March 14, 2016
Lapsed SBA Mentor-Protege Agreement Makes Joint venture Firms Affiliated and No Longer “Small”
Source: FAR Consulting & Training, Richard D. Lieberman, March 8, 2016
In North Star Magnus Pacific Joint Venture, SBA No. SIZ-5715, Feb. 17, 2016, the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) considered a size protest of a joint venture consisting of a large business and a small business that, at one time, had an SBA mentor-protege agreement. Because the agreement had lapsed, OHA held that the joint venture was “not small” and not eligible for the procurement.
Generally, when two firms form a joint venture to perform a contract, the two firms will be considered affiliates for purposes of that contract, even though one firm may be small and in the 8(a) program. 13 C.F.R. §121.103(h). (Usually, joint ventures are examined only with respect to the particular procurement they bid on). When SBA calculates the size of a business to determine if it is a small business, it includes the annual receipts and the employees of all affiliates. 13 CFR §§121.104 & 121.106.
The resources of However, the SBA’s mentor-protege program is unique in that the SBA rules make an exception for joint ventures formed by 8(a) mentor and protege firms, as follows:
Two firms approved by SBA to be a mentor and protege under § 124.520 of these regulations may joint venture as a small business for any Federal government prime contract or subcontract, provided the protege qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement and, for purposes of 8(a) sole source requirements, has not reached the dollar limit set forth in § 124.519 of these regulations. If the procurement is to be awarded through the 8(a) BD program, SBA must approve the joint venture pursuant to § 124.513. READ MORE….
Contact your nearest PTAC to learn more about the SBA mentor-protege program.
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