SDVOSB Joint Ventures: Supermajority Provision Defeats Eligibility, Says SBA OHA

A SDVOSB joint venture was not eligible for award of a SDVOB set-aside contract because its joint venture agreement called for certain decisions to be made by supermajority vote.

As explained by the SBA Office of Hearings and Appeals in its decision finding the SDVOSB joint venture ineligible, the supermajority provision undermined the regulatory requirement that a SDVOSB joint venture be managed by an eligible SDVOSB.

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SBA Doesn’t Fix Incorrect NAICS Code Regulation; Protester Pays The Price

A contractor’s NAICS code appeal was dismissed as untimely, even though it was filed within the time frame expressly established in an SBA regulation.

In a recent decision, the SBA Office of Hearings and Appeals confirmed its earlier ruling that a NAICS code appeal must be filed within ten calendar days, despite an SBA regulation establishing a filing deadline of ten business days.

SBA OHA’s decision isn’t surprising in light of its prior ruling.  However, in my mind, the decision raises a question of fundamental fairness: should protesters continue to be penalized for the SBA’s failure to fix its conflicting timeliness regulations?

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SBA OHA Decision Highlights Joint Venture “Individual Size Treatment” Rule

The SBA misevaluated a joint venture by basing its ineligibility decision on the joint venture’s revenues, rather than determining whether each joint venturer, individually, qualified as a small business, according to a recent decision of the SBA’s Office of Hearings and Appeals.

SBA OHA’s decision highlights what I like to call the “individual size treatment rule,” a special regulation requiring the SBA to deem a joint venture “small” under certain circumstances, even when the combined sizes of the joint venture’s members exceed the applicable size standard.

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FAA ODRA Applies SBA Ostensible Subcontractor Rule

The Federal Aviation Administration is exempt from the Small Business Act and the SBA’s size regulations, but this does not mean that the SBA’s ostensible subcontractor affiliation rule does not apply in FAA procurements.

In a recent decision, the FAA’s Office of Dispute Resolution for Acquisition applied the ostensible subcontractor rule–and SBA Office of Hearings and Appeals decisions interpreting that rule–in arriving at the conclusion that a contract awardee was an eligible small business.

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DOT DBE Fraud: Government Announces Two Large Settlements

If you are planning to defraud the U.S. Government (and I certainly hope that you are not), your best bet is to avoid the U.S. Department of Transportation’s Disadvantaged Business Entity program.

Yesterday, the Department of Justice announced that a DOT DBE subcontractor had agreed to settle “pass-through” fraud claims for $936,000.  The DOJ’s announcement comes on the heels of a June 6 press release touting a settlement of nearly $3 million, also stemming from alleged DOT DBE fraud.

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