NAICS Appeal of Venergy Group LLC SBA No. NAICS-6377 2026 ch.pdf

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Y1EB--512-23-154 LR Construct Consolidated Boiler Spaces
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This is an SBA Office of Hearings and Appeals decision on a NAICS code appeal regarding RFP No. 36C24526R0014 issued by the U.S. Department of Veterans Affairs on November 20, 2025, for "Construct Consolidated Boiler Spaces" at the VA Maryland Health Care System, Loch Raven Campus. The procurement, valued between $20–$50 million with a 730-calendar-day completion period, was set aside entirely for Service-Disabled Veteran-Owned Small Businesses. The VA's Contracting Officer initially assigned NAICS Code 238220 (Plumbing, Heating, and Air-Conditioning Contractors) with a $19 million size standard, which Appellant Venergy Group, LLC challenged on November 24, 2025, arguing for NAICS Code 236220 (Commercial and Institutional Building Construction) with a $45 million size standard. The decision, issued February 25, 2026, GRANTED the appeal and REVERSED the CO's designation.

The RFP requires construction of a 5,000-square-foot PSRDM-compliant blast-resistant boiler plant containing three 6,700 MBH fire tube boilers, related infrastructure, control room, loading dock, rooftop HVAC unit, open-air courtyard with fuel tanks, site work including underground utility lines for sanitary, storm, water, and gas services, hot water distribution to campus buildings, tree removal and landscaping, and erosion control. The Contracting Officer argued 63% of contract value comprised NAICS 238220 trades (27% plumbing, 36% HVAC, 1% fire protection), but OHA determined the procurement's principal purpose is construction of a new institutional building, not specialty mechanical work. The Administrative Judge found the complex project scope, $20–$50 million value, personnel requirements emphasizing general construction experience over mechanical specialization, and inclusion of demolition, site excavation, and structural work aligned with NAICS 236220, making the CO's designation clearly erroneous.

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36C24526R0014 0007_1.docx DOCX document
36C24526R0014 0006.docx DOCX document
36C24526R0014 0005.docx DOCX document
512-23-154_M-801 Bid Add 2.pdf PDF
512-23-154 Bid Addendum 2 Change Log.pdf PDF
512-23-154 - Geotech Report.pdf PDF
512-23-154 - Appendix - HAZMAT.pdf PDF
087100.pdf PDF
512-23-154_Civil MDE Stamped - Bid Add 2.pdf PDF
36C24526R0014 0004_1.docx DOCX document
512-23-154_FA101 Bid Add 2.pdf PDF
S04_Site Visit Sign In_36C24526R0014 - Completed.pdf PDF
512-23-154_FX001 Bid Add 2.pdf PDF
Venergy - NAICS - Notice Orderch1.pdf PDF
36C24526R0014 0003.docx DOCX document
36C24526R0014 0002.docx DOCX document
36C24526R0014 0001_1.docx DOCX document
S02_10 512-23-154 PCRA boiler consolidation.pdf PDF
S02_03 512-23-154 Loch Raven Boiler - Drawings.pdf PDF
512-23-154 Boiler Consolidation Proposal Addendum 1.pdf PDF
S02_02 512-23-154 Loch Raven Boilers - Specs.pdf PDF
36C24526R0014_1.docx DOCX document
S02_512-23-154 Addendum 1 Change Log.pdf PDF
S02_01 512-23-154 Loch Raven Boiler - Final Narrative.pdf PDF
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Cite as: NAICS Appeal of Venergy Group, LLC, SBA No. NAICS-6377 (2026)

- 1 -

United States Small Business Administration

Office of Hearings and Appeals

NAICS APPEAL OF:

Venergy Group, LLC

Appellant

Solicitation No. 36C24526R0014

U.S. Department of Veterans Affairs

SBA No. NAICS-6377

Decided: February 25, 2026

APPEARANCES

Eric J. Debus, Esq., Fort Pierce, FL, for Venergy Group, LLC.

Liana Holland, Contracting Officer, Washington D.C., for U.S. Department of Veterans

Affairs.

