A small business joint venture’s proposal was excluded from the competition because the joint venture failed to submit a signed copy of its joint venture agreement, as required by the solicitation.

In a recent bid protest decision, the GAO held that the procuring agency acted properly in excluding the joint venture’s proposal, even though the joint venture’s price was more than $300,000 lower than the lowest-priced awardee’s.

The GAO’s decision in CJW Desbuild JV, LLC, B-414219 (Mar. 17, 2017) involved a NAVFAC solicitation for construction services.  The solicitation was issued as a small business set-aside, and contemplated the award of up to six IDIQ contracts.

The solicitation called for NAVFAC to make award on a best value basis, taking into account both price and non-price factors. The three non-price factors were construction experience, safety, and past performance.

Under the construction experience factor, the solicitation provided the following instruction:

If the Offeror is a Joint Venture (JV), relevant project experience should be submitted for projects completed by the Joint Venture entity.  If the Joint Venture does not have shared experience, projects shall be submitted for the Joint Venture members. . . . The Offeror shall submit a signed copy of the Joint Venture agreement indicating the proposed participation of each Joint Venture member.  Failure to submit the required Joint Venture Agreement will be considered unacceptable. 

CJW Desbuild JV, LLC was a joint venture comprised of two small businesses.  CJW Desbuild submitted a proposal in response to the NAVFAC solicitation.  However, CJW Desbuild failed to provide a signed copy of its joint venture agreement.  NAVFAC rated CJW Desbuild’s proposal as unacceptable, and excluded CJW Desbuild from award.  NAVFAC awarded IDIQ contracts to six other offerors.

CJW Desbuild filed a bid protest with the GAO.  CJW Desbuild argued that its failure to submit a signed joint venture agreement was a “minor oversight,” and should not have resulted in an “unacceptable” score.  CJW Desbuild also argued that NAVFAC should have used clarifications to permit CJW Desbuild to provide the joint venture agreement–especially in light of the fact that CJW Desbuild “submitted a proposed price that was over $300,000 lower than the lowest-priced awardee.”

GAO noted that the solicitation specifically required a signed copy of the joint venture agreement, and unambiguously “warned that failure to submit the agreement would be considered unacceptable.” GAO concluded that “[s]ince the requirement for a signed JV agreement was specifically linked to technical acceptability, it could not be considered an informality or minor irregularity, subject to waiver.”

GAO also wrote that the agency could not have used clarifications to obtain the joint venture agreement.  The GAO said: “[s]ince the protester’s failure to submit a signed JV agreement was a deficiency that rendered its proposal technically unacceptable, and clarifications do not envision revisions to proposals to cure matters of technical unacceptability, the protester could not have revised its proposal to make it acceptable via clarifications.”

GAO denied CJW Desbuild’s protest.

Joint ventures have long been part of the government contracting landscape.  But now that the SBA has finalized its All Small Mentor-Protege Program, which allows small proteges to joint venture with their large mentors for set-aside contracts, joint venturing seems to be increasing significantly in popularity.

Perhaps in response to an uptick in proposals from joint ventures, it seems to me (based on an entirely unscientific process I call “looking at a lot of government solicitations”) that more and more agencies are requiring joint ventures to submit their signed joint venture agreements as part of their proposals.  And as the CJW Desbuild protest demonstrates, when an agency requires a signed joint venture agreement as part of a non-price evaluation, a joint venture may be excluded from the competition for failing to comply.