Air Force angers small businesses with code decision

Officials are opting for a NAICS code that sets a larger small-business size standard after switching this spring from a code with a more restrictive size standard.

The Air Force is trying to make its new network infrastructure contract as appealing as possible to potential customers, but that is upsetting small-business owners who fear they may be squeezed out. The recent activity around the $4.2 billion Network Operations and Infrastructure Solutions contract has angered some business owners who believe the Air Force is gaming the system.

The dispute revolves around the North American Industry Classification System codes that the Air Force has assigned to the contract. The NAICS codes define which types of businesses can bid on the contract as small businesses, gaining preferential treatment.

“They’re basically shopping the NAICS codes,” said the owner of a 80-employee small business, who requested his name not be used because he plans to bid on the contract.

Code shopping refers to choosing NAICS codes that allow favored or larger companies to bid as small businesses, rather than those that most fairly apply to the contract's scope of work. NetOps, part of the Air Force’s Network-Centric Solutions 2 (NetCents 2) contract, is entirely set aside for small businesses.

Air Force officials selected the NAICS code for wireless telecommunications carriers, which will get the contract a larger number of small businesses. Having more companies in the contractor pool would make the contract more appealing to customer agencies than a pool of a few very small firms, experts say. However, the new small-business definition allows larger companies in. making the field of competitors very different than the one that would have developed under NetOps' initial NAICS designation, computer system design services.

Sales on the first NetCents contracts have come in below the $9 billion estimate, as the contract competes with the Defense Department and General Services Administration other telecom contracts, people familiar with the sales say. They also say NetCents program managers are trying to convince Defense Department officials that NetCents is worth what they spend on it.

NetCents is the “poor stepchild of military service contracts,” said Larry Allen, president of the Coalition for Government Procurement.

NetOps and NetCents 2 are in the pre-solicitation phase, and a request for proposals is expected late this fall. The NetCents managers are in the process of extending NetCents for as much as two more years as they get NetCents 2 released and awarded.

The code for wireless telecommunications carriers defines a small business as one with fewer than 1,500 employees. The code for computer systems design services limits it to companies with less than $25 million in annual revenue.

Officials selected the wireless telecom carriers NAICS code “based on the preponderance of work for the requirement,” the Air Force said today in a statement. “Both the local small-business specialist and the Small Business Administration representative reviewed and concurred with the [contracting officer’s] decision.”

Those assurances don't assuage the business owners who suspect other motives. The anonymous owner of the 80-person small business said the Air Force believes smaller small businesses are riskier than larger small businesses. It’s a “grossly inaccurate” view, the business owner said.

He said the Air Force is tilting the field in favor of having a broader small-business size standard, even when precedence calls for the opposite. Recent Government Accountability Office decisions sustained the rule of two, which says when two small businesses can do the work, an agency must set aside the contract or task order for that type of small business.

Air Force officials also fear receiving fewer than 10 bid proposals for NetOps under the computer design code, the business owner said, saying Air Force officials told him that.

According to a May 14 determination and findings report, the small-business community has already raised its concerns with officials, arguing that the design services code is more appropriate, based on NetOps’ services described in the performance work statement, such as “enterprise services” and securing fiber optic infrastructure. However, Francine Nix, the contract’s contracting officer, said those services will be only a small fraction of the overall work. Most of the work instead will be managing defense networks and establishing the Air Force Intranet among other things, the report states.

Under the wireless telecom carriers code, companies must own or lease transmission facilities and infrastructure and do most of their work over that infrastructure.

Air Force officials have been dealing with the code issue for some time. At a meeting in March where officials discussed NetOps, John Caporal, deputy director of the Air Force Small Business Programs Office, warned that the Small Business Administration upheld a recent challenge against the wireless telecom carriers code for similar work at another Air Force base. The report says he was also concerned that “a NAICS code successfully challenged could delay the schedule.”

The team of officials said that neither code is a “perfect” match with the scope of NetOps’ work. However, the contracting officer must figure out which code best describes the primary work customers will order from the contract.

A DOD inspector general's audit on the first NetCents, issued in June 2007, concluded that the computer design services code more accurately reflected the service provided under NetCents based on past orders. According to the determination and findings report, all the Air Force officials in the meeting except for one agreed with the IG's audit, and they expect the same types of orders for NetCents 2. Ardis Hearn, the lead engineer on NetOps, instead said the majority of work will be for the constant operation of the networks, and the contractors will have to meet Air Force's needs using their equipment, hardware and software.

However, officials also realized that changing to code to the smaller size standard “may result in additional concerns being raised among the ‘larger’ small business,” delaying the contract’s schedule, the report states.

Air Force officials asked industry in April for their input on which code was best. The results showed 24 of 32 responses favored the wireless telecom carriers code, the report states. Some responses questioned whether the smaller small businesses have the capacity to handle such work, but the majority of respondents gave no rationale except that their company would be able to compete, the report states.


X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.