Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, July 10, 2013, 12:48pm EST
TFab Manufacturing, LLC, B-406698, August 3, 2012
In government contracting, winning contract awards is often vital to the success of a business, particularly for small businesses. Therefore, any legitimate methods that increase potential opportunities for awards are met with keen interest by contractors. One such method utilized by business, large and small, are joint ventures.
A joint venture allows a contractor to team up with compatible companies to increase its capabilities in order to compete for procurements it might not otherwise be qualified for on its own. Similarly, joint ventures can be used by small businesses to qualify for set-asides that it might not otherwise be eligible. For example, SBA regulations allow for a non-8(a) small business to compete for 8(a) set-asides through a joint venture with an 8(a) certified small business. Thus, a joint venture is an attractive tool for a small business to increase its contract opportunities.
Many times, a joint venture will be unpopulated, meaning the joint venture itself does not have any personnel; rather, it will rely on the personnel of the joint venture partners. However, joint ventures are typically formed for a specific procurement, and thus have no past performance. How are procuring agencies to evaluate the capabilities of these newly formed, unpopulated joint ventures?
A case recently released by GAO answers this question. In TFab Manufacturing, LLC, the Army made an award in an 8(a) set-aside procurement to Redstone Defense Systems (“RDS”). RDS was an 8(a) business operating as an unpopulated joint venture. Included among the joint venture partners of RDS were members of the incumbent team. The protester argued that because RDS did not have any personnel, it had to rely on the resources of the incumbent, and thus did not have the capabilities to perform on its own. GAO rejected this argument, and denied the protest.
GAO found the Army’s evaluation of RDS’s capabilities to be reasonable. GAO reasoned that generally an agency’s evaluation of an unpopulated joint venture will be based on the assets possessed by the joint venture partners. In this case, because RDS’s partners included the incumbents, it was proposing to use many of the same personnel and facilities used under the predecessor contract. The Army found that RDS therefore had the requisite experience to perform, and GAO did not find anything improper in the Army’s determination.
An agency can utilize the experience of the individual joint venture partners, and in some cases the experience of the personnel of the partners, when making an evaluation of the capabilities of a joint venture. This allows contractors with experience in different arenas to pool those resources together, and present a more attractive option, and hence a better value, for the government.