McNeil Technologies, Inc., No. 4496 (July 11, 2002) Docket No. NAICS-2002-06-19-22 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. ____________________________________ ) NAICS APPEAL OF: ) ) McNeil Technologies, Inc. ) Docket No. NAICS-2002-06-19-22 ) Appellant ) Decided: July 11, 2002 ) Solicitation No. DE-RP01-02SO20138 ) Department of Energy ) Washington, DC ) ____________________________________) APPEARANCES Timothy C. Tozer, Esq., Moore & Lee, LLP, for Appellant Paul A. Gervas, Esq., for the Department of Energy DIGEST A solicitation for assistance in reviewing and making decisions relative to the disclosure of classified and sensitive unclassified documents of a highly technical nature, which requires expertise in scientific disciplines of the contractor's key personnel, is properly classified under NAICS code 541690 (Other Scientific and Technical Consulting Services), rather than NAICS code 541330 (Engineering Services). While prior NAICS/SIC code designations are a factor the contracting officer must consider in making a NAICS code designation, they are not dispositive in NAICS appeals. DECISION HOLLEMAN, Administrative Judge: Jurisdiction This appeal is decided under the Small Business Act of 1958, 15 U.S.C. Section 631 et seq., and 13 C.F.R. Parts 121 and 134. Issues Whether a solicitation for assistance in reviewing and making decisions relative to the disclosure of classified and sensitive unclassified documents of highly technical nature, which requires expertise in scientific disciplines of the contractor's key personnel, is properly classified under NAICS code 541690 (Other Scientific and Technical Consulting Services), rather than NAICS code 541330 (Engineering Services). Whether prior NAICS/SIC code designations are dispositive in NAICS appeals. I. BACKGROUND A. The Solicitation On June 10, 2002, the Department of Energy (DOE) issued the instant solicitation for classification and sensitive unclassified document review services. The Contracting Officer (CO) set the solicitation totally aside for small business, and assigned to it North American Industry Classification System (NAICS) code 541690 (Other Scientific and Technical Consulting Services), with a corresponding $6 million average annual receipts size standard. Offers were due on July 9, 2002. On June 28, 2002, the CO issued Amendment 2, extending the due date to July 25, 2002. B. The Statement of Work The Statement of Work (SOW) states that the objective of the solicitation is to obtain specialized technical and analytical support for DOE's Office of Classified and Controlled Information Review (OCCIR). OCCIR implements DOE's policies and procedures to identify classified information and certain unclassified but sensitive information and to determine whether the documents may be redacted or declassified for release to the public. The contractor will provide OCCIR with qualified personnel to render specialized technical, analytical and administrative support for classification, declassification, and sensitive unclassified information review of documents. Essentially, the contractor's task is to assist OCCIR in complying with the provisions of the Atomic Energy Act and Executive Order 12958, Classified National Security Information, governing the control of information. The solicitation specifically seeks contractor support for document review in the following areas, among others: Reviews made mandatory by statute and Executive Order; Responses to Freedom of Information Act (FOIA) requests; Patent applications and documents; Responses to subpoenas and discovery requests in litigation; Responses to Congressional inquiries; and Pre- publication reviews. The contractor will support various related missions such as: evaluation of document review procedures, evaluation of classification guides under development, and tracking of document action. The solicitation requires 100% accuracy from the contractor in the tasks to be performed. All contractor personnel must have a valid DOE security clearance at the time of award. The Program Manager must have a Bachelor's degree in an engineering discipline or in public or business administration, and a Master's of Business Administration is highly desirable. Most of the contractor's other key personnel must have degrees in a scientific discipline, and must be fully knowledgeable in the area of nuclear weapons technology. C. The Appeal On June 19, 2002, McNeil Technologies, Inc. (Appellant) filed the instant appeal. Appellant asserts NAICS code 541330 (Engineering Services, Military and Aerospace Equipment and Military Weapons), with a corresponding $23 million average annual receipts size standard, is the correct NAICS code for the instant solicitation. As a threshold matter, Appellant asserts it has standing to file this appeal because a large concern has standing to file a NAICS appeal where it is advocating an increased size standard under which it could qualify as small for the procurement. Appellant also asserts the instant procurement is a follow- on contract to an expiring contract, which was classified