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?
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.
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.”
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.
I am excited to announce the publication of Government Contracts Joint Ventures, the first in a new series of new government contracting guides we’re calling “Koprince Law LLC GovCon Handbooks.” Packed with easy-to-understand examples and written in plain English, Government Contracts Joint Ventures should help you maximize your understanding of this important option for pursuing federal contracts.
What does the Handbook contain? I’m glad you asked.
For small government contractors, joint ventures can be an important vehicle for successfully pursuing larger and more complex opportunities. As the SBA’s All Small Mentor-Protege Program enters its second full year, the popularity of joint ventures seems to be increasing significantly.
But joint ventures aren’t immune from the FAR’s rules governing organizational conflicts of interest. In a recent decision, the GAO held that an agency properly excluded a joint venture from competition where one of the joint venture’s members–through its involvement in a second joint venture–had assisted in the preparation of the solicitation’s specifications.
Ah, joint ventures. Few topics in government contracting these days seem to cause as much confusion. And that’s due, in large part, to some common misunderstandings I hear repeated over and over.
Recently, I joined host Michael LeJeune on the “Game Changers” podcast to talk about some of the most common areas of confusion regarding joint ventures. What is the relationship between joint ventures and the SBA’s new All-Small Mentor-Protege Program? How do the rules for joint venture work share operate? What are some frequent mistakes companies make when they draft joint venture agreements? And so on.
My podcast is available now on the Federal Access website. Click here to give it a listen, and while you’re there, check out the many other great podcasts featuring a range of government contracts thought leaders.