8(a) Joint Ventures Are Not 8(a) Program Participants, Says SBA OHA

8(a) joint ventures are not 8(a) program participants, according to a recent (and commonsense) decision of the SBA Office of Hearings and Appeals.

In its decision, SBA rejected a joint venture’s argument that its 8(a) joint venture agreement was essentially an 8(a) program application, drawing a jurisdictional decision between 8(a) program certification and 8(a) joint venture agreement approval.

SBA OHA’s decision in National Sourcing Specialists, LLC, SBA No. BDPE-502 (2013) involved a joint venture between Technical Professional Services and KBTS Technologies, Inc.  TPS was a recent 8(a) program graduate, and KBTS was a current 8(a) program participant.

KBTS and TPS formed their joint venture on October 24, 2012.  However, the SBA did not approve the joint venture until January 9, 2013.  In the interim, in November 2012, the SBA awarded a sole source contract to another 8(a) program participant.

The joint venture apparently wished to receive that sole source contract, but was not eligible at the time of award.  The joint venture filed an appeal with SBA OHA, apparently arguing that the SBA had acted unreasonably by failing to approve the joint venture before awarding the sole source contract. The joint venture argued that SBA OHA had jurisdiction over the appeal because SBA OHA can decide certain challenges relating to SBA program admission, and the joint venture agreement “is ‘both in form and in substance’ an application to the 8(a) BD program . . ..”

In a brief decision, SBA OHA dismissed the apppeal.  “NSS is a JV that was approved by the SBA to perform one or more specific 8(a) BD contracts,” SBA OHA wrote.  SBA OHA continued, “NSS is not an 8(a) BD participant” and “has not applied for 8(a) BD certification.”  SBA OHA rejected the joint venture’s characterization of its joint venture agreement as an 8(a) program application, stating “[t]he JV agreement submitted to the [SBA] is neither in form and/or substance an application to the 8(a) BD program.”

The National Sourcing Specialists decision is more than an interesting insight into SBA OHA’s limited jurisdiction: it also makes the important point that an 8(a) joint venture is not an 8(a) program participant.  Rather, an 8(a) joint venture is a limited-purpose entity entitled to “piggyback” on the 8(a) participant’s certification, when approved by the SBA.  As such, the joint venture is not entitled to all of the rights of an 8(a) program participant, such as a nine-year program term–or, at least in this case, OHA jurisdiction.

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