Georgia Tech Procurement Assistance Center

Major changes finalized in DoD mentor-protégé program

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The author of this article is Steve Koprince. He is managing partner with Koprince Law LLC, specializing in government contracting issues, and is the author of a book entitled “The Small-Business Guide to Government Contracts.”

The Defense Department (DoD) has issued a final rule making major changes in the DoD “Pilot” Mentor-Protégé Program.  The rule took effect on March 23, 2018.

Among the major changes, DoD has both expanded and contracted the universe of potential protégés – and has included a mandatory certification that seems to completely misunderstand the SBA’s joint venture rules and processes.

Here Steve Koprine’s take on the good, the bad, and the ugly from the final rule: http://smallgovcon.com/statutes-and-regulations/dod-mentor-protege-program-major-changes-finalized/

 

VA’s SDVOSB JV verification assistance brief is wrong

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The VA’s Verification Assistance Brief for SDVOSB and VOSB joint ventures flat-out misstates the law regarding the manner in which joint venture profits must be split.

SDVOSBs and VOSBs often rely on Verification Assistance Briefs to guide them through the CVE verification process, and CVE analysts sometimes use Verification Assistance Briefs, too.  Which begs the question: how many CVE-verified joint ventures are legally invalid?

The VAAR provides that a joint venture can be eligible for a VA SDVOSB or VOSB set-aside contract so long as the joint venture (among other things) adopts a joint venture agreement meeting the requirements of the SBA’s SDVOSB regulations.  So far, so good–joint ventures are complex enough; the last thing we need is a separate, VA-specific list of SDVOSB joint venture requirements.

Effective August 24, 2016, the SBA overhauled its requirements for SDVOSB joint ventures.  The SBA moved the regulations from 13 C.F.R. 125.15 to 13 C.F.R. 125.18, and made many substantive changes and additions.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/the-vas-sdvosb-jv-verification-assistance-brief-is-wrong/

Missing JV agreement sinks offeror’s proposal

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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.

Keep reading this article at: http://smallgovcon.com/uncategorized/missing-jv-agreement-sinks-offerors-proposal/

SBA corrects profit-splitting flaw in new joint venture regulations

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The SBA has corrected a flaw in the profit-splitting provisions of its new joint venture regulations.

SBA logo smallUnder the corrected regulations, which became effective on December 27, all of the SBA’s joint venture regulations – those for small businesses, SDVOSBs, HUBZones, 8(a)s, and WOSBs – will require that each joint venturer receive profits commensurate with the work it performs.  The SBA’s revisions clear up an inconsistency between the 8(a) joint venture regulations and the regulations for the SBA’s other set-aside programs, and eliminates a potential disincentive for joint venturers to avail themselves of the protections of a formal legal entity such as a limited liability company.

Effective August 2016, the SBA overhauled its joint venture regulations.  Among the major changes, the SBA eliminated so-called “populated” joint ventures and made numerous additions and revisions to the regulations governing mentor-protege joint ventures, SDVOSB joint ventures, and joint ventures for other set-aside contracts.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/sba-corrects-profit-splitting-flaw-in-new-joint-venture-regulations/

SBA revises 8(a) joint venture regulation – but confusion remains

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Stating that populated joint ventures have now been eliminated, the SBA has revised its 8(a) joint venture regulations to reflect that change.

koprince-book
The author of this article, Steven J. Koprince, is also the author of the book entitled “The Small-Business Guide to Government Contracts.”

In a technical correction published Oct. 19th in the Federal Register, the SBA flatly states that an earlier major rulemaking eliminated populated joint venture, and tweaks the profit-sharing piece of its 8(a) joint venture regulation to remove an outdated reference to populated joint ventures.  But even following this technical correction, there are three important points of potential confusion that remain (at least in my mind) regarding the SBA’s new joint venture regulations.

If you’re a SmallGovCon reader, you know that the Small Business Administration (SBA) made some major adjustments to its rules regarding joint ventures earlier this year.  Among those changes, the SBA amended the definition of a joint venture to state that, among other things, a joint venture “may be in the form of a formal or informal partnership or exist as a separate legal entity.”  If the joint venture is a separate legal entity, it “may not be populated with individuals intended to perform contracts,” although the joint venture may still be populated with one or more administrative personnel.

Keep reading this article at: http://smallgovcon.com/8a-program/sba-revises-8a-jv-regulation-but-confusion-remains/

Major changes proposed to DoD Mentor-Protege Program

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dod-mentor-protege-programThe Department of Defense is proposing a major overhaul of the regulations governing its “pilot” mentor-protege program for small businesses.

