Jackson Kelly PLLC

Government Contracts Monitor

Off to the races: Mentor-Protégé Joint Ventures May Compete as 8(a)s on any Government Contract

June 5, 2013

By: Lindsay Simmons

It has recently come to our attention that contractors, as well as some agencies, may not realize that an 8(a) mentor-protégé joint venture (“JV”) can bid as an 8(a) entity, on an 8(a) contract, without the JV itself being 8(a) certified.  The Small Business Administration (“SBA”) controls the 8(a) program and 8(a) eligibility status, but SBA “does not certify joint ventures as section 8(a) contractors.”  Y.S.K. Const. Co. v. United States, 30 Fed. Cl. 449, 453 (1994).  Rather, the 8(a) program’s allowance of JVs is designed to permit 8(a) concerns and non-8(a) concerns to obtain work set aside for 8(a) businesses if the participants meet certain conditions, including SBA approval of their JV.  If the JV is also an approved mentor-protégé, it can bid on any government contract. The JV itself need not be a section 8(a) contractor.  Id. at 453.

The applicable SBA regulations are found at 13 C.F.R. Part 124, including the benefits of the 8(a) program, one of which is that –

A mentor and protégé may joint venture as a small business for any government prime contract, including procurements with a dollar value less than half the size standard corresponding to the assigned NAICS code and 8(a) sole source contracts, provided the protégé qualifies as small for the procurement and, for purposes of 8(a) sole source requirements, the protégé has not reached the dollar limit set forth in 124.519.

13 C.F.R. § 124.520(d)(1) (emphasis added). Thus, under SBA’s 8(a) rules, a mentor-protégé JV may bid on any government contract, including an 8(a) set aside, so long as (with respect to any contract set-aside for small businesses) the protégé JV member qualifies as small under the NAICS code size standard assigned to the procurement.See 12 C.F.R. 124.513(b)(3) and 124.520(d)(1).

Exactly, how does this work? First, the protégé must be an SBA certified 8(a) concern. Second, the SBA must approve the Mentor-Protégé Agreement between the mentor and its 8(a) protégé. And third, the SBA must approve the JV Agreement between the mentor and its 8(a) protégé, but not as a condition of bidding – only prior to award of an 8(a) contract. 13 C.F.R. 124.513(e)(1).

It is important for all contractors – large and small alike – to be aware of these rules and to use them to their advantage in competing for 8(a) set aside procurements.

 

Lindsay Simmons is the attorney responsible for the content of this article.

 

© 2019 Jackson Kelly PLLC. All Rights Reserved.