#GovConThoughts: SBA Should Issue a Correction to Harmonize its JV Past Performance, Experience Rules
[My #govconthoughts series provides a quick take on recent developments in the government contracting space.]
In December, the U.S. Small Business Administration ("SBA") issued its final rule updating numerous small business regulations. Among the many changes (including to its M&A-related rules, discussed here), SBA significantly revised 13 C.F.R. § 125.8(e), which provides a rubric for how procuring agencies are to evaluate the capabilities, past performance, and experience of small business joint ventures.
When the final rule takes effect (January 16, 2025), 13 C.F.R. § 125.8(e) will look markedly different than the current text, as SBA added language to clarify how agencies are to evaluate joint ventures. "Although SBA's current regulation provides that 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," SBA said, "it does not provide guidance on what a procuring activity could require."
To accomplish this end, and among other things, SBA amended the rule to "permit a procuring activity to require some past performance at a dollar level below what would be required of joint venture mentor partners or of individual offerors." In so doing, SBA added new regulatory text, as well as an example with dollar figures. According to SBA, if a solicitation requires five past performance examples of $20 million, "a procuring activity could require a protégé joint venture partner to demonstrate one or two contracts valued at $10 million or $8 million."
While the new rule and example naturally invite questions on how this will shake out in practice, SBA's clarifying guidance will likely result in a shift in joint venture evaluations. Notably, in that regard, while SBA amended its small business rule under Part 125, it did not amend its socio-economic joint venture rules – 13 C.F.R. §§ 124.513(f) (8(a)), 126.616(f) (HUBZone), 127.506(f) (WOSB), and 128.402(f) (SDVOSB) – which contain nearly identical language.
Considering that all of SBA's joint venture past performance rules serve the same purpose, SBA should revise those rules so that they mirror the new Section 125.8(e). Indeed, when SBA issued its October 2020 rule, it also amended Section 125.8(e) but did not amend its socio-economic joint venture rules. SBA fixed that inconsistency (and its inadvertent omission) in January 2021 when it published several technical "Correcting Amendments" to that final rule.
SBA should follow the same path here and issue a technical correction to fix what appears to be another inadvertent omission (as well as any others). Federal rulemaking is a complex and tedious process. Thankfully, there are mechanisms in place to resolve issues like these.
. . .
Comments