The proposed rule, which was published in the Federal Register on September 23, 2016, makes a number of important changes, including adding new eligibility criteria, placing limits on the amount of time a protege can participate in the program, adding new required elements to mentor-protege agreements, and much more.

The DoD’s proposed rule responds to the 2016 National Defense Authorization Act, which called for the DoD to amend its mentor-protege program.  The proposed rule makes a number of important changes.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/dod-mentor-protege-program-major-changes-proposed/

Unapproved addendum sinks 8(a) joint venture’s bid

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SBA sealAn 8(a) joint venture failed to obtain SBA’s approval of an addendum to its joint venture agreement — and the lack of SBA approval cost the joint venture an 8(a) contract.

In Alutiiq-Banner Joint Venture, B-412952 et al. (July 15, 2016), GAO sustained a protest challenging an 8(a) joint venture’s eligibility for award where that joint venture had not previously sought (or received) SBA’s approval for an addendum to its joint venture agreement.

GAO-GovernmentAccountabilityOffice-SealAt the big picture level, SBA’s 8(a) Business Development Program Regulations contain strict requirements that an 8(a) entity must satisfy before joint venturing with another entity for an 8(a) contract. For instance, the 8(a) joint venture must have a detailed joint venture agreement that, among other things, sets forth the specific purpose of the joint venture (usually relating to the performance of a specific solicitation). Where the joint venture seeks to modify its joint venture agreement (even to allow for the performance of another 8(a) contract), the Regulations require prior approval of any such amendment or addendum by the SBA. 13 C.F.R. § 124.513(e).

Keep reading this article at: http://smallgovcon.com/gaobidprotests/unapproved-addendum-sinks-8a-joint-ventures-bid/

SBA finalizes “universal” small business mentor-protege program

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SBA Mentor-Protege Program 07.2016The SBA has finalized its “universal” mentor-protege program for all small businesses.

In a final rule published in the Federal Register on July 25, 2016, the SBA provides the framework for what may be one of the most important small business programs of the last decade – one that will allow all small businesses to obtain developmental assistance from larger mentors, and form joint ventures with those mentors to pursue set-aside contracts.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/sba-finalizes-universal-small-business-mentor-protege-program/

 

 

SBA issues new rules affecting small business affiliation — and lots more

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Federal RegisterBack when the U.S. Congress was adopting the 2013 version of the National Defense Authorization Act (NDAA), it included directives to the Small Business Administration (SBA) to make changes to multiple rules pertaining to small business set-aside contracts and subcontracting.  On Monday, May 31, 2016, the SBA published final rules in the Federal Register implementing each of these changes.

The rule changes are wide ranging, amending SBA’s nonmanufacturer rule and affiliation rules, and for the first time allowing joint ventures to qualify as small for any government procurement as long as each partner to the joint venture qualifies individually as small under applicable size standards.

All of the changes can be seen at: https://www.federalregister.gov/articles/2016/05/31/2016-12494/small-business-government-contracting-and-national-defense-authorization-act-of-2013-amendments.

Here is a summary view of some of the most significant changes being made:

  • Affiliation. In the case of a solicitation for a bundled contract, a small business contractor may enter into a Small Business Teaming Arrangement with one or more small business subcontractors and submit an offer as a small business without regard to affiliation, so long as each team member is small for the size standard assigned to the contract or subcontract. This is a major change.  Previously, small businesses risked losing small business status if combined employees or gross revenues exceeded SBA’ s size standards.  This new concept applies to joint ventures as well.  A joint venture of two or more business concerns may submit an offer as a small business for a federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract.  In addition, the new rule provides that firms owned or controlled by married couples — in addition to parties to a civil union, parents, children, and siblings — are presumed to be affiliated with each other if they conduct business with each other, such as subcontracts or joint ventures or share or provide loans, resources, equipment, locations or employees with one another. This presumption may be overcome by showing a clear line of fracture between the concerns. Other types of familial relationships are not grounds for affiliation on family relationships.
  • Procurement Center Representatives.  The SBA has Procurement Center Representatives (PCRs) located at federal agencies and military bases which have major contracting programs.  Under the new rules, PCRs are to review all acquisitions that are not totally set aside for small businesses to determine whether a set-aside or sole source award to a small business is appropriate and to identify alternative strategies to maximize the participation of small businesses in the procurement. PCRs are also to advocate against the consolidation or bundling of contract requirements (which tend to adversely impact small business contract participation), and reviewing any justification provided by the agency for consolidation or bundling. This review includes acquisitions that are Multiple Award Contracts (MACs) where the agency has not set-aside all or part of the acquisition or reserved the acquisition for small businesses. It also includes acquisitions where the agency has not set-aside orders placed against MACs for small businesses.  Also, for the first time, PCRs may receive unsolicited proposals from small businesses.  They are to send such proposals to the agency personnel responsible for reviewing such proposals, and the agency personnel are to provide PCRs with information regarding the disposition of each proposal.
  • Subcontracting to Small Businesses.  A prime contractor that identifies a small business by name as a subcontractor in a proposal, offer, bid or subcontracting plan is now obligated to notify those subcontractors, in writing, prior to identifying the concern in the proposal, bid, offer or subcontracting plan.  Safeguards against naming a subcontractor that the prime really doesn’t intent to use are also strengthened.  The new rules state that anyone who has a reasonable basis to believe that a prime or a subcontractor may have made a false statement with respect to subcontracting plans is to report the matter to the SBA’s Office of Inspector General. All other concerns as to whether a prime contractor or subcontractor has complied with SBA regulations or otherwise acted in bad faith may be reported to the Government Contracting Area Office where the firm is headquartered.  Contractors who are judged to have acted in bad faith may be found to be in material breach of contract and subject to liquidated damages under their contract.
  • Limitations on Subcontracting.  The rules have changed for the amount of work a small business may subcontract out.  In order to be awarded a full or partial small business set-aside contract with a value greater than $150,000, a small business concern now must agree that:

    (1) In the case of a contract for services (except construction), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated.  (Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded.)

    (2) In the case of a contract for supplies or products (other than from a non-manufacturer of such supplies), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. (Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded.) Cost of materials are excluded and not considered to be subcontracted.

    (3) In the case of a contract for supplies from a non-manufacturer, it will supply the product of a domestic small business manufacturer or processor, unless a waiver is granted.

    (4) For a multiple item procurement where a waiver has not been granted for one or more items, more than 50% of the value of the products to be supplied by the non-manufacturer must be the products of one or more domestic small business manufacturers or processors.

    (5) For a multiple item procurement where a waiver is granted for one or more items, compliance with the limitation on subcontracting requirement will not consider the value of items subject to a waiver. As such, more than 50% of the value of the products to be supplied by the non-manufacturer that are not subject to a waiver must be the products of one or more domestic small business manufacturers or processors.

    (6) For a multiple item procurement, the same small business concern may act as both a manufacturer and a non-manufacturer.

  • Contracts Set-Aside for Service Disabled Veteran Owned Small Businesses.  Under the new rules, a joint venture comprised of at least one Service Disabled Veteran Owned Small Business (SDVOSB) and one or more other businesses may submit an offer as a small business for a competitive SDVOSB set-aside procurement, or be awarded a sole source SDVOSB contract, so long as each concern is small under the size standard corresponding to the NAICS code assigned to the procurement.

All of these rule changes are effective on June 30, 2016.

 

Expired 8(a) mentor-protégé agreement sinks joint venture’s eligibility

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An 8(a) mentor-protégé agreement, which expired one year after its approval by the SBA, did not protect the 8(a) protégé and its mentor from affiliation–and meant that their 8(a) mentor-protégé joint venture was an ineligible large business.

A recent size appeal decision of the SBA Office of Hearings and Appeals is a cautionary tale for 8(a) protégé and their mentors, and highlights the importance of securing timely SBA reauthorization of 8(a) mentor-protégé agreements.

OHA’s decision in Size Appeal of North Star Magnus Pacific Joint Venture, SBA No. SIZ-5715 (2016) involved a joint venture between North Star Construction and Engineering, an 8(a) program participant, and North Star’s mentor, Magnus Pacific Corp.

On July 5, 2014, the SBA approved a mentor-protégé agreement between North Star and Magnus Pacific.  The mentor-protégé agreement stated that the initial period of the agreement was one year.  North Star, the protégé, was required to request continuance of the mentor-protégé agreement within 60 days prior to its expiration.  The SBA’s letter approving the mentor-protégé agreement similarly stated, “[t]his agreement shall expire after one year, unless SBA approves an extension.”  The letter reiterated that North Star was to request an extension within 60 days prior to expiration.

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/expired-8a-mentor-protege-agreement-sinks-jvs-eligibility/

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