DECISION

I. Introduction and Jurisdiction

On November 20, 2025, the Department of Veterans Affairs (VA) issued Request for

Proposal (RFP) No. 36C24526R0014 for “Construct Consolidated Boiler Spaces”. The

Contracting Officer (CO) set aside the procurement entirely for Service-Disabled Veteran-

Owned Small Businesses and assigned North American Industry Classification System (NAICS)

Code 238220, Plumbing, Heating, and Air-Conditioning Contractors, with a corresponding $19 million annual receipts size standard, as the appropriate code.

On November 24, 2025, Venergy Group, LLC (Appellant) filed the instant appeal, contending that the CO clearly erred in selecting NAICS code 238220, and that the correct

NAICS code for the procurement is 236220, Commercial and Institutional Building

Construction, with a corresponding $45 million annual receipts size standard. For the reasons discussed infra, the appeal is GRANTED.

The U.S. Small Business Administration (SBA) Office of Hearings and Appeals (OHA) decide NAICS code appeals under the Small Business Act of 1958, 15 U.S.C. § 631 et seq., and

13 C.F.R. parts 121 and 134. Appellant filed the instant appeal within 10 calendar days after issuance of the RFP, so the appeal is timely. FAR 19.103(a)(1); 13 C.F.R. §§ 121.1103(b)(1) and 134.304(b). Accordingly, this matter is properly before OHA for decision.

- 2 -

II. Background

A. The RFQ

The RFP states the purpose of the procurement is to completely prepare the site for building operations, including demolition and removal of existing structures, furnish labor and materials, and perform the work for the VAMC Loch Raven Construct Consolidated Boiler

Spaces. (Solicitation at 3.) The contractor will provide all material, labor, equipment, and supervision necessary to complete the aforementioned project at the VA Maryland Health Care

System, Loch Raven Campus. Id. The Magnitude of Construction is between $20-$50 million, and the procurement is restricted to Service-Disabled Veteran Owned Small Businesses. Id.

The Solicitation describes the general scope of work:

The successful awardee will construct a consolidated boiler plant that is a 5,000 square foot Physical Security and Resiliency Design Manual (PSRDM) compliant blast-resistant building to contain three 6,700 MBH (Thousands of British Thermal Units per hour) fire tube boilers and all related infrastructure for operation. (Id. at 8.) The plant should include a full control room for continuous operation by facility staff. Id. The Contractor will create an open-air courtyard that is connected to the plant and houses two 15,000-gallon reserve fuel tanks;

boilers to be normally supplied by new natural gas lines. Id. The plant will also have a dedicated loading dock and roof top HVAC unit to condition the plant. Lastly, the Contractor will demolish existing mechanical equipment from existing campus buildings as outlined on the bid documents. Id.

The successful awardee will also perform site work by running underground utility lines according to bid drawings. Id. This work includes new sanitary, storm, water, and gas service lines that are required for the boiler plant. Id. Additional water lines are to be run to each building on campus to supply hot water. Id. The Contractor will remove trees as needed at the start of the project and replace trees along with necessary landscaping work at project completion. Id. Lastly, the Contractor will set up proper erosion and sediment control according to bid drawings. Id.

The Solicitation requires the Contractor to complete the project in 730 calendar days from Notice to Proceed. Id.

As to the selection criteria, the successful awardee shall have specialized experience and technical competence in the construction of a consolidated boiler plant for a healthcare campus.

(Id. at 15.) The Contractor must have successfully completed at minimum two boiler plants in the previous ten years and include size, scope, and complexity details for each in the proposal package. Id. Contractors should include at a minimum three and at a maximum five additional

Government and Private sector projects similar in size, scope, and complexity. Id. Contractors should provide project examples that demonstrate experience in PSRDM-compliant building construction, Civil Site Excavation, large-scale Mechanical installation, and Environmental regulation adherence. Id. The evaluation will consider the management approach, coordination of subcontractors, quality control regulation, and phase planning as it relates to the construction

- 3 -of a consolidated boiler plant. Id. Additionally, the Solicitation requires that the successful awardee shall have project experience in creating and following phasing plans for large scale construction. Id. Specifically, the phasing plan will include site excavation, traffic flow management, and utility switch over coordination to maintain building operations. Id.