under Standard Industrial Classification (SIC) code 8711, Engineering Services-Military and Aerospace Equipment and Military Weapons, with a corresponding $20 million average annual receipts size standard, and that NAICS code 541330 is the current classification which best corresponds to that previous classification. Appellant argues that a CO's decision not to make the same NAICS designation used in earlier procurements must be reasonable. Here, because there is no significant difference between the statement of work in this solicitation and its predecessor, Appellant asserts it is not reasonable for DOE to use a different NAICS code than 541330. Appellant attaches extracts from the prior procurement's statement of work and a statement of work extract and a Commerce Business Daily synopsis from another, similar procurement in support of its argument. Appellant further asserts the solicitation emphasizes throughout the importance of providing highly educated and qualified personnel to perform the functions of the contract. These personnel must provide expert guidance to DOE related to document declassification, and provide support to DOE on a wide range of matters from FOIA requests to patent applications to discovery requests in litigation. The solicitation refers to a number of highly technical documents which directly apply to the contractor's duties under the solicitation, and the complicated issues contained in these documents require the contractor to hire highly educated and experienced personnel. The solicitation further requires 100% accuracy from the contractor, and all the Key Personnel must have either a military background or military weapons experience. Appellant asserts the solicitation requires the contractor to have in-depth, specialized knowledge of nuclear weapons, and characterizes the ability to understand the intricacies of nuclear weapons technology as essential to performance of this contract. The high degree of technical expertise required by the contract mandates the designation of NAICS code 541330, instead of NAICS code 541690. Appellant also asserts that because the greater value of services provided under this contract will be under the Key Personnel category, which requires the greater technical expertise, that NAICS code 541330 is the appropriate NAICS code. Finally, Appellant asserts DOE chose a NAICS code in this case to provide opportunities for firms in the $6 million average annual receipts range, and this is an impermissible reason for a NAICS code designation. D. The DOE Response On June 26, 2002, DOE filed a response to the appeal. First, DOE moves to dismiss the appeal, because Appellant has not demonstrated how it is adversely affected by the NAICS code designation. Second, DOE asserts NAICS code 541690 is the correct designation for this solicitation because the primary purpose of the solicitation is obtain contractor support to assist OCCIR in performing the classification, declassification and sensitive unclassified examination of official Government documents in DOE's possession. DOE asserts that while the instant procurement is a follow- on to an expiring contract, the requirements have been expanded to include additional contractor support to improve Government services at the program management level. Thus, while NAICS code 541330 may have replaced SIC code 8711, this fact does not mean SIC code 8711 is necessarily the best SIC code for this procurement. NAICS code 541690 is a more accurate match for the revised follow-on contract. DOE further argues that NAICS code 541330 applies to firms primarily engaged in applying physical laws and principles of engineering the design of machines, material processes, and so on, while NAICS code 541690 applies to firms which provide advice and assistance on scientific and technical issues. Here, the SOW does not require the contractor's personnel to have engineering skills, but rather the combination of skills, knowledge, education, and training in nuclear technology and related details to assess whether classified and nonclassified sensitive documents in DOE's possession and may be released to Congress, other agencies, and the general public. The principal purpose of the solicitation is advisory and assistance services of highly analytical nature, and therefore the solicitation is more properly classified under NAICS code 541690. II. DISCUSSION Appellant filed the instant appeal within 10 days of DOE's issuance of the solicitation, and thus the appeal is timely. 13 C.F.R. Section 134.304(a)(3). As a threshold matter, it is clear from the first point Appellant raises in its appeal that it is not eligible for this procurement under the current NAICS code designation, and appealed to this Office in order to seek a higher size standard under which it would be eligible. Therefore, Appellant is adversely affected by the current NAICS code designation, and has standing to appeal. 