Information Ventures, Inc., 4600 (December 23, 2003) Docket No. NAICS-2003-12-10-77 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. NAICS APPEAL OF: ) ) Information Ventures, Inc. ) Docket No. NAICS-2003-12-10-77 ) Appellant ) Decided: December 23, 2003 ) Solicitation No. RFP-NIH-NIAID-DAIT-04-43 ) Department of Health and Human Services ) Contract Management Branch ) Bethesda, Maryland ) APPEARANCES Bruce H. Kleinstein for Appellant Barbara A. Shadrick for the Department of Health and Human Services DIGEST A procurement where the successful contractor will provide day-to- day administrative, technical, and management services for the Division of Allergy, Immunology, and Transplantation (DAIT)'s clinical research programs, which will include tasks such as administrative, technical, and logistical support for scientific meetings and conferences, logistical arrangements for scientific meetings and workshops, and other related activities is appropriately classified under North American Industry Classification 561110 (Other Office Administrative Services) with a $6 million annual receipts, rather than NAICS code 541710 or 541690. DECISION BLAZSIK, 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. Issue Whether the appropriate NAICS code for this procurement is NAICS code 541710, 541690, or 561110. Facts On December 4, 2003, the Contracting Officer (CO) for the Department of Health and Human Services, Contract Management Branch, in Bethesda, Maryland, issued this negotiated small business set-aside procurement for administrative support to the Division of Allergy, Immunology, and Transplantation (DAIT) Clinical Research Program. The CO classified the procurement under North American Industry Classification System (NAICS) code 541710 (Research and Development in the Physical, Engineering, and Life Sciences), with a corresponding 500-employee size standard. Initial offers are due on February 4, 2004, and final proposal revisions are not known by the CO at this time. Statement of Work The DAIT of the National Institute of Allergy and Infectious Diseases (NIAID), of the National Institutes of Health (NIH), plans, sponsors, and directs national and international research programs in basic immunology, asthma, allergic, and immunologic diseases. The procurement will support day-to-day management activities associated with DAIT's clinical research programs, logistical arrangements for small scientific meetings and workshops on critical scientific issues, and the development and maintenance of databases that contain information essential for program management. More specifically, the procurement will provide support services in the following areas: administrative, technical, and logistical support for scientific meetings and conferences, and data and safety "monitory" boards; logistical and technical services for conference calls; management and administrative support for regulatory operations; and preparation of scientific and technical reports and documents. The Statement of Work lists the following specific tasks the successful contractor will perform: Task 1: Meetings with DAIT Program Staff. The contractor shall meet at least once a month with the DAIT Program Staff. Task 2: Scientific Meetings and Conference Support. The contractor shall be responsible for making all logistical arrangements for DAIT scientific meetings and conferences. Task 3: Provide Conference Call Services. The contractor shall designate a conference call coordinator who shall be responsible for arranging conference calls in support of the DAIT clinical research programs. Task 4: Administrative Support for DAIT Data and Safety Monitoring Board. Task 5: General and Regulatory Management and Administrative Support. The contractor shall provide medical/science writers to assist in the preparation of 8 to 10 Clinical Trial Agreements; provide writers to assist in formal responses to requests for information on DAIT sponsored events; and assist DAIT staff in the preparation of presentations using Power Point, Excel, and project management software packages. Task 6: Provide for an Orderly Transition. Prior to the completion date of this procurement, the contractor shall develop a written draft transition plan for the Project Officer's approval, to ensure the orderly and efficient transfer of all or part of this project to a designated contractor, if other than the incumbent. Finally, the Statement of Work requires a Project Director, who is thoroughly experienced in health science management and the coordination of multiple projects. The Appeal and Response On December 10, 2003, Information Ventures, Inc. (Appellant) appealed the CO's NAICS code designation. Appellant asserts the correct NAICS code for this procurement is either NAICS code 561110 (Office Administrative Services), with a corresponding $6 million annual receipts or NAICS code 541690 (Other Scientific and Technical Consulting Services), also with a $6 million annual receipts. Appellant asserts the CO's NAICS code designation is incorrect because the subject procurement does not encompass research and development in the physical, engineering, and life sciences. Rather, as clearly shown by the Statement of Work, the contractor will perform a wide variety of administrative support activities, which do not involve scientific, technical, or medically-related tasks. The Statement of Work also calls for a Project Director, with professional training in the health science field and documented experience in managing and coordinating multiple health projects. Thus, Appellant asserts, because of the wide range of administrative and office support services required, the CO's NAICS code of 541710 is not appropriate. On December 18, 2003, the CO filed her response. She reiterates the purpose of the procurement, described in detail above, and asserts her office issued a Source Sought Notice to conduct market research prior to determining how to solicit this procurement. The notice included the NAICS and size standard at issue. She asserts her office received six capability statements in response to her notice, but Appellant did not submit a response. She asserts the selection of the NAICS code was based on the results of market research and was reviewed by the NIH Small Business Specialists and the SBA Procurement Center Representative prior to issuing the procurement. Based on the above, the CO asserts the NAICS code is correct for the type of support required. The record closed on December 22, 2003. Discussion A NAICS appeal must be filed within ten days after issuance of the procurement. 