SBA Amends Final Rule, Harmonizes JV Past Performance Regulations
On January 14, 2021, the U.S. Small Business Administration ("SBA") published "correcting amendments" to clarify some items in its October final rule, Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments (effective November 16, 2020). SBA's correction is welcome news for small business because, among other things, it harmonizes SBA's socio-economic joint venture ("JV") past performance regulations with another JV past performance regulation that SBA significantly expanded upon in its October final rule.
We previously covered SBA's revised JV past performance regulation and its new regulation regarding the capabilities, past performance, and experience of certain first-tier subcontractors in a December article, New SBA Rule: Potential Game Changer for Teaming (JV & Prime/Sub). A brief discussion of SBA's correcting amendments follows.
By way of background, in its October final rule, SBA significantly expanded its JV past performance regulation at 13 C.F.R. § 125.8(e), which currently provides:
Capabilities, past performance and experience. 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, 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.
This revised regulation was great news for small businesses, particularly because the prior version contemplated just "past performance and experience." Notably, despite this significant change, SBA did not make any corresponding revisions to its JV past performance regulations under its service-disabled veteran-owned small business ("SDVOSB"), historically underutilized business zone small business ("HUBZone"), women-owned small business ("WOSB"), and 8(a) business development ("8(a)") programs.
This lack of harmony caused some confusion among some small businesses and industry; so, in early December, I contacted SBA and requested that it harmonize its SDVOSB, HUBZone, WOSB/EDWOSB, and 8(a) JV past performance regulations with the revised language in § 125.8(e) for both consistency and clarity.
SBA's "correcting amendments" did just that. As explained by SBA, it "inadvertently left out [of the final rule] conforming revisions" to its socio-economic JV past performance regulations. [1] As a result, SBA issued amendments to "correct the inconsistency by revising §§ 124.513 [8(a)], 125.18 [SDVOSB], 126.616 [HUBZone], and 127.506 [WOSB/EDWOSB] to incorporate this clarification."
For example, SBA's SDVOSB JV past performance regulation – 13 C.F.R. § 125.18(b)(5) – now provides: [2]
Capabilities, past performance, and experience. When evaluating the capabilities, past performance, experience, business systems, and certifications of an entity submitting an offer for an SDVO contract as a joint venture established pursuant to this section, 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 SDVO SBC 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.
As noted above, SBA's revisions to its SDVOSB, HUBZone, WOSB/EDWOSB, and 8(a) regulations parallel the language in § 125.8(e). Notably, while these amendments are great news for small contractors, it will be interesting to see how these changes play out in solicitations (or in protests). [3] Regardless, this is a big win for small business contracting.
Takeaway
SBA's new JV past performance regulations are great news for small business. The changes will enhance small business teaming efforts, which could lead to increased opportunities and competition in larger procurements (e.g., CIO-SP4, Polaris, Multiple Award ID/IQs, etc.).
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[1] SBA provided the following supplementary information regarding its revisions:
Fourth, the final rule clarified a procuring activity's responsibilities when evaluating the past performance, experience, business systems and certifications of an entity submitting an offer for a small business contract as a joint venture. Specifically, the final rule amended § 125.8(e) to provide that when evaluating such offers, the procuring activity should not require a small business protégé partner to the joint venture to individually meet any evaluation or responsibility criteria as those required of other offerors generally. SBA inadvertently left out conforming revisions in the final rule to §§ 124.513, 125.18, 126.616, and 127.506 to address the evaluation of past performance, experience, business systems and certifications of a joint venture formed outside SBA's Mentor-Protégé Program to pursue a contract set-aside or reserved for 8(a) Participants, SDVO small business concerns, HUBZone small business concerns, WOSB concerns, or EDWOSB concerns. This rule corrects the inconsistency by revising §§ 124.513, 125.18, 126.616, and 127.506 to incorporate this clarification.
[2] The old version of 13 C.F.R. § 125.18(b)(5) – as well as similar language in the HUBZone, WOSB/EDWOSB, and 8(a) JV past performance regulations – provided as follows:
Past performance and experience. When evaluating the past performance and experience of an entity submitting an offer for an SDVO contract as a joint venture established pursuant to this section, a procuring activity must consider work done individually by each partner to the joint venture as well as any work done by the joint venture itself previously.
[3] For additional details, please see my article, New SBA Rule: Potential Game Changer for Teaming (JV & Prime/Sub).
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