GAO: Protégé Venturer Not Required to Have Same Level of Experience as Other Offerors
A recent Government Accountability Office ("GAO") bid protest decision is welcome news for mentor-protégé joint ventures ("JV") in finding that, under the Small Business Administration's ("SBA") regulatory update (discussed here), "a procuring agency may not require a protégé firm to individually meet the same evaluation requirements as those imposed on other offerors."
The protest of Innovate Now, LLC, B-419546, April 26, 2021, 2021 CPD ¶ ___ involved an Air Force solicitation for various engineering and professional services at the Air Force Material Command headquarters in Ohio. [1] Relevant here, the solicitation required each member of a JV to provide at least one prime federal contract work sample that was performed on a non-fixed price basis for at least six months within the last five years, with a satisfactory or above rating for its most recent past performance or contractor performance assessment reporting system ("CPARS") report.
Here, the protester argued that the solicitation ran afoul of SBA's JV regulation because it "improperly requires the protégé member of any mentor-protégé joint venture offeror to meet the same experience requirements as all other offerors." To support its position, the protester pointed to 13 C.F.R. § 125.8(e), which provides as follows:
When evaluating the capabilities, past performance, experience, business systems and certifications of an entity submitting an offer for a contract set aside or reserved for small business as a joint venture established pursuant to this section [which includes mentor-protégé joint ventures], a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously. A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally. The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract. [2]
On the other hand, the agency argued (among other things) that the solicitation did not run afoul of SBA’s regulations because JV offerors were "not restricted to submitting work samples performed only by the joint venture entity, and are instead permitted to submit work samples performed by each member of the joint venture." The agency also argued that the solicitation reflected its minimum needs and, as such, was reasonable.
At bottom, GAO determined that "[t]he plain language of the regulation is clear; a procuring agency may not require a protégé firm to individually meet the same evaluation requirements as those imposed on other offerors." Thus, according to GAO, the solicitation violated that clear prohibition. In supporting this finding, GAO not only pointed to SBA's comments that accompanied its revised JV regulation but also sought comments from SBA regarding it viewpoint (which also confirmed GAO's position). [3] As a result, GAO sustained the protest and recommended that the agency amend the solicitation consistent with the decision.
Takeaway
This decision is welcome news for small business mentor-protégé JVs, and particularly protégé firms, as it confirms that SBA's regulations do not require a protégé firm to meet the same level of experience that is required by other offerors. Indeed, this is harmonious with SBA's stated rationale that the reason a small business forms a JV is because "it cannot meet all performance requirements by itself and seeks to gain experience through the help of its joint venture partner."
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[1] Notably, the solicitation provided an evaluation method described as, "the highest two technically capable offerors with realistic, balanced and reasonable pricing source selection methodology.”
[2] SBA issued an amendment in January 2021 that harmonized this language across its socio-economic programs' JV past performance regulations. See SBA Amends Final Rule, Harmonizes JV Past Performance Regulations.
[3] In response to GAO's request for comments, SBA noted that:
SBA regulations at 13 C.F.R. § 125.8(e) prohibit an agency from applying the same experience requirements to protégés as other offerors generally. This requirement does not mandate a particular level or type of experience and provides agencies with the flexibility to determine the appropriate criteria, with the understanding that protégés must be held to a different experience standard from mentors and other offerors.
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