GAO Issues Noteworthy Protest Decision on Joint Venture Experience
The Government Accountability Office (GAO), in AttainX, recently sustained a bid protest where the protester argued that the agency’s evaluation was inconsistent with the Small Business Administration’s (SBA) regulations requiring agencies to consider the experience of the individual members of the joint venture if the joint venture itself does not demonstrate experience. This article discusses the key facts, holdings, and takeaways from this noteworthy case.
AttainX, Inc. filed a GAO bid protest challenging a task order award to MiamiTSPi, LLC, an 8(a) small business joint venture consisting of Miami Technology Solutions, LLC (MTS) — the managing member and 8(a) small business — and Technology Solutions Provider, Inc. (TSPi) — the minority member and also a small business. AttainX alleged that the agency unreasonably evaluated MiamiTSPi’s quotation under the “similar experience factor” because the experience examples submitted related only to work managed by TSPi, which is only the minority member of the joint venture. According to AttainX, none of the examples were for work performed or managed by either MiamiTSPi itself or MTS, the managing member of the MiamiTSPi joint venture. As such, AttainX alleged that the agency’s evaluation violated the SBA’s regulations.
The GAO sustained AttainX’s protest, stating in relevant part:
When evaluating a small business joint venture for award of a contract, the Small Business Act requires agencies to consider the experience of the individual members of the joint venture ‘if the joint venture does not demonstrate sufficient capabilities or past performance to be considered for award of a contract opportunity[.] (citing 15 U.S.C. § 644(q)(1)(C)).
The GAO then noted that the implementing SBA regulations state:
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. (citing 13 C.F.R. § 125.8(e); citing also 13 C.F.R. § 124.513(f)).
Thus, based on the record and the SBA’s regulations, the GAO stated it “cannot conclude that the agency reasonably evaluated MiamiTSPI’s quotation under the similar experience factor.” According to the GAO, the record showed “only that the awardee submitted project examples for TSPi — by itself and as part of a different joint venture[.]” As such, the GAO found that the agency “did not evaluate a project example from the joint venture, MiamiTSPI, or from MTS, the managing protégé member of the joint venture.”
The GAO’s decision in AttainX is noteworthy because the GAO held that, notwithstanding the fact that the solicitation does not require examples from the joint venture itself or the individual members, the SBA regulations require the agency to evaluate each joint venture member individually when the joint venture itself does not demonstrate that it has the required experience. As the GAO put it, “the agency does not have license to ignore SBA regulations in its evaluation.”
More broadly, one must read this protest decision as simply a further confirmation of the statutory and regulatory requirements for small business joint ventures. The statute states that, when a joint venture does not demonstrate sufficient capabilities or past performance, the agency “shall” consider the capabilities and past performance of the joint venture members (15 U.S.C. § 644(q)(1)(C)). The regulations then clarify that the managing member of the joint venture — typically, the smaller of the two businesses — cannot be required to demonstrate the same level of capabilities, past performance, or experience as its larger joint venturer (13 C.F.R. § 125.8(e)). Thus, in 2021, the GAO sustained a pre-award protest, Innovate Now, LLC, where the solicitation required both the mentor and protégé in a mentor-protégé joint venture to meet the exact same evaluation requirements because that approach violated the regulation.
Here, in AttainX, the agency’s evaluation ignored the fact that neither the joint venture nor its managing 8(a) member had presented any examples of their experience, as the statute and regulations require. Only the minority member of the joint venture did. The agency’s evaluation was, therefore, unreasonable.
The GAO’s holding in this regard will undoubtedly have a significant impact on the way that protesting companies frame their challenges to an agency’s evaluation of a small business joint venture’s past performance, capabilities, or experience. In addition, the GAO’s holding will likely give rise to pre-award protests when solicitation terms do not conform to the SBA regulations because, under the GAO’s timeliness rules, potential offerors generally would otherwise waive those arguments.