GAO Sustains Protest for Agency’s Violation of SBA’s Mentor-Protégé Regulations

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In the recent matter of Innovate Now, LLC, the Government Accountability Office (“GAO”) sustained a protest on the grounds that the Agency’s solicitation required that both parties in a mentor-protégé joint venture (“MP-JV”) meet the same experience thresholds, despite Small Business Administration (“SBA”) regulations to the contrary. As background, the MP program allows a small business, or protégé, to partner with another business, large or small, as its mentor and bid as a Joint Venture on small business set-aside contracts for which the small business partner is eligible.  SBA regulations additionally provide that MP-JVs will be credited with the benefit of both parties’ experience in agency evaluations.

In Innovate Now, LLC, the solicitation at issue required both the mentor and the protégé to independently submit work samples of prior work meeting certain requirements, despite SBA’s express statement in 13 C.F.R. § 125.8(e) 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 comments accompanying the regulation explain “The reason that any small business joint ventures with another business entity . . . is because it cannot meet all performance requirements by itself and seeks to gain experience through the help of its joint venture partner.”  In developing the record, the GAO also solicited the SBA’s opinion, which stated that “protégés must be held to a different experience standard from mentors and other offerors.”

The GAO sustained this protest on another ground as well.  The solicitation required that an element of the offeror’s experience occur in a “single point of time”, without providing a definition for the phrase.  The GAO explained that such a requirement was too vague to put offerors on notice of what experience would qualify, as the definition could have been a single minute, a day, a week, or any other interval.  Finally, the GAO dismissed Innovate Now’s challenge to the solicitation’s requirement that the JV submit a work sample on a cost-reimbursement basis as being premature.

This case serves as notice to Mentor-Protégé Joint Venture contractors that they should be aware of the standards by which the agency proposes in the solicitation to evaluate them.  As we have previously discussed, protests such as this challenging the terms of a solicitation must be filed prior to bid opening or the time set for receipt of the round of proposals in which the impropriety arose.  Such a protest will be dismissed by the GAO as untimely if filed following contract award.

The SBA’s MP-JV program is an excellent opportunity for small business protégés to gain experience and win government contracts through partnerships with more experienced mentor companies.  Thus, the purpose behind the SBA’s MP-JV program is undermined when agencies require both members of the JV to meet the same experience requirements.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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