Georgia Tech Procurement Assistance Center

GAO holds solicitation requirement violates SBA’s regulations regarding small business mentor-protégé joint ventures

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In a recent decision, the Government Accountability Office (GAO) sustained a protest challenging the terms of a solicitation, as the solicitation impermissibly required that a protégé and mentor in a joint venture have the same level of experience as other offerors.  This is an important decision for companies that are parties to a joint venture, and a reminder to carefully review a solicitation’s requirements before submitting a proposal.

As relevant background, the Small Business Administration (SBA) revised its regulations in November 2020.  Prior to November 2020, SBA’s regulations provided that, in evaluating proposals submitted by a joint venture, agencies must consider the past performance of the joint venture entity itself and each party to the joint venture.  Effective November 16, 2020, this provision was expanded to include capabilities, experience, business systems, and certifications.  SBA explained that while a small business protégé should have some experience in the type of work to be performed, “it is unreasonable to require the protégé concern itself to have the same level of past performance and experience (either in dollar value or number of previous contracts performed, years of performance, or otherwise) as its large business mentor.”  Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments, 85 Fed. Reg. 66146, 66167 (Nov. 16, 2020).

Continue reading at:  JD Supra

See also, this Small GovCon article:  https://smallgovcon.com/gaobidprotests/gao-solicitation-cannot-require-a-protege-have-the-same-experience-as-its-mentor/

Roadmap to Joint Venture agreements: legal and accounting considerations

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Piliero Mazza and Baker Tilly recently gave a helpful webinar on Joint Venture Agreements.  Joint ventures (JVs) can be a powerful tool to improve a government contractor’s odds of winning federal contracts.  With the SBA’s Mentor Protégé Program facilitating JVs and large multiple award contracts making many firms form JVs, an understanding of how JVs work from a legal and accounting perspective is a must.

Watch the webinar on-demand at:  JD Supra

SBA’s change to joint venture bank account rule is another trap for the unwary

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If you are part of a joint venture between a small protege and its large mentor under the SBA’s Mentor-Protege Program, heads up: the SBA recently amended its list of mandatory requirements for joint venture agreements to cover what happens to funds leftover in the joint venture bank account at the end of a project.

Like the revised recordkeeping rules SmallGovCon discussed in an earlier post, the new required provision only applies to mentor-protege joint ventures pursuing small business set-aside contracts–not to JVs seeking 8(a), SDVOSB/VOSB, WOSB/EDWOSB or HUBZone work.  Confusingly (and again, like the recordkeeping rules), SBA’s decision to change only the small business set-aside regulation, 13 C.F.R 125.8, means that the same joint venture agreement may not be valid for both small business set-aside contracts and socioeconomic contracts.

Continue reading at:  SmallGovCon

Podcast: Teaming agreements, joint ventures, and mentor-protégé

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It is common for two or more companies to work together to win and successfully perform federal government contracts.  The relationship between those companies must be formally documented and agreed to in order to define roles and responsibilities and avoid future issues.  The Contracting Officer Podcast recently held a podcast with Koprince Law on teaming agreements, joint ventures, and mentor-protégé arrangements.

You can listen to the podcast for free here: 

https://www.contractingofficerpodcast.com/podcasts/334-teaming-agreements-joint-ventures-and-mentor-protege-with-koprince-law/

Changes to the evaluation of small business joint ventures

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As we’ve stressed about the mentor-protégé program, the Small Business Administration’s (SBA) primary concern is that the program benefits the small business protégés.

Past performance is a particularly delicate topic for small businesses, presenting something of a what-came-first-the-chicken-or-the-egg question.  Past performance is not strictly required in order to win prime federal contracts, and its weighting and restrictions can vary greatly by procurement.  For example, FAR 15.305 prohibits an offeror without a record of relevant past performance from being evaluated favorably or unfavorably under past performance.  Nonetheless, many small businesses find it exceedingly difficult to break into the federal market without a record of past performance.

Of concern when SBA initially established the All-Small Mentor-Protégé Program was how past performance would be treated for small business joint ventures authorized under 13 C.F.R. § 125.9.  SBA initially required procuring agencies to consider not only the past performance and experience of the joint venture but also of the joint venture members.  In the recent rulemaking, SBA broadened the regulation to provide for contracting agencies to consider not only past performance and experience but also the capabilities, of the joint venture members.

