Bid Protests: How to Take Advantage of a Debriefing

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This is a guest post by Jerry Miles of Deale Services, LLC.

Debriefings can be a valuable tool, whether you are the awardee or the disappointed offeror. Think of it as a time to gather information that will assist you in drafting future proposals, understanding the agency “thought process,” and determining whether grounds exist for protesting the decision. When doing so, there are a few things to keep in mind:

Know what information you are entitled to receive

The agency is not required to provide as much information in a pre-award protest as in a post award protest. In a pre-award situation, the agency must provide:

(1) an evaluation of significant elements in the offeror’s proposal;
(2) a summary of the rationale for eliminating the offeror from the competition; and
(3) reasonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed in the process of eliminating the offeror from the competition. FAR 15.505.

Post-award, FAR 15.506 requires the agency to provide:

(1) an evaluation of the significant weaknesses or deficiencies in the offeror’s proposal, if applicable;
(2) the overall evaluated cost or price (including unit prices) and technical rating, if applicable, of the successful offeror and the debriefed offeror, and past performance information on the debriefed offeror;
(3) the overall ranking of all offerors, when any ranking was developed by the agency during the source selection;
(4) a summary of the rationale for award;
(5) for acquisitions of commercial items, the make and model of the item to be delivered by the successful offeror; and
(6) reasonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed.

Always request a debriefing and do so immediately

It is always in a contractor’s best interest to request a debriefing. The request need not be formal – a simple email will do. The reasons include those stated above but even the awardee should consider such a request. The awardee can use the debriefing as a chance to identify issues that might be protested by disappointed offerors or as a means to support the agency should a protest be filed.

Be sure to accept the first day offered by the agency for a debriefing because this is the day that begins the running of the clock – protest must be filed within 10 days of award or five days of the first date offered for the debriefing, whichever is later in order to obtain a stay of award or performance.

Be prepared

Debriefings can be written, oral, or in any other method acceptable to the contracting officer. Particularly in the context of an oral debriefing, preparation is key to getting the most from a debriefing.

First, know your proposal and the source selection material. Second, consider researching the awardee. Third, be ready to ask questions about RFP source selection procedures and other applicable authorities and evaluation factors to elicit more information about the agency’s decision. Fourth, have more than one person available to take notes. Everyone hears things differently. You want to record all of the reasons for the agency’s decision, especially the most challenging ones.

Be polite; do not state counter-arguments. Your main objective is to listen and record what the stated rationale is. It is not time to make your argument or try to change agency’s mind. The time for that is when you file your protest.

Jerry Miles of Deale Services, LLC ( is a government contracts attorney and business consultant with experience working as corporate counsel for a Fortune 500 government contractor and as a private practitioner for over one hundred small, midsize and large businesses. In addition to being the owner of a law firm, Mr. Miles regularly advises clients on teaming agreements, joint ventures, subcontracting, government contract disputes, bid protests, international contracting matters and corporate compliance.

This post was originally published at and was adapted and reprinted with permission.

What the Kingdomware Ruling Means for SDVOSBs

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Department of Veterans Affairs is required by law to award contracts to service-disabled veteran-owned small businesses when there is a reasonable expectation that two or more such concerns will bid for the contract. This has become known as the “Rule of Two” or “Veterans First.”

Yet there were many large-scale contracts that the VA department didn’t open up to this rule because they were traditionally things that they would not have set aside or acquired on a small business scale.

As Steven Koprince explains at, “Despite the absence of a statutory exception for GSA Schedule orders, the VA has long taken the position that it may order off the GSA Schedule without first applying the VA Act’s Rule of Two.”

After a lengthy court battle that went all the way to the United States Supreme Court, the folks from a company called Kingdomware successfully sued the VA and won; in fact they won unanimously.

This effectively changes the rules of engagement for the VA so that they’re going to have to do a sources sought to determine whether there is a reasonable expectation that SDVOSBs can meet the requirements of the contract, and that there are qualified businesses who can do the job.

Interestingly enough, some things that are in IDIQ contracts may be exempt from this requirement – large IDIQs with both large businesses and SDVOSBs, or other small business types, may allow the VA to procure directly with the large businesses of a task order competitive basis.

But there are still going to be a lot more service-disabled sources sought directed at procurements for small businesses. It may very well be that the outcome will be the same, but we don’t know. What we do know is that SDVOSBs will have access to more work.

