SBA Proposes to Remove the “Three” from the “Three-In-Two” Rule for Joint Ventures

The SBA recently proposed a rule that would amend the infamous three-in-two (AKA 3-in-2) rule for joint ventures. SBA’s current regulations provide that a joint venture can be awarded no more than three contracts over a two-year period. While SBA plans to keep the two-year lifespan for joint venture awards, it plans to get rid of the three contract maximum.

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Joint Venture Facility Security Clearances: SBA Wants Feedback

Forming a joint venture is an important tool to help small businesses increase their competitiveness under federal acquisitions. But for all the benefits, some headaches remain.

One common issue arises when a solicitation requires the prime contractor to hold a facility security clearance. Because a joint venture is an unpopulated legal entity formed for the purpose of bidding on a specific opportunity, the joint venture itself (as the prime contractor) often lacks the needed clearance—even though the joint venture’s members might both hold it. In these situations, a form-over-substance evaluation may leave the joint venture ineligible for award.

Fortunately, the SBA has recognized the silliness of such an exclusion and has invited feedback on a potential solution.

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5 Things You Should Know: Joint Ventures

In the age of consolidated contracts and increased competition, small business federal contractors are searching for a way to improve their odds of winning the next opportunity. One of the most important tools for doing so is to form a joint venture.

Here are five things you should know about small business joint ventures:

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Unpopulated Joint Venture Can Be “Manufacturer” For SBA Size Purposes

When a small business sells products to the government under a contract designated with a manufacturing NAICS code, the small business either must be the “manufacturer” of the products, or separately qualify under the nonmanufacturer rule. The nonmanufacturer rule, in turn, requires the prime contractor to have no more than 500 employees, whereas manufacturers may fall under larger size standards–some as big as 1,500 employees.

But what about an unpopulated joint venture that doesn’t itself manufacture any products, relying on the individual venturers to manufacture the solicited goods? Does it also have to comply with the 500-employee size standard under the nonmanufacturer rule? Or can the joint venture be deemed the “manufacturer” of the products in question?

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GAO Puts Substance Over Form in Past Performance Protest

Recently, GAO sustained a bid protest where an agency “unreasonably excluded” a joint venture’s proposal, which included all necessary information listed in the solicitation, from competition.

GAO held that it was unreasonable for the agency to exclude the joint venture merely because the joint venture’s proposal didn’t include a subcontract number for one of its past performance references. GAO held, in essence, that the missing information was irrelevant because it had no bearing on the type of work completed.

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GAO Denies Protest Challenging SAM Registration

One of the first things a prospective government contractor (including a joint venture) must do to be eligible for an award is to create a business profile in the System for Award Management (or “SAM”). Before making an award, in fact, the contracting officer is obligated to verify the prospective contractor is registered in SAM.

Not only must a business be registered in SAM, but its registration should be up-to-date. It’s an enduring myth of government contracting that a business’s SAM profile only has to be updated annually. But as FAR 4.1201(b)(1) instructs, an offeror’s SAM profile has to be updated as necessary to ensure that it is “kept current, accurate, and complete.”

What happens if a prospective awardee fails to update its SAM profile? Can a disappointed bidder challenge the basis of the award? The answer, according to GAO, is “it depends.”

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DoD Mentor-Protege Program: Major Changes Finalized

The DoD has issued a final rule making major changes in the DoD “Pilot” Mentor-Protege Program.  The rule took effect on March 23, 2018.

Among the major changes, DoD has both expanded and contracted the universe of potential proteges–and has included a mandatory certification that seems to completely misunderstand the SBA’s joint venture rules and processes.

Here is my take on the good, the bad, and the ugly from the final rule.

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