“Contractor should include examples of phasing plans…more weight will be given to large scale construction project phasing examples – i.e., construction projects above $10M in contract value.” Id. Furthermore, the Project Manager shall have a minimum of five years’ experience in this position and minimum of ten years’ experience in construction. Id. At least one project in the past ten years shall have been on the installation of large-scale industrial boilers or a large-scale industrial facility. Id. The proposed Site Superintendent shall have a minimum of five years’ experience in the position and ten years’ experience in construction. Superintendent shall have overseen at least one project in the past ten years that involved the installation of large-scale industrial boilers. Id.

B. The Appeal

On November 24, 2025, Appellant filed the instant appeal. Appellant challenges the CO’s choice of NAICS code 238220 and contends that NAICS code 236220 is the correct classification for this procurement. (Appeal at 1.) In Appellant’s view, the principal purpose of this procurement is the construction of a consolidated boiler space, as opposed to the installation of mechanical systems as a specialty trade under NAICS code 238220. (Id. at 2.) Appellant argues that the Solicitation’s scope of work establishes that NAICS code 236220 is the proper designation. Id. Appellant further argues that the overall value and importance of plumbing, heating, and air-conditioning make up only a small component of the overall end-product of the procurement, and that the function of the procurement itself is the construction of operational consolidated boilers’ spaces. Id.

Appellant contends that the principal purpose of the Solicitation is to acquire a major construction project. (Id. at 3.) The boilers and mechanical equipment constitute only the functional contents of the facility being built, not the principal purpose of the procurement. Id.

Appellant further contends that the NAICS Manual1 description of NAICS code 238220 is limited to establishments “primarily engaged in installing and servicing plumbing, heating, and air-conditioning equipment.” Id. Specifically, the illustrative examples provided in the NAICS

Manual include tasks such as cooling tower installation, sprinkler system installations, duct work installation, HVAC and mechanical contractors, fireplace/natural gas installation, refrigeration system installation, furnace installation, or sewer hookup and connections to existing buildings.

Id. In Appellant’s view, the Solicitation’s description of work does not match the type of work outlined in the NAICS Manual’s 238220 definition. Id. In fact, nothing in NAICS code

238220’s definition covers new building construction, structural steel erection, utility-line construction, blast resistant facility construction, or fuel-tank courtyards. Id. On the contrary, Appellant opines that the language contained in the NAICS Manual’s classification of NAICS code 236220 is more appropriate, as “the industry comprises establishments primarily responsible for the construction (including new work, additions, alterations, maintenance, and

1 Executive Office of the President, Office of Management and Budget, North American Industry

Classification System-United States (2022), available at 2022_NAICS_Manual.pdf (census.gov)

- 4 -repairs) of commercial and institutional buildings and related structures.” Id. Per the scope of work, VA is not retrofitting an existing building primarily for mechanical purposes; it is acquiring the design and construction of a new, stand-alone, blast-resistant boiler plant facility complete with foundations, structural steel, blast-resistant walls, control room, loading dock, and courtyard fuel tank enclosure. Id. The mechanical systems are subsystems of the new building, not the principal purpose of the procurement, which is emphasized by the Solicitation’s

Statement of Work. Id.

Appellant argues the end-product VA seeks is a complete, turn-key, 5,000 square foot consolidated boiler plant facility and associated campus utility upgrades. (Id. at 4.) The plumbing, heating, and HVAC components are only one portion of a far broader, general-construction effort. Id. Furthermore, the solicitation’s own Davis-Bacon wage determination further confirms that the CO’s designation of NAICS code 238220 is in error. Id. The

Department of Labor wage determination incorporated at Section A.4 of the solicitation is expressly classified as “Construction Type: Building (General Decision Number MD20250108

06/27/2025, Baltimore County, Maryland).” Id. This is the standard wage schedule applied to general building construction projects governed by NAICS code 236220. Id. By selecting the building construction wage rates (which include prevailing wages for carpenters, ironworkers

[structural and reinforcing], cement masons, laborers [common, concrete, asphalt], the VA has itself acknowledged that the principal purpose of this procurement is the construction of a new institutional building (a ~5,000 square foot blast-resistant consolidated boiler plant), not specialty-trade mechanical work in an existing facility. Id. According to Appellant, the CO’s simultaneous assignment of NAICS code 238220 is irreconcilable with the Solicitation’s own labor classification and scope of work, which constitutes clear error of fact and law. Id. Because the plumbing, heating, and air-conditioning components represent only one subsystem among many others of equal or greater scope, cost, and complexity, the relative value and importance of the procurement overwhelmingly favor the designation of NAICS code 236220. Id.