Let’s say there is a piece of work that traditionally would have been done full and open (not set-aside for specially certified businesses), or would have been done by an 8(a) or another small business type. Now, for that same piece of business the VA will have to determine whether two or more SDVOSBs will be qualified and will bid. There’s no guarantee, but at least it’s more likely the work could go a service-disabled vet.

Important Amendments to Department of Defense (“DOD”) Mentor-Protégé Program

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This is a reprint from the PilieroMazza Weekly Report newsletter (click here to subscribe).

DOD has issued a proposed rule which will amend the DFARS to implement Section 861 of the NDAA 2016, which provides amendments to the DOD Mentor-Protégé Program. The proposed amendments will require contractors who participate in the program as mentors to report all technical or management assistance provided; any new awards of subcontracts to the protégé firm, including the value of such subcontracts; any extensions, increases in the scope of work, or additional, unreported payments to the protégé firm; the amount of any progress payments or advance payments made to the protégé firm for performance under any subcontract made under the program; any loans made to the protégé firm; all federal contracts awarded to the mentor and protégé firms as a joint venture; any assistance the mentor firm obtained for the protégé firm from small business development centers established under 15 U.S.C. § 648, entities providing procurement technical assistance under 10 U.S.C. ch. 142, or Historically Black Colleges or Universities or Minority Institutions of Higher Education; whether the terms of the mentor-protégé agreement have changed; and a narrative describing the success assistance provided under the program has had in addressing the protégé firm’s developmental needs, the impact on DOD contracts, and addressing any problems encountered. These reporting requirements apply retroactively to mentor-protégé agreements in effect on November 25, 2015, the date of enactment of the NDAA 2016.

In addition, Section 861: (1) adds new eligibility criteria; (2) limits the number of mentor-protégé agreements to which a protégé firm may be a party; (3) limits the period of time during which a protégé firm may participate in mentor-protégé agreements under the program; (4) adds new elements to mentor-protégé agreements addressing the benefits of the agreement to DOD and goals for additional awards for which the protégé firm can compete outside the program; (5) removes business development assistance using mentor firm personnel and cash in exchange for an ownership interest in the protégé firm from the types of assistance that a mentor firm may provide to a protégé firm; (6) prohibits reimbursement of any fee assessed by the mentor firm for certain services provided to the protégé firm while participating in a joint venture with the protégé firm; (7) revises the definitions of the terms “small business concern” and “disadvantaged small business concern;” (8) adds definitions for “severely disabled individual” and “affiliated;” and (9) extends the Program for three years, 81 Fed. Reg. 65610. Comments on this proposed rule are due by November 22, 2016.

NDAA FY2016 and Small Business – Part Three

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To complete what we started in Part One and Part Two, let’s take a final look at how FY2016 NDAA could affect small businesses.

Section 866 – Modifications to requirements for qualified HUBZone small business concerns located in a base closure area

This section provides an equivalency between HUBZone firms and Native Hawaiian firms, which helps the NHSBs to expand into HUBZone contracting. To date, meeting HUBZone goals is the most difficult set-aside category.

This section also does some definitional changes that make BRAC (Base Re-alignment and Closure) areas more easily designated as HUBZones, this is a good thing, as base closure areas from BRAC decisions are always particularly hard-hit.

Section 867 – Joint venturing and teaming

So this section is a big deal, and as the details emerge, we’ll address this. First, the specifics are that joint venture team members’ past performance will count when pursuing certain large contracts. And it expands the use of JVs to expand the number of areas where SBs are acceptable.

If implemented as described, this is a big change. Currently, only certain JVs inherit the past performance from their members. If this is implemented as written, we’ll be able to use JVs a lot better in the future.

Section 868 – Continued modification to scorecard program for small business contracting goals 

The scorecard program is, quite frankly, somewhere between a joke and unfathomable. Agencies with major deficiencies still receive A’s, and small differences seem to generate larger effects.

Could this be because the grades affect government officials’ bonuses? We certainly don’t want those to be affected (sorry, tongue-firmly-in-cheek).

Section 869 – Establishment of an Office of Hearings and Appeals in the Small Business Administration (SBA); petitions for reconsideration of size standards

This is a technical detail, which separates a way to have size standard appeals to prevent these from going to courts instead. It also allows this office to review the size determinations. There have been a lot of complaints over the years that SBA keeps sizes smaller than really appropriate.

