Years after Expiration of Mentor-Protégé Agreement, Joint Venture Still Small Based on Status as of Proposal Date

SBA regulations say that size is determined as of the date an offeror submits its initial proposal, with price. On its face, this rule seems pretty straight forward. But what happens if the initial proposal was filed six years ago? And what if the joint venture that submitted the proposal has since expired? Following OHA’s recent logic, the proposal-date rule stands even in these unique circumstances.

The case at issue is Global Dynamics, LLC, SBA No. SIZ-6012 (June 18, 2019). Global Dynamics is OHA’s ruling on an appeal of an SBA area office finding that, based on information as of October 16, 2012, GiaMed is a small business. To fully understand OHA’s ruling, we need to walk through a timeline with plenty of twists and turns.

Here is a bulleted list with the important dates and events:

  • August 7, 2012 – GiaCare and MedTrust enter into a mentor-protégé agreement (“MPA”) under SBA’s 8(a) Program.
  • August 15, 2012 – SBA approves the MPA for one year (SBA granted a one-year extension on May 7, 2013).
  • September 14, 2012 – the Army issued the RFP (the “RFP”) at issue for registered nursing services.
  • September 25, 2012 – GiaCare and MedTrust, under their MPA, formed a joint venture named GiaMed to compete for the RFP.
  • October 16, 2012 – GiaMed submitted a proposal which included its price proposal.
  • January 24, 2013 – Army names GiaMed awardee.
  • May 6, 2013 – GAO sustained a protest and recommended the Army re-evaluate all proposals and make a new competitive range determination (see B-407966).
  • May 6, 2014 – the GiaCare and MedTrust MPA expired.
  • January 29, 2015 – Army informed GiaMed that the appellant (Global Dynamics, LLC) is the awardee of the contract at issue.
  • June 29, 2015 – GiaMed filed a GAO protest of Global Dynamics’ award (see B-407966.4).
  • June 2016 – Agency concluded corrective action under the June 29 GAO protest and reaffirmed award to Global Dynamics.
  • November 2017 through August 2018 – Army cancelled the RFP and sole-sourced the award, a decision which was appealed to the Court of Federal Claims after which the Army rescinded the cancellation, amended the RFP, reopened discussions, and requested revised proposals.
  • August 23, 2018 – GiaMed was announced as awardee.
  • August 29, 2018 – Global Dynamics filed a protest alleging GiaMed is not a small business.
  • October 2, 2018 – The Area Office dismissed the size protest as untimely.
  • December 17, 2018 – OHA granted the appeal and remanded for a new size termination (see SBA No. SIZ-5979 and our discussion of that decision).
  • February 25, 2019 – The Area Office concluded GiaMed is a small business.
  • March 12, 2019 – Global Dynamics files the size appeal at issue here.

If you struggled to follow that, here is a short version. GiaCare and MedTrust formed GiaMed as an MPA joint venture in September 25, 2012 and submitted a proposal for the RFP at issue on October 16, 2012. Through a series of protests the Army ended up amending the RFP, reopening discussions, and requesting revised proposals. While the Army did at one time cancel the RFP, that decision was rescinded. In other words, the RFP never fully died, so neither did GiaMed’s October 16, 2012 proposal.

Global Dynamics’ appeal argued that GiaMed is not small because (1) it is affiliated with MedTrust and other entities; (2) it is not an eligible mentor-protégé joint venture (JV); (3) GiaMed’s JV lacks specificity such that the exception to joint venture affiliation does not apply; and (4) GiaMed is affiliated with a firm named GiaSpace (a d/b/a of GiaMed for a short period of time).

Now is the time to answer the question of the day – does the extended time between initial proposal (October 16, 2012) and the post-award size decision (February 25, 2019) have any role in OHA’s ruling?

Simply put – no. Despite the many intervening years and procedural events and litigation, OHA still looked back to the initial proposal date for its ruling.

OHA reminds us that “SBA regulations provide that SBA will determine ‘the size status of a concern, including its affiliates’ as of the date the concern self-certifies as small with its initial offer including price.” (citing 13 C.F.R. 121.404(a)). “In the instant case, the Area office twice stated in the size determination . . . that GiaMed’s size must be determined as of October 16, 2012, the date of GiaMed’s initial proposal including price.” This finding is key as the rest of OHA’s analysis relies on this date.

Possibly the most pivotal aspect from the timeline is that in May 2014, the GiaMed MPA expired. Surely this is the nail in the coffin for GiaMed, right? Nope!

“[T]he crucial flaw in [Global Dynamics’ argument] involves the date to determine size.” “Even assuming . . . the MPA did expire in 2014, there is no dispute that GiaCare and MedTrust were an SBA-approved mentor and protégé on October 16, 2012, the date to determine size.”

OHA similarly found that GiaCare and MedTrust were not generally affiliated due to extensive joint venture agreements because as of October 16, 2012, these other joint ventures did not yet exist. “[U]nder OHA precedent, events occurring after the date to determine size are not relevant in a size determination.”

OHA reiterated what each 8(a) joint venture agreement should contain. Specifically, provisions (1) itemizing all major equipment, facilities, and other resources, (2) specifying contract negotiation, source of labor, and contract performance roles, and (3) noting that the 8(a) will perform at least 40% of the work. The Area Office and OHA found these provisions in GiaMed’s joint venture agreement. The only unique aspect of these is that the joint venture agreement stated that GiaCare and MedTrust “will not bring any major equipment or facilities . . . because the Joint Venture will utilize Army equipment and facilities.” OHA found this to be a valid provision because the RFP was for nursing services performed at military treatment facilities and “[i]t is therefore reasonable that there would have been no major equipment, facilities or other resources for GiaMed to have detailed in the JVA.”

Through OHA’s repeated stance that the most important date is “the date the concern self-certifies as small with its initial offer including price,” it should come as no surprise that OHA denied the appeal and affirmed the Area Office’s determination that GiaMed was a small business.

While the facts of this case are very unique, they show that the rollercoaster that is government contracting can sometimes lead to head-scratching results. Whether your RFP was issued 6 years ago and you think there is a valid protest ground or you have questions about what is required in a joint venture agreement, please do not hesitate to reach out with your questions.