Appellant contends that the functional deliverable here is a fully constructed, code-compliant, blast-resistant institutional power and heating plant ready for operation by VA staff.

Id. The boilers and associated mechanical equipment are the operational contents of the new facility, not the object of a specialty-trade installation contract. Id. The magnitude ($20M-

$50M) and duration (730 calendar days) of this project aligns with major building construction projects under NAICS code 236220. Id. Appellant further contends that the assignment of

NAICS code 238220 to a contract whose core function is the delivery of a complete, turn-key power and heating plant is directly contrary to the plain language of the NAICS Manual and constitutes clear error. Id. Furthermore, SBA’s own size-standard framework provides powerful corroboration that NAICS code 238220 is fundamentally mismatched to a project of this scale and complexity. (Id. at 5.) NAICS code 236220 (Commercial and Institutional Building

Construction) carries a size standard of $45 million. Id. Appellant argues that since VA has estimated the magnitude of this project at $20-$50 million and established a performance period of 730 calendar days, “a procurement whose anticipated value exceeds the 238220 size-standard by more than double, and whose duration is two full years cannot reasonably be characterized as ordinary specialty-trade mechanical work.” Id. SBA set a significantly higher size threshold for

NAICS code 236220 precisely because general building construction projects, particularly institutional facilities such as hospitals, power plants, and heating plants, routinely reach or

- 5 -exceed $20 million and require the broader capabilities and bonding capacity of general contractors. Id.

Appellant explains that assigning NAICS code 238220 to a $20-$50 million, 730-day project would arbitrarily exclude virtually every legitimate small business capable of performing general institutional building construction, while simultaneously allowing only the smallest subset of mechanical contractors to compete which is directly contrary to Congress’ intent that set-aside opportunities be reserved for firms that are small for the work they actually perform.

Id. Appellant believes that the magnitude and duration of this procurement align squarely with

SBA’s own determination that commercial and institutional building construction of this scale is performed by firms eligible under the $45 million size standard of NAICS code 236220, not the restrictive $19 million standard of NAICS code 238220. Id.

Appellant concludes that for the foregoing reasons, the assignment of NAICS code

238220 constitutes a clear error of fact and law when compared with certain OHA decisions and

SBA’s intent for size-standards in small business set-asides. Id. The only NAICS code that accurately reflects the principal purpose of the procurement is 236220. Id.

C. Responses to the Appeal

On December 17, 2025, the CO responded to the Appeal opposing the proposed NAICS code. (Response at 1.) The CO argues that NAICS Code 238220 is the NAICS Code that best describes the procurement when considering 1) the principal purpose, 2) the description in the

Solicitation, 3) the relative value and importance of the underlying components and 4) the function of the services being acquired. Id.

Regarding the principal purpose, the CO contends that while the construction of the building is necessary, the project is centered around the sophisticated installation, integration, and commissioning of advanced industrial boiler systems. Id. According to FAR 19.102, a procurement should be classified according to the component that accounts for the greatest percentage of contract value. Id. VA claims the Independent Government Cost Estimate (IGCE) indicates that 63% of the value is dedicated to trades under NAICS code 238220. Id. These activities include the installation of high-capacity boilers, heating systems, and control mechanisms, which are integral to achieving the functional goal of the project and all fall under

Plumbing, Heating, or Air-Conditioning trades. (Id. at 1-2.) The detailed scope of work, such as the installation of three 6,700 MBH fire tube boilers, extensive underground utilities, specialized safety and structural systems, and industrial HVAC installations, underscores the focus on specialized mechanical applications that align with NAICS code 238220. (Id. at 2.)

