SBA OFFICE OF HEARINGS AND APPEALS REJECTS JOINT VENTURE
In the SIZE APPEAL OF: KISAN-PIKE, A JOINT VENTURE, APPELLANT, SBA No. SIZ-5618 (November 24, 2014), the SBA Office of Hearing and Appeals (“SBA OHA”) ruled that a Joint Venture Agreement was invalid for failure to comply with applicable regulations. A Joint Venture was created between an 8(a) company and a large business as an SBA approved mentor. Even though the SBA previously approved the JV, SBA OHA found that the JV failed to meet applicable regulations.
The solicitation was set aside for small businesses. The JV submitted a proposal and self-certified itself as a small business. The JV was the apparent awardee. However, the Contracting Officer decided to initiated a size protest against the JV. He was concerned that the JV did not comply with applicable regulations and therefore ineligible for the mentor-protégé joint venture exception from affiliation.
The Contracting Officer’s suspicions were correct and the SBA OHA held that the JV did not comply with applicable regulations because:
- The JV did not specifically itemize “all major equipment, facilities, and other resources” to be furnished by each of the joint venture partners. 13 C.F.R. § 124.513(c)(6) Instead the JV merely stated that each member of the JV would “provide equipment, facilities and other resources to the Joint Venture required to execute the contract.” SBA OHA held that this was not specific enough.
- The JV did not specify the roles and responsibilities of each of the JV partners. 13 C.F.R. § 124.513(c)(7) The JV said that the 8(a) president will negotiate the contract, but does not designate his specific tasks or responsibilities.
- The JV did not indicate how it will comply with the requirement of that the 8(a) BD participant perform at least 40% of the work. 13 C.F.R. § 124.513(d) The JV argued that it could not do so with specificity because this was a design-build construction procurement and details on construction were not yet known. The SBA OHA disagreed and stated that the “regulations do not authorize an exception for design-build procurements or other situations where a joint venture may have difficulty providing detailed information.” SBA OHA suggested that the JV complain to SBA policy officials, not to OHA.
This case is a warning to those who may have an SBA-approved JV agreement. Just because it is SBA approved, does not mean it cannot be challenged in a size protest. Revisit your JV to make it as specific as possible.
