GAO Clarifies Small-Business Participation Must Cover Surge When Measured Against Total Estimated Task-Order Amount
In Resource Management Concepts, Inc., B-423503.2; B-423503.4 (Sept. 2, 2025), the Government Accountability Office denied a protest challenging the Navy’s evaluation of small-business participation on a SeaPort-NxG task order for IT support at NUWC Keyport. The decision—prepared by GAO’s Office of General Counsel with Michael Willems and Evan D. Wesser participating, and issued under the signature of General Counsel Edda Emmanuelli Pérez—matters for any contractor proposing under IDIQ task orders that include “surge” requirements.
The core dispute was whether the agency could include surge labor in calculating the offeror’s small-business participation percentage. The solicitation required offerors to demonstrate that at least 30 percent of “the proposed total estimated amount of the task order” would be performed by small business concerns. GAO concluded the text unambiguously required the inclusion of surge in that denominator, and therefore the Navy reasonably counted surge hours and dollars when it determined the protester showed only 27 percent small-business participation.
The protester argued that surge was indefinite, potentially never ordered, and therefore could not be allocated among team members. GAO rejected that position, pointing to the RFP’s labor-hour estimates, explicit instructions to price surge, and the mandate to calculate participation against the total estimated task-order amount. The decision emphasizes that offerors bear the burden to submit well-written proposals that clearly demonstrate compliance; agencies need not infer intent from silence or fill gaps left by the offeror.
Equally important is what the protester’s narrative did not do. While the cost template’s surge formula referenced base performance costs that themselves included subcontractor elements, the narrative never explained how small businesses would actually perform surge work. GAO found that using rates that “incorporated subcontractor labor” is not a stand-in for a concrete allocation of surge tasks to small-business performers. In other words, math without tasking is insufficient: the proposal must commit to meaningful small-business involvement, including for surge.
The decision also underscores documentation alignment. The solicitation warned that Section B pricing would control over other pricing artifacts, and required the cost spreadsheet and cost narrative to “fully align with and support” Section B and to corroborate every cost element, including prime and subcontractor labor hours. Where a small-business narrative excludes surge or fails to align with priced levels of effort, the agency may reasonably find the participation showing lacking.
For federal contractors, the significance is practical and immediate. Many DoD service task orders—particularly under SeaPort-NxG—use surge CLINs to address uncertain demand. When the solicitation measures small-business participation against the “total estimated amount” of the task order, contractors must budget and narratively allocate surge to small-business teammates, not simply price it. Treating surge as a separate, hypothetical universe invites an adverse evaluation. GAO’s clear endorsement of the agency’s approach supplies evaluators a defensible rationale to scrutinize surge allocations and gives offerors a checklist item: make surge part of the small-business story, with specific tasks and hours, not just an arithmetic echo of base rates.
The case also situates itself within GAO’s task-order protest jurisdiction for DoD orders exceeding $35 million under 10 U.S.C. § 3406. For capture teams weighing protest options or compliance risk, that reminder is consequential: high-value orders remain subject to GAO oversight, and compliance shortcomings in small-business participation—surge included—are unlikely to be forgiven at the back end.
Disclaimer: This summary is for general information only, reflects the cited GAO decision, and may omit nuances. It is not legal advice and does not create an attorney-client relationship. Always review the primary source and consult qualified counsel about your specific facts.