With respect to the description in the Solicitation, the CO contends that NAICS code

238220 encompasses the installation and servicing of plumbing, heating, and air-conditioning systems, which are fundamental to this project’s core objectives and clearly discussed in the

Solicitation itself. Id. In particular, the design narrative outlines the extensive technical requirements for specialized equipment installations and integration:

- 6 -

• Boiler Installation: The project involves setting up three high-capacity, dual-fuel

(natural gas/fuel oil) boilers, which require detailed coordination with control room systems, safety controls, and compliance with emission standards.

o Narrative Reference and Page Number – Heating Hot Water Boiler

System (18), Environmental/Asbestos Abatement (36)

• Fuel Systems Management: Creating a fuel delivery system that includes continuous fuel polishing, duplex natural gas booster skids, and compliant fuel storage and distribution systems.

o Narrative Reference and Page Number – Fuel Storage and Use (24), Available Natural Gas Supply (25)

• Campus-Wide Plumbing: The bulk of the project work will involve the installation of a vast network of underground piping to supply hot water from the new boilers to nearly every building on campus. This plumbing installation will also include tie-in and switch over to the new plant source once completed. Other new lines include sanitary, storm water, and incoming domestic and fire water mains to the building. On top of the site wide plumbing work, there is also plumbing integral to the building itself, such as domestic hot and cold water lines, a fire suppression system, drainage and vent lines.

o Narrative Reference and Page Number – Utilities (9), Domestic Cold-

Water (13), Distribution Piping (22)

• Heating Hot Water Distribution System: Detailed plans for a variable primary/secondary pumping arrangement, integration with existing building systems, and the implementation of thermal stress analysis to manage piping expansion and contraction.

o Narrative Reference and Page Number – Utilities (9), Domestic Hot-

Water (14), Heating Hot-Water Distribution System (19)

• Mechanical System Complexity: The boilers' integration with rooftop HVAC, fuel tank systems, sanitary, stormwater, and gas service lines necessitates specialized skills characteristic of contractors under NAICS code 238220. This includes managing installation pressures, chemical treatment systems, and safety protocols compliant with rigorous design standards like ASME and NFPA.

o Narrative Reference and Page Number – Storm and Condensate (14), Sanitary Waste (15)

• Advanced Mechanical Installations: A DX Heat Pump will provide heating and cooling to the habitable spaces along with supplementary terminal heating units and split systems to cover the restrooms and electrical room. The installation of roof-mounted exhaust fans will ensure plant pressurization levels are maintained.

o Narrative Reference and Page Number – Boiler Building HVAC

System (23)

- 7 -

(Id. at 2-3.) In the CO’s view, the narrative demonstrates that the primary technical effort involves complex mechanical installations, aligning with the specialized work defined under

NAICS code 238220. (Id. at 3.)

Regarding the relative value and importance of the underlying components, the CO claims that the IGCE reveals that 63% of the project’s value is dedicated to trades under NAICS

Code 238220. Id. Specifically, Plumbing comprises 27%, HVAC work comprises an additional

36% and Fire Protection comprises 1%. Id. Moreover, as noted above and in the design narrative, not only do these components make up a majority of the IGCE, but they are also integral to the ultimate success of the overarching project. Id.

Finally, with respect to the function of the services being acquired, the project’s functional delivery is a fully operational, highly specialized boiler facility. Id. The detailed design narrative and technical scope involve rigorous physical security, blast mitigation, structural reinforcement, and sophisticated mechanical systems, underscoring the project’s intricate and specialized nature. Id. The CO asserts these complex and highly specialized systems necessitate the expertise of contractors well-versed in mechanical and HVAC installations as defined under NAICS code 238220, aligning closely with the specialized nature and operational goals of the project. Id.

Accordingly, for the reasons discussed above the Agency respectfully requests OHA deny the subject NAICS code designation appeal.

D. NAICS Manual Descriptions

The NAICS code designated by the CO, 238220, Plumbing, Heating, and Air-

Conditioning Contractors, comprises:

[E]stablishments primarily engaged in installing and servicing plumbing, heating, and air-conditioning equipment. Contractors in this industry may provide both parts and labor when performing work. The work performed may include new work, additions, alterations, maintenance, and repairs.

Illustrative Examples:

Cooling tower installation

Heating, ventilation, and air-conditioning (HVAC) contractors

Duct work (e.g., cooling, dust collection, exhaust, heating, ventilation) installation

Lawn sprinkler system installation

Fire sprinkler system installation

Mechanical contractors

Fireplace, natural gas, installation

Refrigeration system (e.g., commercial, industrial, scientific) installation

Furnace installation

Sewer hookup and connection, building

- 8 -

NAICS Manual at 132.

