The Federal Acquisition Regulation (the “FAR”) and its Part 19, Small Business Programs, can create uncertainties even for seasoned federal contracting professionals. Recognizing the importance of small business set asides and the growing popularity of joint ventures in federal contracting, GovContractPros (“GCP”) has prepared this guidance to identify crucial regulatory references which identify eligibility as an 8(a) program participant, HUBZone small business concern, Service Disabled Veteran owned small business, and Woman owned small business. Where there is confusion regarding an entity’s socio-economic status for purposes of eligibility and award of a federal contract, directing contracting officers and other acquisition professionals can mean the difference between award of contract and participation in an unsuccessful offeror post-award debrief. For 8(a) eligibility, the FAR provides that contracting officers should review a small concern’s SAM and DSBS profiles. In the case of joint ventures, contracting officers should review the SAM and DSBS profiles of the managing venturer of the joint venturer and not the SAM or DSBS profile of the joint venture.
8(a) Program Participant Status
FAR subpart 19.8 regulates the 8(a) program for federal acquisitions. Specifically, FAR 19.802 states: “Determining eligibility of a small business to be a participant in the 8(a) program is the responsibility of the SBA”. This clause is a crucial and often overlooked aspect of determining 8(a) status. Contracting officers should not be asking 8(a) participants to provide documentation that “proves” their eligibility for an 8(a) contract award. Instead, FAR 19.802 goes on to state: “SBA designates the concern as an 8(a) participant in the Dynamic Small Business Search (DSBS)” and “SBA’s designation also appears in the System for Award Management (SAM).” In other words, 8(a) participants should regularly review both their DSBS and SAM profiles to verify that their status as an 8(a) participant is displayed in those respective systems.
8(a) Program Joint Venture Status
But, what about joint ventures? Since a joint venture formed by an 8(a) participant as the managing member and another concern is a separate legal entity with a separate SAM profile and a unique DSBS profile, the procedures for verifying the joint venture as eligible for award of an 8(a) contract is slightly different. With respect to joint ventures, FAR 19.301-1(a)(2)(i) states that “A joint venture may qualify as a small business concern if the joint venture complies with the requirements of 13 CFR 121.103(h) and 13 CFR 125.8(a) and (b) if – (A) Each party to the joint venture qualifies as small under the size standard for the solicitation; or (B) the protégé is a small under the size standard for the solicitation in a joint venture comprise of a mentor and protégé with an approved mentor-protégé agreement under an SBA mentor-protégé program.” Furthermore, FAR 19.301(a)(2)(ii) states “a joint venture may qualify for an award under the socioeconomic programs as described in subparts 19.8, 19.13, 19.14, and 19.15”. As demonstrated by the FAR’s language, verifying the status of a joint venture is more complicated than that of verifying an 8(a) participant.
For sole source 8(a) awards, FAR 19.804-3(c) states “For a joint venture, SBA will determine eligibility as part of its acceptance of a sole source requirement”. But prior to drafting a sole source 8(a) offer letter to the SBA, contracting officers should verify the status of the 8(a) joint venture as eligible for award of an 8(a) contract. This is where Subpart 19.8 becomes a bit challenging because FAR 19.805(d)(1) offers “SBA does not certify joint ventures, as entities, into the 8(a) program”. This section references SBA’s regulations at 13 CFR 124.501(g), which state “SBA will determine whether the 8(a) partner to the joint venture is eligible for award”. SBA’s regulations at 13 CFR 124.513(b) also provide that “A joint venture of at least one 8(a) participant and one or more other business concerns may submit an offer as a small business for a competitive 8(a) procurement or be awarded a sole source 8(a) procurement so long as each concern is small under the size standard corresponding to the NAICS code assigned to the procurement.” In the alternative, “Notwithstanding the provisions of [the previous sentence], a joint venture between a protégé firm and its approved mentor will be deemed small provided the protégé qualifies as a small business for the size standard corresponding to the NAICS code assigned to the contract.”
Given the complexity of these regulations, determining the size status of an 8(a) joint venture is complicated. However, ultimately, the FAR defers to SBA regulations which provide that the size and socio-economic status of a joint venture is determined based on the size and socio-economic status of the managing venturer, i.e. the 8(a) participant. Therefore, contracting officers should review the managing venturer’s SAM and DSBS profiles, rather than the joint venture’s SAM and DSBS profiles, to determine eligibility.
If you have any questions or concerns regarding the eligibility of your joint venture for award of an 8(a) contract, please contact Trevor Skelly or Jake Neilson. And stay tuned here for the next installment of guidance on the size and socio-economic status regulations for HUBZones, WOSBs, and SDVOSBs.
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