Government Contracts Monitor

SBA District Office Reviews and Reverses 8(a) Joint Venture Eligibility Determination Based on New Evidence

September 28, 2011

The SBA Washington Metropolitan Area District Office recently reconsidered and reversed an earlier favorable eligibility determination on behalf of an 8(a) joint venture where newly-obtained information during a size protest indicated that the joint venture did not comply with SBA’s 8(a) joint venture regulations at 13 C.F.R. 124.513.

  The District Office had approved the proposed 8(a) joint venture agreement some 16 months earlier, and confirmed the joint venture’s eligibility for an 8(a) competitive award in early May 2011.  However, in the course of a subsequent size protest by a competing offeror, information provided by the joint venture indicated that, among other things, (i) the joint venture had incorporated under different ownership after the initial SBA approval (with ownership in the names of the owner of the 8(a) participant and a minority owner of the other company, in their respective individual capacities, rather than in the names of the two joint venturer companies), and (ii) the proposed joint venture program manager, who was required to be working for the 8(a) participant, was still employed by the non-8(a) joint venturer.  SBA’s Area II Government Contracting Office concluded that the joint venture therefore did not comply with SBA’s 8(a) joint venture regulations.  Based upon this new information, the District Office reconsidered and withdrew its earlier eligibility determination, and urged the procuring agency to terminate the 8(a) competitive award that had been made in the interim.  The procuring agency followed SBA’s recommendation, and terminated the subject $8.1M janitorial services contract and awarded the contract to the next-in-line eligible 8(a) offeror. 

The joint venture challenged the SBA district office’s and procuring agency’s respective decisions at the U.S. Court of Federal Claims.  The Court denied the joint venture’s TRO application on August 18, 2011, and the joint venture withdrew the protest after the Court granted the awardee’s Motion to Compel depositions of the joint venture’s two principals.  MNM/R&R Joint Venture, Inc. v. U.S., COFC Case No. 11-510C, dismissed and closed 9/14/11. 

The clear messages for 8(a) companies are:  (1) you must implement any 8(a) joint venture in strict accordance with the approved joint venture agreement terms; and (2) you must liaison closely with your local SBA District Office, and obtain written approval of, any changes to the approved agreement or other implementation variance.*

 

 

*Jackson Kelly PLLC represented the successful awardee in challenging the JV’s size status and 8(a) eligibility before the SBA, and successfully defended the JV’s challenges at the COFC.