The NAICS code advocated by Appellant, 236220, Commercial and Institutional Building

Construction comprises:

[E]stablishments primarily responsible for the construction (including new work, additions, alterations, maintenance, and repairs) of commercial and institutional buildings and related structures, such as stadiums, grain elevators, and indoor swimming facilities. This industry includes establishments responsible for the on-site assembly of modular or prefabricated commercial and institutional buildings. Included in this industry are commercial and institutional building general contractors, commercial and institutional building for-sale builders, commercial and institutional building design-build firms, and commercial and institutional building project construction management firms.

Illustrative Examples:

Airport building construction

Office building construction

Arena construction

Parking garage construction

Barrack construction

Prison construction

Farm building construction

Radio and television broadcast studio construction

Fire station construction

Grain elevator or bin construction

Data center construction

Religious building (e.g., church, synagogue, mosque, temple) construction

Restaurant construction

Hospital construction

School building construction

Hotel construction

Shopping mall construction

Indoor swimming facility construction

Warehouse construction (e.g., commercial, industrial, manufacturing, private)

NAICS Manual at 122-23.

- 9 -

III. Discussion

A. Standard of Review

Appellant has the burden of proving, by a preponderance of the evidence, all elements of its appeal. Specifically, Appellant must show that the CO’s NAICS code designation is based upon a clear error of fact or law. 13 C.F.R. § 134.314; NAICS Appeal of Durodyne, Inc., SBA

No. NAICS-4536, at 4 (2003). SBA regulations do not require the CO to select the perfect

NAICS code. NAICS Appeal of Evanhoe & Assocs., LLC, SBA No. NAICS-5505, at 13 (2013).

Rather, the CO must assign the NAICS code that best describes the principal purpose of the product or service being acquired in light of the industry descriptions in the NAICS Manual, the description in the solicitation, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being acquired. 13 C.F.R. § 121.402(b); FAR 19.102(b)(1). Generally, when a procurement calls for qualitatively different types of products or services, the appropriate NAICS code is the one which represents “the greatest percentage of contract value.” 13 C.F.R. § 121.402(b)(2); see also FAR 19.102(b). However, while a procurement is “usually” classified according to the component accounting for the greatest percentage of the contract value, the CO may rely on other factors in selecting a NAICS code, such as the relative importance of the components involved and the function of the goods or services being procured. See e.g., NAICS Appeal of

Pinnacle Solutions, Inc., SBA No. NAICS-5651, at 9-10 (2015) (holding that aircrew training accounted for the largest portion of the procurement, but “such services [were] nevertheless of secondary importance to the [device] upgrades” that warranted the NAICS code designation).

B. Analysis

Having reviewed the RFP, the descriptions in the NAICS Manual, OHA’s prior decisions, and the arguments of the parties, I conclude that the CO’s designation is in error. Appellant has met its burden of proving that the CO’s NAICS code designation is clearly erroneous. As a result, I must grant this appeal.

OHA has consistently held the proper NAICS code is the one which best describes the principal purpose of the product or service being acquired through a subject procurement. See e.g., NAICS Appeal of Ferris Optical, SBA No. NAICS-5713 (2016). Further, OHA has held that NAICS code 236220 is the appropriate designation for an RFP which requires the construction of buildings. NAICS Appeal of SD Titan Resources/SM&MM, SBA No. NAICS-

5187, at 14 (2011).

OHA has considered the NAICS code 236220 before. In NAICS Appeal of U.S. Small

Business Administration, SBA No. NAICS-5899 (2018), OHA found that the procurement involved not only pouring concrete, but also extensive additional services, such as plumbing, drainage, and demolition, establishing that NAICS code 236220 is more appropriate for the extensive amount of work of various types required to build a parking garage addition.

- 10 -

Here, the VA is seeking to procure the construction of a consolidated boiler space.

Section II.A., supra. The RFP clearly states that the successful awardee shall have specialized and technical experience in the construction of a consolidated boiler plant. Id. The RFP further states that the purpose of the procurement is to completely prepare the site for building operations, including demolition and removal of existing structures, furnish labor and materials, and perform the work for the VAMC Loch Raven Construct Consolidated Boiler Spaces. Id.