Section 870 – Additional duties of the Director of Small and Disadvantaged Business Utilization

If an OSDBU is a strong advocate, this helps by empowering them to help an SB work on SB set-aside status for an opportunity.

Section 871 – Including subcontracting goals in agency responsibilities 

It is always a good thing to have all small business goals in the evaluation criteria for success by agency executives. This provision adds goals to agency-level responsibilities.

Section 872 – Reporting related to failure of contractors to meet goals under negotiated comprehensive small business subcontracting plans 

This is essentially “tattling” on the big integrators – and requiring actual accountability. Accountability is always a good thing, but be wary because you’re complaining about your prime contractor. But when aggrieved, this may be a strong avenue.

Section 873 – Pilot program for streamlining awards for innovative technology projects 

Pilots for awarding contracts to non-contractors might be good, but this can lead to abuse. As small businesses we’re always wary of “special deals.”

Section 874 – Surety bond requirements and amount of guarantee 

A surety bond is a promise given to one party to pay a certain amount if the second party fails to meet the terms of a contract. Surety bonds are mostly used in construction.

For more details about the FY2016 NDAA, see the full text or this summary.

Preventing Personal Conflicts of Interest for Acquisition Contractors

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At its core, the purpose of an OCI (organizational conflict of interest) clause is to prevent somebody from having an unfair competitive advantage by knowing information about an upcoming procurement or what is required to win or lose, or some other secretive information about what’s going on in that particular contract.

The dilemma is how to define organizational conflict of interest in a way that doesn’t prohibit the incumbent from bidding on the contract. Because the incumbent does know details about the customer and the contract, and already has people operational in the agency.

So when there is an incumbent in place, the RFP has to written in such a way that the evaluation requirements don’t give the incumbent an unfair advantage. In addition, we don’t want a situation where a contractor is helping to define the requirements, and therefore has advanced knowledge.

Acquisitions/support work is one of three contractor services that are most likely to get into OCI issues. Clearly, if you’re working as an acquisitions support consultant supporting a contracting office, you shouldn’t be able to bid on anything that you helped to work on, because you know the stuff that didn’t go into the RFP.

Organizational conflicts of interest are discussed in FAR Part 209.5, and there’s now a new subpart 3.11 that specifically addresses contractors in acquisition functions. It’s important to be improving these definitions because frankly lots of people have been tripped up on OCI clauses and OCI issues, particularly in these last eight years.

Ultimately we must prohibit the person who’s creating an RFP (helping the government create one) from bidding on that RFP, so they don’t have an unfair advantage over you or me.

Bid Protest Reform

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There have been many recent changes to the regulations around bid protests, including one outlined by Sandra Erwin in a recent guest post about Pentagon contractors.

The Government Accountability Office (GAO), where most bid protests are filed, released a proposed rule on April 25, 2016 that hopes to clarify the protest process.

There are a couple of important things to understand about where these regulations are going. There’s a proposed $350 filing fee. Right now there’s no filing fee other than admin costs of lawyers creating a document.

This is not a prohibitive amount, but is enough to make people think twice before filing. People have been complaining for years about folks who file frivolous protests in order to hold onto a contract. In fact, one company got the government’s attention with their repeated protests and were prohibited from protesting again for a specific period of time.

The GAO is also proposing to extend the ability to protest below the current task order multiple-award contract threshold of $10 million. Clearly, the lower they go, the more protests they will encounter. This is a good thing in one sense because of the recognition that more opportunities are being competed on multiple-award task order contracts. The bad news is that there are more likely to be protests.

There are a lot other rules and regulations to understand about the bid protest process, but let’s end this post at the starting place: deciding whether or not to protest in the first place.

The fundamental issue around protests is a belief that the government, has “done you wrong,” in their evaluation. However, you have to understand that these evaluations are always subjective and if you are eliminated in the evaluation process, it’s because the technical evaluators or contracting officers wanted somebody else, pure and simple.

You have to be very careful about using protests. Not only does it cost you money in legal fees, and the time and energy involved, but you could be pissing off a future customer. Just because you lost this contract, doesn’t mean you won’t be bidding on the next one from the same agency customer. Should you ask for a debrief instead, and focus on the next opportunity?

