A common path for many federal contractors to bid on and perform a federal contract is through a joint venture (“JV”). Utilizing a JV can provide some great opportunities for two (or sometimes more) businesses to share resources and boost each others’ performance on a contract. Additionally, it can be a great tool for contractors to utilize both JV partners’ experience and to jointly gain more experience. There are even widespread SBA regulations requiring agencies to “consider” both JV partners’ experience in an evaluation. However, there has still been quite a bit of back and forth regarding how agencies are supposed to evaluate a JV’s experience, and specifically what it means to “consider” each JV partners’ individual experience, particularly in situations where only one JV partner submits the experience. In May of 2023, GAO issued a decision that provided at least some clarification on how an agency should consider each JV partner’s experience, and the impact of not doing so.
One of the many factors that may appeal to contractors, looking at utilizing a JV for contract proposal and performance, is the ability to work with a JV partner that may have more relevant experience, and thus, open the door for bidding on projects that require more specified prior experience from offerors. But despite SBA’s implementation of widespread joint venture rules regarding the evaluation of a JV’s past performance, (which I will get to shortly), there has still been some debate within the federal contracting industry. There also have been multiple bid protests, that question exactly how an agency’s evaluation of a JV’s experience would need to consider both JV partners’ experience, rather than just the JV itself or just one JV partner. Due to this confusion, GAO in MiamiTSPi, LLC – Reconsideration, decided to quell the waters and provide some guidance about what an agency is expected to analyze when evaluating a JV’s experience.
This GAO holding is due to a request for reconsideration, which in turn is based on a previous case where GAO found that the agency did not properly review the experience of a JV. In this reconsideration, GAO upheld the previous decision and articulated the expectations for how experience in a JV is meant to be evaluated.
The solicitation at the heart of this issue was an RFQ, for IT services at the USDA’s Farm Loan Program, which anticipated issuing a fixed price task order and award based off a best-value tradeoff, with “similar experience” being the most important factor in the tradeoff. The RFQ told offerors that the agency “would consider the extent of the contractor’s experience in providing like or similar services in accordance with original project deadlines.”
Initially, the award on this RFQ was made to a JV called MiamiTSPi, but that award was protested on the basis that “the agency’s evaluation did not comply with applicable SBA regulations, which require the agency to ‘consider work done . . . by each partner to the joint venture as well as any work done by the joint venture previously” citing 13 C.F.R. § 125.8(e). GAO in that initial bid protest found the record showed the JV submitted two projects to demonstrate experience, and both experience examples came only from one party of the JV. GAO sustained the protest because it found that the record did not show “any type of acknowledgement of the fact that the only experience examples submitted” for this procurement were from one of the JV’s partners, thus “indicating that the evaluators never even considered the limited nature of the experience examples.” The JV then filed a request for reconsideration, leading to the GAO reconsideration decision.
The request for reconsideration argued that GAO “failed to consider the portion of the SBA regulations that prohibits the agency from negatively evaluating the 8(a) partner of the joint venture for its lack of relevant experience.” In the request for reconsideration of the decision, GAO makes it quite clear what standard agencies must be held to when evaluating a JV’s submitted experience. GAO in its decision points to 13 C.F.R. § 124.513(f) which states “[t]he partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems, and certifications necessary to perform the contract” and “procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously.”
The GAO further pushed back on the reconsideration argument, holding that when reading the entirety of 13 C.F.R. § 124.513(f), the rule “directs agencies to ‘consider work done and qualifications held individually by each partner to the joint venture’ and in that consideration, prohibits agencies from requiring the protégé or 8(a) participant partner to individually meet the same criteria as the mentor or non-8(a) partner.” GAO also mentioned that the SBA, in creating these same regulations, explained that the “rules require a small business protégé to have some experience in the type of work to be performed under the contract” but it would be unreasonable for the protégé to be held to the same level of experience of a mentor in a JV.
Additionally, GAO explained that while the regulations don’t require a specific degree of consideration, “it is clear that the agency must consider to some degree the experience of both partners of the joint venture.” The GAO, after distinguishing other similar cases, articulated that their holding, in this reconsideration, showed there was no error of law in the underlying bid protest when “concluding that the agency’s evaluation of MiamiTSPi’s quotation was unreasonable and inconsistent with the SBA regulations” as the record showed that the agency did not “consider the experience of each partner to the joint venture in evaluating the experience of the joint venture.”
While this reconsideration holding, and underlying bid protest, revolved around SBA’s 8(a) Program regulations, it represents a holding that could impact all small business joint ventures (given the similar regulatory language in SBA’s small business joint venture regulations and other socioeconomic status joint venture regulations). While agencies are generally given deference in their evaluations of an offeror’s experience, in this reconsideration GAO has somewhat carved away at that deference. As you know, the regulatory interpretation of how to “consider” joint venture experience has been somewhat unclear, but through this ruling the GAO has now issued clear guidance in one of the many situations that could arise when a joint venture submits experience in a proposal (i.e., a joint venture has only one partner submit experience, while the other submits no experience). In that specific situation, GAO expects for both joint venture partners to submit experience, and for the agency to evaluate both of those joint venture partners’ experience. Consequently, going forward if a joint venture finds itself in a situation in which it submits a proposal, with only one partner of the joint venture providing experience, it is likely that a bid protest may be on its way.
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