The SBA’s Utah District Office has imposed tough new restrictions on the approval of 8(a) mentor-protege agreements and joint ventures.
The Utah SBA obviously hopes that these restrictions will lead to more successful 8(a) mentor-protege and joint venture relationships–but I worry that these District-specific restrictions may backfire, and put Utah 8(a)s at a significant competitive disadvantage against 8(a)s serviced by other SBA District Offices.
Participation in the SBA’s 8(a) Program has declined from about 7,000 firms in 2010 to only around 4,500 today–a sharp drop of approximately 34% in only six years.
These startling numbers come from a recent SBA Office of Inspector General report, which focuses on whether the SBA properly documented the reasons for admitting certain 8(a) participants. While that matter is interesting in its own right, the most revealing part of the SBA OIG report is the rapid decline in 8(a) Program participation, and the SBA’s plans to reverse it.
An 8(a) mentor-protégé agreement, which expired one year after its approval by the SBA, did not protect the 8(a) protégé and its mentor from affiliation–and meant that their 8(a) mentor-protégé joint venture was an ineligible large business.
A recent size appeal decision of the SBA Office of Hearings and Appeals is a cautionary tale for 8(a) protégé and their mentors, and highlights the importance of securing timely SBA reauthorization of 8(a) mentor-protégé agreements.
Before an agency can award an 8(a) contract, the prospective awardee must first be deemed eligible for award under the 8(a) business development program criteria by the Small Business Administration. The SBA has a tight deadline to make this determination—a mere five days.
But what happens when the SBA’s eligibility evaluation is more complicated than a determination of whether the awardee meets the program’s basic eligibility requirements? The GAO recently addressed this issue in FedServ-RBS JV, LLC, B-411790 (Oct. 26, 2015), where the GAO held that the applicable regulations do not require the agency to stay its proposed award beyond five days pending the SBA’s approval of an 8(a) joint venture agreement. Continue reading
The SBA is moving toward implementing its proposed “universal” mentor-protege program for all small businesses.
According to testimony presented by the SBA’s Associate Administrator for Government Contracting Business Development at a recent Congressional hearing, the SBA has put together a Mentor-Protege Program Expansion Project Team to oversee the implementation of the new program.
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.
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.