Late Payments to Small Business Subcontractors Will Affect Prime’s CPARS

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On January 20, 2016, the FAR Council published a proposed rule calling for changes to the Federal Acquisition Regulation (FAR), regarding payments to small business subcontractors. It has concurrence and is going to be added to the Code of Federation Regulations at section 19.701.

Originally put into the small business jobs act of 2010, this rule provides specific definitions for reduced payment and untimely payment so that there’s no questions or confusion, for example in the case of prorated payments.

This statute requires a prime to self-report, that is to say to tell on themselves, if they make a late payment to small business subcontractors.

(Note that this doesn’t apply if you’re a small businesses with a large business as a subcontractor. You can be late paying them and not have to self-report. This makes sense because typically large businesses have whole accounting departments tracking money coming in and going out.)

The prime self-reports to the CO and that information gets reported in a system called FAPIIS. What’s important is that a history of delayed payments in FAPIIS will be a criteria for your CPARS rating when a CPARS is generated at the end of each contract year.

For a small business, not getting paid can be a very big deal, so these efforts are definitely a step in the right direction.

Labor Law Changes That Will Affect Small Business Federal Contractors

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The Fair Labor Standards Act (FLSA) is a federal statute that defines, among other things, the difference between an exempt employee (one who is paid a salary and is therefore exempt from overtime pay) and an hourly employee (someone who may be paid on an hourly, weekly, or even yearly basis, but is not exempt and is therefore subject to overtime pay).

The current threshold is $455 per week, meaning that if you’re paid that amount or less you’re automatically assumed to be hourly. If you’re paid more than $100,000 per year, you’re automatically assumed to be exempt. In between, there are duties (referred to as professional standards) that will define an employee as exempt.

So that’s the current law. Under the new law, they’re going to raise that salary to $913 per week, and the automatic compensation level to $134,000 per year. What this means is that a lot more people are going to become subject to hourly rules, no longer exempt. When that happens, as a small business owner you will have to convert those people from exempt status to hourly status, from being paid a salary and not being eligible for overtime pay, to being eligible for overtime pay and being paid hourly.

In government contracting, it’s common practice for people to put in a lot of extra hours, many of them spent on non-billable work (sometimes called “company time”) rather than directly serving customers, after the 40-hour week is “done.” This might be time spent doing things like interviewing candidates for other jobs in the project or elsewhere in the company, preparing status reports, or attending company meetings. A major example of this is doing proposal work.

Let’s say you have an employee who works 40 hours a week of billable time and 10 hours a week of “company time.” Under these new rules that employee will now have to be paid for all of those 50 hours (and 10 of them at overtime rates).

Of course you’d be smart to consult with the compensation experts and lawyers whose job it is to work on this stuff. I will only say that it’s important for you to understand these issues because these changes are definitely going to be a challenge.

For more details, see this fact sheet from the Department of Labor and this article from the HR Bartender.

How to Lose a Contract in 3 Easy Steps

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This is a guest post by Debbie Ouellet of EchelonOne Consulting. Debbie gets it exactly right. Pay attention, folks!

From time to time I’m approached by a business owner who has just been blind-sided. They’ve been a long-term service provider for a customer and just learned that they no longer have the contract.

And they don’t know why.

Most often this has happened when the contract went back out for bid, usually through the RFP (Request for Proposal) process, and the service provider prepared their own response. I’m called in to perform a postmortem and provide feedback with the goal of preventing a recurrence with other contracts.

Many business owners might assume that they were simply underbid (i.e.: another vendor low-balled their price to win the contract). The truth is; that’s rarely the reason.

What are 3 of the main reasons that long term vendors lose contracts in the bid process?

They got complacent.

Any procurement manager will tell you… complacency in a vendor is a contract killer. The vendor works hard in the first year or so of the contract to bring innovation, quality initiatives and cost control strategies into play. And then they ride the wave for the remainder of the term.

It’s not that they’re lazy or even bad vendors. They just get comfortable that all is well within their contract and relationship and that everyone is happy with the status quo.

When you read their RFP response and distill it down to the main messages, it says, “We’re great, you know we’re great and we’re going to keep doing what we’ve been doing…because hey, it’s working.” Unfortunately, their competitors have done their homework and suggested new approaches and offered added value in their responses making the incumbent’s proposal look pretty darn blah.

