SBA 8(a) participants need not obtain the SBA’s prior approval of prime/subcontractor teaming agreements, according to an SBA statement made in a GAO bid protest case.

The SBA’s position makes sense, because the SBA’s regulations only call for prior approval of joint venture agreements.  However, one former 8(a) company might be hopping mad over the SBA’s stated position, because that company was terminated from the 8(a) program for–you guessed it–failing to obtain the SBA’s prior approval of a teaming agreement.

The SBA’s position statement arose in the context of a GAO bid protest, The Matthews Group Inc. d/b/a TMG Construction Corporation, B-408003.2, B-408004.2 (June 17, 2013), which in turn stemmed from two Navy 8(a) set-aside solicitations.  The solicitations, as originally issued, stated that “offerors contemplating a teaming agreement shall show evidence in their proposal that the agreement has been received by the SBA prior to proposal due date and approved before award of a resulting contract.”  In other words, the solicitations required that all teaming arrangements–not just joint venture agreements–be approved by the SBA prior to award.

After a bid protest was filed challenging the original award, the Navy took corrective action.  As part of its corrective action, the Navy deleted the requirement that non-joint venture teaming agreements be submitted to, or approved by, the SBA.  The Matthews Group, Inc. d/b/a TMG Construction Corporation protested the corrective action, asserting that there was no defect in the solicitations to correct.

In evaluating TMG’s bid protest, the GAO sought the SBA’s input.  The SBA responded that “we believe the underlying solicitations were flawed and we agree with the Navy’s decision to take corrective action.”

The SBA stated that pursuant to its 8(a) program regulations, the SBA must approve a joint venture agreement prior to award of an 8(a) contract to a joint venture.  However, the SBA continued, “there is no similar prior approval requirement under SBA’s regulations for [other] teaming arrangements involving 8(a) BD participants and SBA has no process for, or practice of, reviewing such arrangements.”  For this reason, the SBA concluded, “it would have been impossible for affected offerors under the Navy solicitations to comply with this requirement as written.”

The GAO agreed with the position of the Navy and the SBA, and rejected TMG’s argument that the solicitations were not defective.  The GAO denied TMG’s protest.

The SBA’s statement in The Matthews Group is in keeping with common understanding that 8(a) participants need not seek or obtain the SBA’s prior approval of teaming agreements for 8(a) set-aside contracts.  However, the SBA’s position may come as news to Accent Services Company, Inc., which as I reported in January, was terminated from the 8(a) program for failing to obtain the SBA’s approval of its teaming agreement.

As I wrote at the time:

My initial reaction to the Accent Services Co. case is sympathy for Accent.  After all, countless 8(a) participants have entered into teaming agreements without the SBA’s prior approval and have not been terminated from the 8(a) program.  In that respect, Accent got a raw deal.

In the wake of SBA’s statement in The Matthews Group, Accent’s deal seems even rawer.  That said, I agree with the SBA’s position as stated in The Matthews Group.  Nothing in the 8(a) regulations calls for prior review or approval of teaming agreements, and to my knowledge, such a review is not part of the SBA’s ordinary practice.  Hopefully, this means that Accent Services Company was an outlier and that other 8(a) participants need not fear termination on the basis of unapproved teaming agreements.