NAICS APPEAL OF: SALVADORINI CONSULTING, LLC, APPELLANT

*1 On January 22, 2024, the U.S. Department of Veterans Affairs (VA) issued Request for Quotations (RFQ) No. 36C24224Q0203, seeking to lease a Magnetic Resonance Imaging (MRI) machine and accompanying trailer. 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 532490, Other Commercial and Industrial Machinery and Equipment Rental and Leasing, with a corresponding size standard of $40 million average annual receipts.

*1 On February 1, 2024, Salvadorini Consulting, LLC (Appellant), a prospective offeror, filed the instant appeal. Appellant contends that the CO clearly erred in selecting NAICS code 532490, and that the correct NAICS code for this procurement is 621512, Diagnostic Imaging Centers, with an associated size standard of $19 million average annual receipts. For the reasons discussed infra, the appeal is denied.

*1 The U.S. Small Business Administration (SBA) Office of Hearings and Appeals (OHA) decides 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 RFQ, so the appeal is timely. Federal Acquisition Regulation (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.

*1 The RFQ seeks the “[l]ease of an MRI and MRI Trailer with required Preventative Maintenance and Repairs”. (RFQ, SF 1449.) The base period of performance is 12 months with four one-year options. (Id.)

*1 The contractor will “deliver, install, connect, ensure functionality, service and support all components of the equipment listed in Section G”. (RFQ, Performance Work Statement (PWS), at 1.) Section G in turn identifies the following equipment/services:

*2 (RFQ Amend. 0001, Revised PWS, at 2-4.) The contractor will perform both preventive and corrective maintenance of the equipment throughout the lease. (PWS, at 5.)

*2 The MRI unit and associated services will be delivered to the Toms River Community-Based Outpatient Clinic (CBOC), Radiology Department, in Toms River, New Jersey. (Id. at 2.) The RFQ explains that “[w]ithout this equipment, the Radiology Department will not have the ability to perform MRIs at the Toms River CBOC.” (Id. at 1.)

*2 Quotations were due February 21, 2024. (RFQ Amend. 004.)

*2 On February 1, 2024, Appellant filed the instant appeal. Appellant contends that NAICS code 532490 is improper for this procurement because the RFQ does not merely call for the lease of an MRI unit but rather for the provision of a complete “diagnostic imaging center—a system for ordering and producing the diagnostic images directly referred by a medical professional.” (Appeal at 4 (emphasis Appellant's).)

*2 Appellant allows that NAICS code 532490 might be appropriate if the contractor were simply asked to “drop off” an MRI machine at the CBOC. (Id.) The contractor here, though, will also supply the “coach” that houses the MRI and where the MRI will be utilized. (Id. at 5.) Appellant maintains that VA essentially seeks an “extension of the VA hospital” or “an attached center with the same highly technical and sensitive nature and hardwired systems as the Toms River CBOC.” (Id.)

*2 Appellant urges that NAICS code 621512, Diagnostic Imagining Centers, is a ““perfect” fit for this RFQ. (Id. at 4.) In Appellant's view, the procurement seeks a complete diagnostic imaging center that includes “shielding, HVAC, fire suppression, storage furniture and compartments, wiring, and filtration, among other imaging center systems.” (Id. at 6.) Appellant highlights that VA has utilized NAICS code 621512 for other solicitations, including the procurement of a “mobile MRI unit”. (Id. at 6-7.) Appellant also asserts that, if this procurement is not designated under NAICS code 621512, the code will be rendered “useless”, because the ultimate awardee is likely to be a larger concern with less specialized expertise. (Id. at 7.)

*2 The NAICS code designated by the CO, 532490, Other Commercial and Industrial Machinery and Equipment Rental and Leasing, covers:

*3 NAICS Manual at 452. Index entries which refer to NAICS code 532490 include “[m]edical equipment (except home health furniture and equipment) rental or leasing”. Id. at 814. The NAICS Manual reiterates that establishments primarily engaged in “[r]enting medical equipment (except home health equipment), such as electromedical and electrotherapeutic apparatus[,] are classified in Industry 532490, Other Commercial and Industrial Machinery and Equipment Rental and Leasing”. Id. at 449.

*3 The NAICS code Appellant advocates, 621512, Diagnostic Imaging Centers, covers:

*3 NAICS Manual at 527. Industries classified under NAICS code 621512 include “[m] agentic resonance imaging (MRI) centers”, “[m]edical X-ray laboratories”, “[m] obile X-ray facilities (medical)”, and “[r]adiological laboratories, medical”. Id. at 808, 814, 820, and 869. NAICS code 621512 is one of several industries within NAICS subsector 621, Ambulatory Health Care Services. According to the NAICS Manual, “[i]ndustries in the Ambulatory Health Care Services subsector provide health care services directly or indirectly to ambulatory patients”. Id. at 519.

