Forming a small business joint venture and utilizing it for federal contracts can at times be quite tedious. Often businesses can feel intimidated by the various required joint venture agreement terms in the SBA’s joint venture regulations and the reporting requirements placed on joint ventures. But complying with the SBA’s joint venture regulations can make or break a contract award, especially if the regulations are made a material requirement of a solicitation. The GAO recently issued an opinion which should serve as a warning to all small business joint ventures to make sure to follow all SBA joint venture regulations when bidding on a contract award or potentially risk the award itself.
In OS-DB-JV-2, LLC, B-424382 (Comp. Gen. June 16, 2026) a bidder lost its shot at an award due to missing a certificate required by SBA’s joint venture regulations and the subject solicitation. The joint venture regulations at issue in this bid protest are VOSB and SDVOSB joint venture regulations found at 13 C.F.R. § 128.402, but the specific joint venture term hits on something which is required in a similar shape and form in all other SBA joint ventures, a certificate of compliance. (For more info on joint ventures, check out various blog posts on the topic)
Section 13 C.F.R. § 128.402(e) requires that at time of initial offer “each certified VOSB or SDVOSB joint venture partner” must make a certification to the contracting officer that: “It is a certified VOSB or SDVOSB”; it is “small under the size standard corresponding to the NAICS code assigned to the procurement”; and it will “comply with the applicable limitations on subcontracting during performance of the contract,” as set forth in 13 C.F.R. § 125.6 (for more info on the limitations on subcontracting check out our Back to Basics post on the topic). It also requires that “[p]rior to being identified as an apparent successful offeror for a VOSB or SDVOSB contract,” the VOSB or SDVOSB joint venture partner must submit a certification to the contracting officer and SBA “signed by an authorized official of each partner to the joint venture: which states: “The parties have entered into a joint venture agreement that fully complies with paragraph (c) of this section”; and “The parties will perform the contract in compliance with the joint venture agreement and with the limitations on subcontracting requirements set forth in paragraph (d) of this section.” Therefore, there is an expectation in the regulation for certifications of compliance to be submitted by SDVOSB or VOSB joint ventures at time of initial offer and prior to being identified as the awardee.
In this GAO case, the agency had made a competitive range of two offerors, one of them was a joint venture, the protester OS-DB-JV-2, LLC. The VA conducted discussions with those two offerors and issued an amendment which stated that joint ventures would be eligible for award “so long as the joint venture meets the requirements of 13 C.F.R. [§] 128.402.” The amendment went on to state “to comply with 13 C.F.R. [§] 128.402(e) JV offerors must include in their offer a certification, signed by an authorized official of each partner to the joint venture, stating that the parties have entered into a joint venture agreement that fully complies
with 13 C.F.R. [§] 128.402(c), and that the parties will perform the contract in compliance with the joint venture agreement and with the limitations on subcontracting requirements set forth in 13 C.F.R. [§] 128.402(d).” So, through the amendment the agency made submitting a certificate of compliance under the regulations a material requirement of the solicitation.
Protester OS-DB-JV-2, LLC submitted a revised proposal, but due to a clerical error, missing from the proposal was the required certification of compliance. Consequently, the joint venture was eliminated from the competition, and subsequently filed a GAO bid protest.
GAO explained “clearly stated requirements are considered material to the needs of the government and a proposal that fails to conform to the material terms and conditions of the solicitation is considered unacceptable and may not form the basis for award.” GAO held that the language of the amendment required submission of the certificate of compliance from joint venture offerors, and therefore it was a material term. The evaluation terms even said proposals that “failed to meet the minimum requirements – including a material failure to conform with the instructions . . . will be deemed unacceptable.”
GAO also explained that the missing certificate is not something that could have been remedied through clarifications, as clarifications “cannot be used to cure deficiencies or material omissions in a quotation or materially alter the technical costs elements of the quotation, or revise the quotation.” Providing a required missing certificate was material and would have constituted discussions not clarifications. Additionally GAO reiterated that an agency may conduct clarifications, but they are not required to (despite any such update here would be a discussion not clarification).
Contractors need to be aware of all the requirements of the joint venture regulations, and keep an eye on solicitation terms. Here, a clerical error led to forgetting one item, a certificate of compliance. While that may feel like a minor issue, GAO disagreed, especially when the solicitation itself calls out that one item as a requirement for award eligibility. Joint venture entities need to make themselves aware of all the different requirements under SBA’s joint venture regulations, not just the ones you utilize to form the joint venture formation or agreement. The joint venture regulations expect reporting to be made through certificates of compliance (discussed here) and other reports as well (such as performance of work reports, profit and loss statements, among others), many of which are technically not required to be in the joint venture agreement. However, if you miss any of those reports, it could doom a potential award, especially if those reports are a required part of the proposal process. To make sure your joint venture is formed correctly, and you understand all the requirements placed on it, reach out to a federal contracting attorney, like us for assistance.
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