Earlier this month, in Rothe Development, Inc. v. Department of Defense, the D.C. Circuit upheld the constitutionality of the Small Business Administration (“SBA”) 8(a) program by rejecting arguments that the Small Business Act contains an unconstitutional classification based on race. Although the decision will likely be seen as a positive development for small business government contractors and other 8(a) program supporters, the court’s opinion leaves the door open for further challenges to the 8(a) program based on the SBA’s implementing regulations.
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8(a) Program
OHA and COFC Agree: Mentor/Protégé JV Agreements Must Be Specific to Avoid Affiliation
Recent decisions by the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) and the Court of Federal Claims offer important advice to anyone in the process of drafting and negotiating a mentor/protégé joint venture agreement: Be specific. Those agreements, in many cases, are the crown jewel of the mentor-protégé program enabling mentors and protégés to work together on set-aside opportunities that they would not otherwise have been eligible. And like anything of great value, it should not be taken for granted. Instead, as a matter of meeting both regulatory requirements and best practice, mentor/protégé joint venture agreements should specifically list all resources, equipment and facilities (and their estimated values) that each party will provide and detail how work will be shared between the joint venture members.
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SBA 8(a) Ruling: Connections Not the Same as Control
The Small Business Administration’s Office of Hearing Appeals (“OHA”) recently issued a ruling affirming the SBA’s termination of a contractor from participation in the 8(a) Business Development Program (“8(a) Program”). Yet the OHA’s opinion in The DESA Group, Inc., SBA No. BDPT-543 (2015), is notable not for this conclusion, but rather for the discussion that preceded it. Although the OHA ultimately affirmed the termination of the contractor from the 8(a) Program, it did so only on narrow grounds, and only after subjecting the SBA’s underlying determination to extended (and unusually pointed) criticism. For 8(a) Program participants and their mentors—a class of federal contractors that the SBA has recently proposed to expand—the ruling may serve as a useful roadmap on pushing back against potential overreaching by the SBA.
Continue Reading SBA 8(a) Ruling: Connections Not the Same as Control