Continue reading at:  Crowell & Moring

SBA eliminates the three-in-two rule for joint ventures

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As part of the outgoing administration’s effort to eliminate and simplify regulations, the SBA issued a final rule – effective November 16, 2020 – to merge “the 8(a) Business Development (BD) Mentor Protégé Program and the All Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within SBA.”  What many small business contractors may not realize is that this rule also eliminated the three-in-two rule for joint ventures, meaning that there is now no limit on the number of contracts a joint venture can enter into during its existence.  However, that existence is now limited to two years.

Continue reading at:  GovCon Examiner

Uncertainty in how small business joint ventures must be managed

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U.S. Small Business Administration (“SBA”) regulations require that mentor-protégé and socioeconomic joint ventures designate the protégé or socioeconomic member as the “managing venturer” of the joint venture.  However, the regulations do not define “managing venturer” or state how much control such a “manager” must maintain over the joint venture.  In the context of typical small business operating entities (i.e., notjoint ventures), SBA’s Office of Hearings and Appeals (“OHA”) has offered detailed guidance on what it means to “control” such entities, but this case law has never been applied to joint ventures.  This leaves joint venturing firms without any direction on the subject — beyond the general requirement that they designate a “managing venturer.”

As discussed in more detail below, this is a “gap” in SBA regulations and case law that has led to uncertainty in the governance of small business joint ventures.  Given the increasing use of joint ventures by contractors pursuing small business set-aside procurements, this uncertainty is increasingly harmful to the business community.

This article surveys the available OHA case law in order to identify the specific limits of the aforementioned “gap,” and then offers predictions and recommendations for the way that SBA should define the term “managing venturer” in order to minimize business uncertainty and thereby promote small business development through joint venture participation.

Continue reading at:  Miles and Stockbridge

All small mentor-protégé program 2019 mid-year report

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The Small Business Administration (SBA) began accepting applications for the All Small Mentor-Protégé Program (ASMPP) in 2016 and has seen a surge in applications in each subsequent year.

Under the ASMPP, any small business – including 8(a) small businesses, Historically Underutilized Business Zone (HUBZone) small businesses, veteran-owned and service-disabled veteran-owned small businesses (VOSB/SDVOSBs), woman-owned and economically disadvantaged woman-owned small businesses (WOSBs/EDWOSBs) – may enter into an agreement with a large business under which the large business will provide mentorship and assistance.  In return, the large and small businesses are permitted to joint venture to perform federal small business set-aside contracts.

As of mid-year 2019, below are some fast figures about the ASMPP, as reported by the SBA, that both large and small businesses need to know…

Continue reading at:  BuildSmart

GTPAC launches ‘GTPAC Community,’ a dedicated online social media platform for GTPAC clients

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On May 21, 2019, the Georgia Tech Procurement Assistance Center (“GTPAC”) launched the GTPAC Community, a dedicated online social media platform for GTPAC clients.  This platform, enables GTPAC clients to connect, communicate, and collaborate.  The primary purpose of the platform is to facilitate greater engagement and collaboration among GTPAC clients in all the activities associated with the pursuit of government contracts. 

“This platform provides a forum where contractors can identify potential teaming partners, and showcase their products, services and capabilities,” said Andrew Smith, Program Manager of GTPAC, he continued, “Clients can also find information related to GTPAC announcements, contracting news of interest, upcoming workshops and events, and other recent developments.”

Clients can access the GTPAC Community by going to: 

https://community.gtpac.org/

To get started by joining the community, clients can click here.  GTPAC clients will need their GTPAC Client ID to create an account and access the system.

For Frequently Asked Questions, clients can click here.

To view a recent slideshow presentation on the GTPAC Community, click on this document:  GTPAC Community Launch Presentation

SBA OHA: Joint venture agreement must explain venturers’ responsibilities

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Joint venture agreements continue to be a hot topic among small business federal contractors.  For good reason: if the agreement is properly prepared, a joint venture allows two companies (including, in the case of an approved mentor and protégé, a large business) to augment their capabilities and jointly bid on a federal project.

But to avail themselves of this benefit, the venturers must first prepare a joint venture agreement that complies with the SBA’s requirements.  Sometimes, this task can be quite tricky.  And as a recent decision of the SBA’s Office of Hearings and Appeals shows, the failure to have a compliant joint venture agreement can cost the joint venture an award.

Continue reading at:  SmallGovCon

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