all staffing, including both managerial and non-managerial employees, and without contributing Appellant's own employees or other value to the project beyond Appellant's small business status.” SIZE APPEAL OF PROFESSIONAL SECURITY CORPORATION, SBA No. SIZ-5548 (April 14, 2014)
