SBA approval of 8(a) Mentor-Protege Joint Venture Agreement

[elgueromeromero]

The following is from the GSA OASIS 8(a) Sub-Pool On-Ramp RFP:

For Mentor-Protege JVs, the SBA must approve the Mentor-Protege Agreement before the firm may submit an offer (reference 13 CFR 125.9(d)(1)(i), 13 CFR § 124.520(d)(1)(i)).  For 8(a) Joint Ventures where all members are small under the applicable size standard per 13 CFR 124.513(e), the SBA must approve the JVA prior to award, not prior to submission of an offer.

This requirement is causing a lot of heartache for 8(a) Mentor-Protege JVs. A lot of folks (including consultants and contracts attorneys) are saying that GSA is violating SBA rules in that they can't require approval of the 8(a) Mentor-Protege JV prior to submission of an offer because the regulations state that approval must happen prior to award. Of the 369 questions and answers provided in Amendment 04 Q&A, probably 20 of them were directly related to the above requirement. Admittedly, I also initially thought that GSA was going against SBA regulations with this requirement. Then I dug more into the regulations and now I actually think that GSA is correct. Here's why:

GSA is essentially stating that 13 CFR § 124.513, which allows SBA approval of the 8(a) agreement prior to award doesn’t apply to 8(a) JVs formed under SBA’s mentor-protégé program, but rather 13 CFR § 124.520 and 125.9, which require approval of the JV agreement prior to submission of an offer, applies to 8(a) and SB Mentor-Protégé JVs. 13 CFR § 124.513 is almost entirely silent on Mentor-Protégés, whereas 13 CFR § 124.520 and 125.9 are specific to the Mentor-Protégé program. So the regulations contain two distinct requirements with respect to SBA's approval of joint venture agreements: If you're an 8(a) JV (meaning both or all members are 8(a) Participants) SBA approval of the JV agreement is required prior to award. If you're a Mentor-Protege 8(a) JV, SBA approval of the JV agreement is required prior to submitting an offer.

Do you agree with this interpretation? If not, why?

[Retreadfed]

Have you read 13 CFR 121.103(h)(3)(iii)?  What, if any, impact does that section have on your analysis?  Note, that 13 CFR 124.520 requires approval of the JV prior to submission of an offer in order to receive "the exemption from affiliation." 

[elgueromeromero]

17 hours ago, Retreadfed said:

Have you read 13 CFR 121.103(h)(3)(iii)?  What, if any, impact does that section have on your analysis?  Note, that 13 CFR 124.520 requires approval of the JV prior to submission of an offer in order to receive "the exemption from affiliation." 

Wow--interesting. Thanks for this reference. I have read this section before but didn't catch what I think you're pointing out, which is this part, correct?:

If the procurement is to be awarded through the 8(a) BD program, SBA must approve the joint venture pursuant to § 124.513.  

This does have an impact on my analysis in that it seems to create some ambiguity and confusion by contradicting 124.520(d)(1)(i)). 13 CFR 121.103(h)(3)(iii) first references 124.520 but then jumps to § 124.513 when discussing approval of the joint venture, when it seems they should have instead referenced 124.520. 

I still think that there's a distinction in the regulations between the requirements for 8(a) Joint Ventures and 8(a) Mentor Protege Joint Ventures; however, this apparent oversight by SBA that you've pointed out does confuse the issue and may give interested parties a better chance of succeeding in a solicitation protest. And I can almost guarantee that this RFP will get protested for this very issue. 

[elgueromeromero]

UPDATE: GSA just issued an amendment to clarify that the Mentor Protege agreement has to be approved prior to submission of the offer, not the Joint Venture agreement.

Disregard my original post--I was wrong. The regulation states that the Mentor-Protege Agreement has to be approved prior to award. I thought I had read that the Mentor-Protege Joint Venture agreement had to be approved prior to award.

Huge oversight on my part.