The CO acknowledges this purpose by highlighting that the project is centered around the sophisticated installation, integration, and commissioning of advanced industrial boiler systems.

Section II.C., supra. NAICS code 236220 complies with the CO’s objective due to the establishment of “new work, additions, alterations, maintenance, and repairs”. Section II.D., supra. NAICS code 236220, and not 238220, is also broad enough to encompass the purpose of the procurement and the CO’s stated goals. Although the CO acknowledges the procurement’s need for a contractor that specializes in construction, the CO chooses to focus on miniscule details of the contract such as the heating systems and control mechanisms. Section II.C., supra.

The focus of the procurement is not the underground utilities or HVAC installations, but rather the construction of a consolidated boiler plant that is less than 5,000 square foot PSRDM and is blast-resistant compliant. Section II.A. and II.C., supra.

The General Scope of Work of the Procurement is the demolition of existing mechanical equipment to then construct the consolidated boiler plant. Section II.A., supra. The project’s site work is secondary to the construction of the consolidated boiler plant, and includes electrical, maintenance, and additions/alterations work. Id. This procurement also requires the use of plumbing and demolition services, similar to those required in NAICS Appeal of U.S. Small

Business Administration, SBA No. NAICS-5899 (2018). Although the CO considers plumbing and demolition services as part of trades and HVAC systems, OHA has previously ruled that those services can fall under NAICS code 236220. Id. Moreover, even if construction services does not account for the greatest percentage of the contract value, its components are greatly important in the function of the extensive services being procured, which is the installation and construction of a consolidated boiler plant.

The instant RFP requires a project manager that has five years’ experience in this position and a minimum of ten years’ experience in construction. Section II.A., supra. Also, the project manager should have at least one project experience on the installation of large-scale industrial boilers or a large-scale industrial facility. Id. Additionally, the proposed Site Superintendent shall have a minimum of five years’ experience in the position and ten years’ experience in construction. Id. The Superintendent shall have also overseen at least one project in the past ten years that involved the installation of large-scale industrial boilers. Id. If the primary and vital purpose of the project were trades, then the Solicitation would have specified its need for an

HVAC specialist/project manager. Id. Here, having extensive years of experience in construction is necessary for such a complex and sophisticated project on construction installations. In listing the necessary technical team for the project, the Solicitation makes no mention of anyone specializing in plumbing, heating, or air-conditioning trades. Id. Instead, the

Solicitation requires that each proposal list the employee’s previous construction experience, and their evidence of significant related experience. See Section II.A, supra. The requirements that project managers and other personnel have extensive construction background support the designation of NAICS Code 236220. NAICS Appeal of Ascendant Program Services, LLC, SBA

- 11 -

No. NAICS-5832 (2017). Moreover, as part of the phasing plan, the project will include “site excavation, traffic flow management, and utility switch over coordination to maintain building operations”. Section II.A., supra. This phasing plan is not considered the main component or focus of the procurement, but rather its transition plan.

Overall, given the complexity of the project, the RFP, NAICS Manual, and level of expertise needed to fulfill the procurement, NAICS code 236220, Commercial and Institutional

Building Construction, is the correct NAICS code. The use of plumbing, heating, and air conditioning are only a small part of the contract, and not the primary and vital requirements.

The value of the contract is not in the operation of the boilers, but rather in the construction of the boiler enclosure, which a contractor working in HVAC simply cannot do. I conclude the

CO’s designation of NAICS code 238220 is clearly erroneous, and that NAICS code 236220 best fits the requirements of the RFP.

C. Conclusion

For the above reasons, the appeal is GRANTED, and the CO's designation of NAICS code 238220 is REVERSED. The NAICS code that best describes the principal purpose of the subject procurement is NAICS Code 236220, Commercial and Institutional Building

Construction, with a corresponding $45 million annual receipts size standard.

The CO MUST amend the Solicitation to change the NAICS code designation from

238220 to 236220. 13 C.F.R. § 134.318(b); FAR 19.103(a)(7); Eagle Home Med. Corp., B-

402387, March 29, 2010, 2010 CPD ¶ 82. This is the final decision of the Small Business

Administration. See 13 C.F.R. § 134.316(d).

CHRISTOPHER HOLLEMAN

Administrative Judge

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