13 C.F.R. Section 134.304(a)(3). Because the CO issued this procurement on December 4, 2003, and Appellant filed its appeal on December 10, 2003, the appeal is timely. In a NAICS code appeal, Appellant has the burden of proof, by a preponderance of the evidence, to show error in the Contracting Officer's NAICS code designation. NAICS Appeal of Red River Service Corporation, SBA No. NAICS-4590 (2003). 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. [1] The standard of review is whether the NAICS code designation is based on a clear error of fact or law. 13 C.F.R. Section 134.314. NAICS code 541710, designated by the CO, covers the following: This industry comprises establishments primarily engaged in conducting research and experimental development in the physical, engineering, and life sciences, such as agriculture, electronics, environmental, biology, botany, biotechnology, computers, chemistry, food, fisheries, forests, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary, and other allied subjects. NAICS Manual at 745. There are no illustrative examples shown for this NAICS code in the Manual. Appellant asserts either of two NAICS codes is appropriate. The first is NAICS code 561110 (Other Office Administrative Services). This code has the following description: This industry comprises establishments primarily engaged in providing a range of day-to-day office administrative services, such as financial planning; billing and recordkeeping; personnel; and physical distribution and logistics for others on a contract or fee basis. These establishments do not provide operating staff to carry out the complete operations of a business. NAICS Manual at 762. This NAICS code has no illustrative examples. The other NAICS code proposed by Appellant is NAICS code 541690 (Other Scientific and Technical Consulting Services). This code covers the following: This industry comprises establishments primarily engaged in providing advice and assistance to businesses and other organizations on scientific and technical issues (except environmental). NAICS Manual at 744. Some examples of this industry are the following: Agricultural consulting services; biological consulting services; chemical consulting services; energy consulting services; physics consulting services; and security consulting services. The Administrative Judge's examination of the Statement of Work compels the conclusion there is no perfect fit for this procurement. The regulation, supra, requires that the correct NAICS code is the one that "best describes the principal purpose of the services being procured." A close reading of the Statement of Work and tested by the regulatory standard, quoted in full, above, compels the conclusion that the CO's designated NAICS code 541710 is inappropriate. It is clear that the successful contractor will not be engaged in conducting research and experimental development in the physical, engineering, or life sciences. Moreover, the CO's response merely states she selected the NAICS code based on a market research study and the supposed agreement by the NIH Small Business Specialist and the SBA Procurement Center Representative. The CO's reliance on these employees or on the results of a market research in no way demonstrate that the NAICS code selected meets the regulatory standard. While opinions of other employees engaged in small business advisory roles may be instructive, the regulatory standard does not depend on opinion, but on a close reading of the Statement of Work and the industry description for the NAICS code selected. The CO's selection, for whatever the reason, was inappropriate and incorrect. The Statement of Work is replete with tasks to be performed by the successful contractor that, in no stretch of the imagination, requires research and development in physical, engineering, biological, or life sciences, encompassed and emphasized in the industry description for NAICS code 541710. Rather, the Statement of Work is replete with the numerous tasks to be performed by the successful contractor. The successful contractor is to perform 6 separate tasks, detailed above, and all concern administrative and management tasks. For example, the work to be performed includes providing pre-meeting and planning services, on-site meetings and conference services, conference call services, various other forms of administrative support for DAIT and an orderly transition to a new contractor at the completion of this contract. None of the tasks to be undertaken by the successful contractor involve, in any way, conducting research and experimental development in the diseases DAIT is involved in. In other words, the successful contractor will be involved in administrative and management support services. These are not described in NAICS code 541710. Similarly, Appellant's alternate choice of NAICS code 541690 is inappropriate. The industry description for that code, even its title, refers solely to establishments engaged in providing scientific and technical consulting services. The instant Statement of Work does not require any consulting advice and assistance from the successful contractor. It emphasizes administrative support services. Appellant's other choice of NAICS code 561110 seems to be the only industry code that has any relevance, albeit not perfect, to the tasks required by the Statement of Work. As noted before, this NAICS code describes a wide range of day-to-day office administrative services, which clearly are the principal tasks described in the Statement of Work. While the Administrative Judge doesn't believe this NAICS code is necessarily flawless for the work to be performed, the Administrative Judge's search of other NAICS code failed to unearth any other NAICS codes that fit better the procurement's requirements. Accordingly, the Administrative Judge concludes the CO's NAICS code designation was in error. Thus, the appeal is GRANTED. Conclusion NAICS code 561110 is the appropriate classification for the instant procurement because the services required by the Statement of Work are best described by that classification in the NAICS Manual. Thus, the Administrative Judge REVERSES the CO's NAICS code designation and GRANTS the appeal. This is the Small Business Administration's final decision. 13 C.F.R. Section 134.316(b). ___________________ GLORIA E. BLAZSIK Administrative Judge _________________________ Executive Office of the President, Office of Management and Budget, North American Industry Classification System (2002). Posted: December, 2003