*3 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 14 (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). OHA will not reverse a NAICS code designation “merely because OHA would have selected a different code.” NAICS Appeal of Eagle Home Med. Corp., SBA No. NAICS-5099, at 3 (2009).

*4 The instant case is analogous to OHA's decision in NAICS Appeal of Salvadorini Consulting, LLC, SBA No. NAICS-6020 (2019). In that case, VA issued a solicitation to lease a mobile Computerized Tomography (CT) scanner. Salvadorini, SBA No. NAICS-6020, at 1. The appellant argued that NAICS code 621512, Diagnostic Imaging Centers, would best describe the principal purpose of the solicitation, because that NAICS code covers CT-scan centers. Id. at 3. OHA rejected this argument, however, finding that the contractor itself would not “perform[] any diagnostic imaging services”; rather, “VA's own personnel will perform this work, using equipment leased from the contractor.” Id. at 5. OHA noted that the contractor would perform other, non-patient services, such as “testing, maintenance, and training VA personnel to operate the device.” Id. Nonetheless, the solicitation contained “no indication the contractor would ever perform diagnostic imaging on patients”, as is necessary for the use of NAICS code 621512. Id. OHA determined that the correct NAICS code for the procurement was 532490, Other Commercial and Industrial Machinery and Equipment Rental and Leasing, because it encompassed the solicitation's primary purpose, i.e., the leasing of medical equipment other than equipment intended for home health use. Id. at 6.

*4 Here, the RFQ calls for lease of an MRI machine and accompanying trailer. Section II.A, supra. The contractor will “deliver, install, connect, ensure functionality, service and support” the requested equipment. Id. Importantly, though, only VA radiology staff at the Toms River CBOC will administer MRIs to patients. Id. The contractor is not responsible for providing technicians or other medical personnel to conduct diagnostic imaging. Id. As in Salvadorini, then, the principal purpose of this RFQ is “[m]edical equipment (except home health furniture and equipment) rental or leasing”, and the CO did not err in designating the procurement under NAICS code 532490.

*4 Appellant argues that failure to assign NAICS code 621512 here will render the code unusable. Section II.B, supra. This argument, though, misunderstands the proper scope of the code. NAICS code 621512 is a health care services code, and thus may apply to procurements when the contractor itself is engaged in diagnostic imaging. Section II.C, supra. OHA thus has found NAICS code 621512 appropriate for a procurement that sought “professional radiology technologists, who will perform ‘the full range of radiology imaging care’ — such as x-rays, MRIs, ultrasounds, and CAT scans — for VA inpatients and outpatients”. NAICS Appeal of Laredo Tech. Servs., Inc., SBA No. NAICS-6216, at 6 (2023).

*5 Appellant also highlights that NAICS code 621512 has been utilized for other procurements with similar requirements. Section II.B, supra. While this may be so, these other procurements are not before OHA, and OHA attaches little weight to the NAICS codes assigned to other procurements that were not appealed to OHA. E.g., NAICS Appeal of Veterans First Health Care, SBA No. NAICS-6212, at 6 (2023); NAICS Appeal of Millennium Health & Fitness, Inc., SBA No. NAICS-6094, at 11 (2021); NAICS Appeal of Oak Grove Techs., LLC, SBA No. NAICS-5998, at 9 (2019). The procurements at issue in Salvadorini and Laredo, conversely, were appealed to OHA.

*5 Because Appellant has not established that NAICS code 532490 is clearly incorrect for this procurement, OHA need not consider the NAICS code Appellant advocates, or other alternative codes. It is well-settled that “OHA will not assign a different NAICS code to a procurement unless the CO's choice of NAICS code is shown to be clearly erroneous.” NAICS Appeal of Taurean Gen. Servs., Inc., SBA No. NAICS-6092, at 6 (2021) (quoting NAICS Appeal of Dentrust Optimized Care Sols., SBA No. NAICS-5761, at 7 (2016)); NAICS Appeal of Ascendant Program Servs., LLC, SBA No. NAICS-5832, at 10 (2017).

*5 For the above reasons, the appeal is DENIED. The CO appropriately selected NAICS code 532490, Other Commercial and Industrial Machinery and Equipment Rental and Leasing, for this RFQ. This is the final decision of the Small Business Administration. See 13 C.F.R. § 134.316(d).