Another tactic that drives customers crazy is when long-term vendors save all of their ideas and innovations to submit with the rebid process. Instead, a better approach is to show steady improvement over the entire term of the contract. Your customer then sees you as consistently bringing value to the table. Then when it comes time for the contract to go out to bid again, you can cite the great initiatives you’ve implemented and offer a few more that you’d like them to consider moving forward.

The best piece of advice I can give a vendor who already has a contract is this: At least once each year, sit down and take stock of what you’ve done for your client lately. Where did you bring value, suggest cost control or improve quality? If you haven’t, find ways to do it now before the contract goes out to rebid.

They assumed that they knew it all.

At times, being the incumbent has its drawbacks. They’ve been immersed in their customer’s business so much so that they lose perspective and believe that they already know everything there is to know about them.

Because the vendor thinks they already know, they don’t read the RFP documents carefully. They make assumptions and miss key elements for the response.

No matter how good your relationship is with your customer, you should always approach an RFP as though it’s anybody’s game. Read it carefully, ask questions and follow the instructions to the tee.

They assumed that the client knew it all.

At times, an incumbent won’t explain responses fully in an RFP because they assume that the client already knows about their business, what they do and how they do it.

There are three reasons why this is a bad approach:

  1. The people reading your response may not know you. The truth is, your main contact; the one who loves you; may not be the decision maker in the bid process. Changeover in decision makers is also commonplace in today’s business world.
  2. Most RFPs go through a scoring process. Each set of answers to questions is scored against a pre-defined process to come up to an overall score. It’s a process that was designed to ensure objectivity in the review process. The bids with the highest scores make it to the finalists list. If you don’t provide full answers to questions, how can you be scored properly?
  3. Incomplete answers look sloppy and lazy. You don’t want your customer to think that you couldn’t be bothered to take the time to answer their questions properly.

Use incumbency to your benefit

Being the incumbent in the RFP process can be a huge advantage as long as you understand that winning and keeping a contract starts long before it goes out to bid.

  • Consistently show value (and make sure that your customer knows about it) while you have the contract. Document it so that you’ve got the information readily available at bid time.
  • Always approach an RFP as though it’s anybody’s game.
  • Don’t assume that you know everything. Read the RFP document carefully and follow the instructions closely.

Don’t assume that the people reading your response know all about you just because you’re their current vendor. Answer questions fully as if they didn’t know you.

I’d much rather help a client win back a contract through the RFP process than explain to them postmortem why they didn’t.

This article originally appeared at and was reprinted with permission.

Debbie Ouellet of EchelonOne Consulting is a Canadian RFP consultant and business writer. She helps business owners win new clients and grow their business by helping them to plan and write great RFP responses, business proposals, web content and marketing content. You can find out more about Debbie at

Service-Disabled Veteran-Owned Small Business Joint Ventures – New SBA Requirements

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This is a guest post by Steven Koprince of SmallGovCon.

SDVOSB joint venture agreements will be required to look quite different after August 24, 2016.  That’s when a new SBA regulation takes effect–and the new regulation overhauls (and expands upon) the required provisions for SDVOSB joint venture agreements.

The changes made by this proposed rule will affect joint ventures’ eligibility for SDVOSB contracts.  It will be imperative that SDVOSBs understand that their old “template” JV agreements will be non-compliant after August 24, and that SDVOSBs and their joint venture partners carefully ensure that their subsequent joint venture agreements comply with all of the new requirements.

If you’ve been following SmallGovCon lately (and I hope that you have), you know that we’ve been posting a number of updates related to the SBA’s recent major final rule, which is best known for establishing a universal small business mentor-protege program.  But the final rule also includes many other important changes, including major updates to the requirements for SDVOSB joint ventures.  For those familiar with the requirements for 8(a) joint ventures, most of the new requirements will look familiar; the SBA states that its changes were intended to ensure more uniformity between joint venture agreements under the various socioeconomic set-aside programs.

The SBA’s final rule moves the SDVOSB joint venture requirements from 13 C.F.R. 125.15 to 13 C.F.R. 125.18 (a change of note primarily to those of us in the legal profession).  But the new regulation is substantively very different than the old.  Below are the highlights of the major requirements under the new rule.  Of course (and this should go without saying), this post is educational only; those interested in forming a SDVOSB joint venture should consult the new regulations themselves, or consult with experienced legal counsel, rather than using this post as a guide.

