Agreement Flexibility is Important but Vigilance Over Compliance is Required

Fighting for government contract wins involves good business capture plans, intelligent pricing and all too often, protests of competitors to eliminate competition. These protests take on many different formats and forums depending on the factual scenarios presented.  In addition to the attack of proposals or the government review of them, small government contractors are very aware of the attacks on size status which get lodged with the SBA. Although the Mentor Protégé program was the subject of a recent report by the Defense Business Board (here) hoping to enhance the program to assist contractors, protests of Joint Ventures arising from such arrangements are not above challenge.  Those protests also emphasize the importance of good draftsmanship and ensuring the joint venture agreements (JVA’s) are revisited with each bid submitted by the JV.

In Size Appeal Of: Eagle Home Medical Corp., SBA No. SIZ-6163, 2022 (S.B.A.), the SBA’s Office of Hearings and Appeals rejected a challenge that a joint venture was not an eligible small business under a JVA for a variety of arguments largely focusing on its lack of personnel, infrastructure and experience in the protégé necessary to successfully complete the contract. The SBA Area Office disagreed as did the OHA. It reaffirmed that assistance under a mentor protégé agreement would not be grounds for finding affiliation. It further reaffirmed that although there were relationship indicators and assistance beyond the scope of the mentor protégé agreement, there was not sufficient facts to otherwise demonstrate an affiliation to disqualify the small contractor.

More importantly, the OHA rejected a challenge to the JVA that it did not contain the contract specific provisions identifying the work to be completed by each member required by 13 CFR §125.18(b)(2)and (3).  The OHA found no fault in the fact that the JVA allowed for a separate addendum relative to the contract and found that such an addendum was completed specific to the contract opportunity at issue.  OHA reaffirmed that the SBA’s review of such addenda is even more lax when there is an IDIQ involved and “the JVA need only include ‘a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each.’”

Proper drafting of JVA’s is essential but contractors need to keep in mind that these are living documents which need to be revisited with each proposal submitted.  If you are considering or need assistance with your mentor protégé or joint venture agreements, please contact Don Walsh at dwalsh@rkwlawgroup.com.

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