SBA 8(a) mentor-protege joint ventures suffer from inadequate oversight and may not adequately benefit 8(a) protege firms, says the SBA Office of Inspector General. In a recently-released report, the SBA OIG criticized the SBA’s oversight of 8(a) mentor-protege joint ventures, finding that there is no way to ensure that 8(a) protege’s substantially benefit from the 8(a) mentor-protege joint venture program.
Some highlights from the 37-page report follow.
Joint ventures seem to be an increasingly popular vehicle for pursuing federal contracts, but the FAR and agency solicitations usually are not written with joint ventures in mind. As a result, confusion can sometimes arise over how a joint venture’s proposal should be evaluated.
Case in point: past performance. A joint venture is often a new legal entity, so should it receive a “neutral” past performance score? Not necessarily. According to a recent GAO bid protest decision, it is perfectly acceptable for a procuring agency to consider the relevant experience and past performance of the individual joint venture members.
SBA size protests should include all of the reasons why the protester believes the protested company is not small. If the protester omits an allegation from its SBA size protest, the allegation may be lost forever, even if the protester files a SBA size appeal.
One protester recently learned this lesson the hard way. On appeal before the SBA Office of Hearings and Appeals, the protester alleged that the awardee was affiliated with the incumbent contractor. The problem? The protester never mentioned any such affiliation in its SBA size protest.
Go on, go on. Call me Captain Obvious for writing this post if you must, but the question actually comes up quite often: can a small business joint venture with a large business and qualify as “small” for purposes of a federal small business set-aside contract?
The answer, as confirmed in a recent SBA Office of Hearings and Appeals SBA size appeal decision, is “no,” unless the joint venturers are participants in the SBA’s 8(a) mentor-protege program. Unfortunately for the joint venturers in Size Appeal of BY&R Contractors, LLC & West Coast Contractors of Nevada, Inc. JV, SBA No. SIZ-5349 (2012) not only were they not an 8(a) mentor and protege, but neither company was even an 8(a) participant.
According to the SBA Office of Hearings and Appeals, an 8(a) mentor-protege joint venture may be entitled to an affiliation “shield,” even if the joint venture violates the so-called “three-in-two” rule by receiving more than three contracts over a two-year period.
SBA OHA’s decision in Size Appeal of Magnum Opus Technologies, Inc., SBA No. SIZ-5372 (2012), should reassure 8(a) proteges and their mentors that if the SBA District Office has approved a contract award to an 8(a) mentor-protege joint venture, the joint venturers are very unlikely to be found affiliated as a result of that contract award.
If you have ever gotten a traffic ticket, you know the ticket typically presents you with two options: send in your fine (essentially admitting guilt), or appear in court and contest the ticket. The second option is available because in our democracy, a citizen accused of wrongdoing–even a minor traffic infraction–has the right to contest the charges.
The same is true when it comes to SBA size protests. According to a recent decision by the SBA Office of Hearings and Appeals, a contractor cannot be found affiliated with another company unless the contractor is given the opportunity to respond to the particular basis of affiliation at issue.
No matter your political persuasion, it’s hard to forget the image of Senator John Kerry windsurfing in the famous 2004 Bush-Cheney ad. The ad attacked Kerry for supposedly changing his mind too often–“flip-flopping,” in political parlance.
It turns out that the dangers of flip-flopping are not limited to politics. In a recent SBA size appeal decision of the SBA Office of Hearings and Appeals, SBA OHA held that if the SBA’s Office of Government Contracting, or OGC elects not to formally oppose a SBA size appeal, it cannot later change its mind and ask SBA OHA to revisit the size appeal decision. Because the SBA OGC does not formally oppose most SBA size appeals, SBA OHA’s decision forces the SBA OGC to make up its mind quickly about whether it will play a role in the SBA size appeal process.