Size Eligibility

In order to form an SDVOSB joint venture, at least one of the participants must be an SDVOSB, and must also be a small business under the NAICS code assigned to the procurement in question. The other joint venturer can be another small business, or the partner can be the SDVOSB’s mentor under the new small business mentor-protege program or the 8(a) mentor-protege program:

A joint venture between a protege firm that qualifies as an SDVO SBC and its SBA-approved mentor (see [Sections] 125.9 and 124.520 of this chapter) will  be deemed small provided the protege qualifies as small for the size standard corresponding to the NAICS code assigned to the SDVO procurement or sale.

This piece of the new regulation appears to overturn a recent SBA Office of Hearings and Appeals decision, in which OHA held that a mentor-protege joint venture was ineligible for an SDVOSB set-aside contract because the mentor firm was not a large business.

Required Joint Venture Agreement Provisions

Under the new regulations, an SDVOSB joint venture agreement must include the following provisions:

  • Purpose.  The joint venture agreement must set forth the purpose of the joint venture.  This is not a change from the old rules.
  • Managing Member.   An SDVOSB must be named the managing member of the joint venture.  This is not a change from the old rules.
  • Project Manager.  An SDVOSB’s employee must be named the project manager responsible for performance of the contract.  This, too, is not a change from the old rules.  Curiously, unlike in the rules governing small business mentor-protege joint ventures, the SBA doesn’t specify whether the project manager can be a contingent hire, or instead must  be a current employee of the SDVOSB.  The new regulation also doesn’t address OHA case law holding that a specific individual must be named in the agreement (i.e., it’s insufficient to simply state that “an employee of the SDVOSB will be the project manager.”)  It’s unfortunate that the SBA didn’t address that issue; if the SBA agrees with OHA’s rulings, it would have been nice to have the regulations reflect this requirement so that SDVOSBs understand that a specific name is required.
  • Ownership. If the joint venture is a separate legal entity (e.g., LLC), the SDVOSB must own at least 51%.  This is a change from the old rules, which don’t address ownership.
  • Profits. The SDVOSB member must receive profits from the joint venture commensurate with the work performed by the SDVOSB, or in the case of a separate legal entity joint venture, commensurate with its ownership share. This is a change from the old rule, which applies the 51% threshold to all SDVOSB JVs.  To me, there is no good reason to distinguish between “informal” and “separate legal entity” joint ventures, especially since the SBA (elsewhere in its final rule) concedes that “state law would recognize an ‘informal’ joint venture with a written document setting forth the responsibilities of the joint venture partners as some sort of partnership.”  In other words, an informal joint venture is a legal entity too, just not one that has been formally organized with a state government.  In any event, the long and short of this change is that we can expect to see many more informal SDVOSB joint ventures.  That’s because, using the informal form, the non-SDVOSB will be able to perform up to 60% of the work and receive 60% of the profits (see the discussion of work split below); whereas in a separate legal entity joint venture, the non-SDVOSB will be limited to 49% of profits, no matter how much work the non-SDVOSB performs.
  • Bank Account.  The parties must establish a special bank account” in the name of the joint venture.  This is a change from the old rule, which is silent regarding bank accounts.  The account “must require the signature of all parties to the joint venture or designees for withdrawal purposes.” All payments to the joint venture for performance on an SDVOSB will be deposited in the special bank account; all expenses incurred under the contract will be paid from the account.
  • Equipment, Facilities, and Other Resources. Itemize all major equipment, facilities, and other resources to be furnished by each venturer, along with a detailed schedule of the cost or value of such items. This is a change from the old rule, which doesn’t require this information to be set forth in an SDVOSB joint venture agreement.  In a recent court decision, an 8(a) joint venture was penalized for providing insufficient details about these items—even though the contract in question was an IDIQ contract, making it difficult to provide a “detailed schedule” at the time the joint venture agreement was executed. Perhaps in response to that decision, the new regulations provide that “if a contract is indefinite in nature,” such as an IDIQ, the joint venture “must provide a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each, or in the alternative, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available.”
  • Parties’ Responsibilities.  Specify the responsibilities of the venturers with regard to contract negotiation, source of labor, and contract performance, including ways that the parties will ensure that the joint venture will meet the performance of work requirements set forth in the new rule.  Again, if the contract is indefinite, a lesser amount of information will be permitted.  This is an update from the old rule, which requires information on contract negotiation, source of labor, and contract performance, but does not require a discussion of how the SDVOSB joint venture will meet the performance of work requirements.
  • Ensured Performance. Obligate all parties to the joint venture to ensure complete performance despite the withdrawal of any venturer. This is not a change from the current rule.
  • Records. State that accounting and other administrative records of the joint venture must be kept in the office of the small business managing venturer, unless the SBA gives permission to keep them elsewhere. Additionally, the joint venture’s final original records must be retained by the SDVOSB managing venturer upon completion of the contract. These provisions, which are not included in the old rule, seem dated in the assumption that records will be kept in paper form; it instead would have been nice for the SBA to allow for more modern record-keeping, like a cloud-based records system that enables documents to be available in real-time to both parties.
  • Statements. Provide that quarterly financial statements showing cumulative contract receipts and expenditures (including salaries of the joint venture’s principals) must be submitted to the SBA not later than 45 days after each operating quarter of the joint venture. This language, which was basically copied from the 8(a) program regulations, doesn’t specify who might be a “joint venture principal” in a world in which populated joint ventures have been eliminated. The joint venture agreement must also state that the parties will submit a project-end profit-and-loss statement, including a statement of final profit distribution, to the SBA no later than 90 days after completion of the contract.  I find these requirements a bit odd because, unlike for 8(a) joint ventures, the SBA doesn’t pre-approve SDVOSB joint ventures, nor does it seem that the SBA will review a particular SDVOSB joint venture agreement except in the case of a protest.  So why the ongoing requirement for submitting financial records?

