8(a) Mentor-Protege Joint Venture Agreements: Details Matter, Court Says

An 8(a) mentor-protege joint venture was not entitled to take advantage of the special mentor-protege exception from affiliation because the joint venture agreement lacked adequate detail.

In a recent decision, the U.S. Court of Federal Claims held that the SBA had reasonably determined the joint venture to be a large business because the joint venture agreement did not sufficiently address certain requirements.  The Court’s decision should be a warning for all 8(a) mentor-protege joint ventures: details matter.

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8(a) Fraud: 21-Month Prison Sentence In Pass-Through Case

The owner of a former 8(a) program participant has been sentenced to 21 months in prison in connection with an 8(a) program “pass-through” scheme.

Under the plea agreement, the former 8(a) program owner also agreed to three years of supervised release and the forfeiture of $554,541.07.

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8(a) Program Fraud: Contractor Will Pay $7.8 Million

A former 8(a) program participant has agreed to pay nearly $8 million to settle allegations of 8(a) program fraud.

According to a Department of Justice press release, LB&B Associates Inc. will pay $7.8 million to resolve claims that it improperly obtained 8(a) certification (and 8(a) contracts) even though it was not controlled by a disadvantaged individual.

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8(a) Program Denial: Federal Lawsuit Available, Says SBA OHA

An 8(a) Program applicant may challenge the SBA’s denial of its application in federal court if the SBA Office of Hearings and Appeals lacks jurisdiction to hear the case.

According to a recent OHA decision, although OHA’s own jurisdiction in 8(a) denial matters is limited, a rejected applicant “is not utterly without recourse” because relief can be sought in court.

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8(a) Program: Follow-On To Competitive Award Can Be Sole Sourced

An 8(a) contract was properly awarded on a sole source basis to a tribally-owned entity, even though the contract was a follow-on to a competitive 8(a) set-aside award.

In a recent decision, the GAO deferred to the SBA’s interpretation of the 8(a) program regulations–which, according to the SBA, allow such sole source awards.

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8(a)’s Unapproved Mentor-Protege Arrangement Leads To Affiliation

An 8(a) small business was found to be affiliated with its large subcontractor under the ostensible subcontractor rule based in part on the fact that the large subcontractor was providing mentoring services to the small business–even though the SBA had rejected a proposed mentor-protege agreement between the companies.

The recent decision of the SBA Office of Hearings and Appeals in Size Appeal of Brown & Pipkins LLC, SBA No. SIZ-5621 (2014) is a warning to 8(a) firms about the potential dangers of accepting mentoring services outside the confines of a SBA-approved mentor-protege agreement.

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8(a) Program: “Honest Mistake” Not Grounds For Termination

An honest mistake made in a company’s 8(a) Program application may not support termination of the company from the 8(a) Program.

In a recent decision, the SBA’s Office of Hearings and Appeals held that the SBA could not validly terminate an 8(a) participant for submitting false information in the 8(a) application because the SBA had not considered whether the 8(a) participant honestly, and reasonably, believed that she was not required to report the information.

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