13 C.F.R. Section 134.302(b). Accordingly, DOE's motion to dismiss for lack of standing is DENIED. Appellant has the burden of proving, by a preponderance of the evidence, all elements of its appeal. Specifically, it must prove the CO's NAICS code designation is based on a clear error of fact or law. SIC Appeal of The Scientific Consulting Group, Inc., No. 4186, at 5 (1996); [1] 13 C.F.R. Section 134.314. 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, [2] the description in the solicitation, and the relative weight of each element in the solicitation. 13 C.F.R. Section 121.402(b). The NAICS Manual describes NAICS code 541690, assigned by the CO, as including: [E]stablishments primarily engaged in providing advice and assistance to businesses and other organizations on scientific and technical issues (except environmental). (The description then lists ten types of consulting services as examples of the kind of firm covered by this code). NAICS Manual, at 575. The NAICS Manual describes NAICS code 541330, urged by Appellant, as including: [E]stablishments primarily engaged in applying physical laws and principles of engineering in design, development, and utilization of machines, materials, instruments, structures, processes, and systems. The assignments undertaken by these establishments may involve any of the following activities: provision of advice, preparation of feasibility studies, preparation of preliminary and final plans and designs, provision of technical services during the construction or installation phase, inspection and evaluation of engineering projects, and related services. (The description then lists five types of engineering services as examples of the kind of firm covered by this code.) NAICS Manual, at 564. Clearly, the SOW does not require the contractor to apply physical laws and principles of engineering to design, development, or utilize machines, materials, instruments, structures, processes, or systems. The contractor here will not design, develop, or build anything. Rather, the contractor will advise DOE on how to handle classified and sensitive documents. The SOW requires scientific expertise of the contractor because these documents are highly technical in nature and the contractor's personnel must have these qualifications in order to understand the documents in question and intelligently review them. However, the work the contractor will perform is more in the nature of consulting than engineering. The fact that this procurement is a follow-on to previous procurement classified under SIC code 8711 does not mandate the designation of Appellant's preferred NAICS code. It is true that SIC code 8711 is matched to NAICS code 541330. NAICS Manual, at 1007. While prior NAICS/SIC code designations are a factor the CO must consider in designating a NAICS code (13 C.F.R. Section 121.402(b)), they are not dispositive in NAICS appeals before this Office. SIC Appeals of Analytical Systems, Inc., et al., SBA No. SIC-4411, at 8 (2000). Where, as here, the designation clearly does not call for services covered by the NAICS code urged by Appellant, and this Office was not called upon to review the prior designation and render a decision, the previous procurement's SIC code designation has no weight, and the CO's decision to discount the prior procurement history is justified. See NAICS Appeal of Phoenix Scientific Corporation, SBA No. NAICS-4416, at 12 (2000). Thus, the documentation Appellant submitted on the prior procurement and another similar procurement are not probative evidence, and are not entitled to any weight. Finally, Appellant's argument that this NAICS code was chosen in order to provide opportunities for firms in the $6 million average annual receipts is a bare assertion, unsupported by any evidence. Thus, the Administrative Judge will not consider it. In conclusion, it is clear that the Appellant has failed to meet its burden of establishing that the CO erred in not designating NAICS code 541330 for this solicitation, because the solicitation does not call for engineering services, but rather assistance in reviewing classified and sensitive documents and making decisions relating on redaction and disclosure, and these do not require the contractor to apply physical laws and principles of engineering in the design and development of machines, structures and systems. The CO's NAICS code designation is AFFIRMED. III. CONCLUSION The Administrative Judge AFFIRMS the Contracting Officer's NAICS code designation and DENIES the appeal. This is the final decision of the Small Business Administration. 13 C.F.R. Section 134.316(b). CHRISTOPHER HOLLEMAN Administrative Judge _________________________ 1 Following the Small Business Administration's (SBA) October 1, 2000, conversion to the 6-digit NAICS codes as the basis for the SBA's small business size standards, SIC code appeals are now known as NAICS code appeals. NAICS Appeal of Phoenix Scientific Corporation, SBA No. NAICS-4416, at 8 (2000). Where appropriate, the case precedent of this Office, decided under the prior SIC system, will apply to NAICS code appeals. Id. 2 Executive Office of the President, Office of Management and Budget. North American Industry Classification System Manual (1997). Posted: August, 2002