York Telecom Corporation v. United States, 130 Fed. Cl. 186

Background

NASA issued SEWP V RFP (commercial-item, small-business set-aside) using NAICS 541519 (ITVAR) with a 150-employee size standard in Block 10. FAR 52.212-1(a) (non-manufacturer language) also appeared in the solicitation.
FAR 52.212-1(a) includes a sentence stating non-manufacturers face a 500-employee size standard, and the solicitation contained agency Q&A responses and amendments clarifying that the applicable size standard was 150 employees.
York Telecom (Yorktel) submitted an offer stating it was a non-manufacturer with between 150 and 500 employees; NASA awarded Yorktel a SEWP V contract but then suspended it and referred the matter to SBA for a size determination.
SBA Area Office and SBA Office of Hearings and Appeals (OHA) concluded the NAICS 541519 is a services code, the non-manufacturer rule did not apply, and Yorktel did not meet the 150-employee size standard.
Yorktel sued in the Court of Federal Claims challenging NASA’s size determination and seeking to enjoin termination; government moved to dismiss or for judgment on the administrative record and to supplement the record with the contracting officer’s declaration.
Court denied supplementation, found jurisdiction and standing, but held Yorktel waived its challenge as untimely and that the RFP and law required application of the 150-employee NAICS size standard; judgment for the government.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the court has jurisdiction and Yorktel has standing to pursue a bid protest despite being an awardee	Yorktel argued it alleges statutory/regulatory violations and seeks relief from termination, so the Court may hear the protest	Gov’t argued awardee status or pending SBA proceedings could preclude review	Court: Jurisdiction exists under 28 U.S.C. §1491(b) and Yorktel has standing because SBA-OHA determined it was not small and NASA might terminate the contract
Whether the solicitation imposed a 500-employee non-manufacturer size standard that would make Yorktel eligible	Yorktel contended FAR 52.212-1(a)’s non-manufacturer sentence establishes a 500-employee standard applicable here	Gov’t argued the NAICS 541519 150-employee size standard governs and FAR language does not override NAICS-based standard	Court: RFP read as requiring compliance with Block 10 NAICS size; non-manufacturer rule still requires meeting NAICS size, so 150 employees controls
Whether the non-manufacturer rule applied to this procurement	Yorktel asserted it was a non-manufacturer and relied on FAR provision and rule to claim 500-employee standard	Gov’t and SBA maintained 541519 is a services NAICS and the non-manufacturer rule does not apply to service NAICS (or applies only where principal purpose is supply)	Court: SBA-OHA correctly found non-manufacturer rule inapplicable here; Yorktel did not qualify under the rule
Whether Yorktel’s challenge to the RFP size standard was timely	Yorktel argued the RFP language and FAR created ambiguity and it was entitled to challenge after award	Gov’t argued Yorktel knew (or should have known) of the agency’s interpretation via Q&A and amendments and therefore waived challenge under Blue & Gold	Court: Yorktel waived its challenge by failing to object prior to close of procurement; challenge is untimely under Blue & Gold and denied

Key Cases Cited

Advanced Sys. Tech., Inc. v. United States, 69 Fed. Cl. 474 (2006) (discussing NAICS/small-business framework)
Rotech Healthcare Inc. v. United States, 71 Fed. Cl. 393 (2006) (NAICS and size standard references)
Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374 (Fed. Cir. 2009) (limiting supplementation of the administrative record)
Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007) (untimely challenge/waiver rule for solicitation defects)
Systems App. & Techs., Inc. v. United States, 691 F.3d 1374 (Fed. Cir. 2012) (awardee may have bid protest jurisdiction)
Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (standing tests for bid protests)
Orion Tech., Inc. v. United States, 704 F.3d 1344 (Fed. Cir. 2013) (substantial chance test for post-award standing)
Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345 (Fed. Cir. 2004) (arbitrary and capricious standard in procurement review)
Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (standards for arbitrary and capricious review)