While I wish that every SDVOSB would call qualified legal counsel before setting up an SDVOSB joint venture, the reality is that many SDVOSBs attempt to cut costs by relying on joint venture agreement “templates” obtained from a teammate or even from questionable internet sources.  Using SDVOSB joint venture agreement templates is risky enough under the old rules, but will be an even bigger problem after August 24, when all those old templates become severely outdated.  I hope that all SDVOSBs become aware of the need to have updated joint venture agreements meeting the new regulatory requirements, but I won’t be surprised to see some SDVOSB joint ventures using outdated templates in the months to come–and losing out on SDVOSB set-asides as a result.

Performance of Work Requirements

In addition to setting forth many new and changed requirements for SDVOSB joint venture agreements, the new regulation also specifies that, for any SDVOSB contract, “the SDVO SBC partner(s) to the joint venture must perform at least 40% of the work performed by the joint venture.”  That work “must be more than administrative or ministerial functions so that [the SDVOSBs] gain substantive experience.”  The joint venture must also comply with the limitations on subcontracting set forth in 13 C.F.R. 125.6.

And that’s not all: the SDVOSB partner to the joint venture “must annually submit a report to the relevant contracting officer and to the SBA, signed by an authorized official of each partner to the joint venture, explaining how and certifying that the performance of work requirements are being met.”  Additionally, at the completion of the SDVOSB contract, a final report must be submitted to the contracting officer and the SBA, “explaining how and certifying that the performance of work requirements were met for the contract, and further certifying that the contract was performed in accordance with the provisions of the joint venture agreement that are required” under the new regulation.

Past Performance and Experience 

Many SDVOSBs will groan at the new paperwork and reporting requirements established under the new regulation.  But the SBA has inserted at least one provision that is a definite “win” for SDVOSBs and their joint venture partners: the new regulation requires contracting officers to consider the past performance and experience of both members of an SDVOSB joint venture.  The regulation states:

When evaluating the past performance and experience of an entity submitting an offer for an SDVO contract as a joint venture established pursuant to this section, a procuring activity must consider work done by each partner to the joint venture as well as any work done by the joint venture itself previously.

Small businesses sometimes assume that agencies are required to consider the past performance and experience of the individual members of a joint venture–but until now, that wasn’t the case.  True, many contracting officers considered such experience anyway, but there have been high-profile examples of agencies refusing to consider the past performance of a joint venture’s members.  Of course, a joint venture is defined as a limited purpose arrangement, so it makes no sense to require the joint venture itself to demonstrate relevant past performance.  This change to the SBA’s regulations is important and helpful.

The Road Ahead

After August 24, 2016, those old template SDVOSB joint venture agreements won’t be anywhere close to compliant, so SDVOSBs should act quickly to educate themselves about the new regulations and adjust any planned joint venture relationships accordingly.  For SDVOSBs and their joint venture partners, the landscape is about to shift.

This post originally appeared at and was reprinted with permission.