As we wrote on July 16th, SBA was interpreting 13 CFR 124.513(a)(2) as prohibiting awards of STARS III to both an 8(a) firm, individually, and a joint venture where that same 8(a) firm was the entity upon whom eligibility for the JV was based. Below we address additional guidance as to SBA’s interpretation of the prohibitions for 8(a) firms seeking to bid on STARS III—as well as compliance requirements—which are important to note as firms prepare their bidding strategies.

As of Friday evening, SBA and GSA issued additional answers to questions addressing this issue:

Q5) Can an 8(a) company submit an offer as a STARS III prime, and also as the managing member of a Joint Venture or protege of a Mentor/Protégé arrangement?

The SBA has shared its position with GSA that an 8(a) firm is not eligible to receive an award as a Prime and as part of a Joint Venture. We encourage contacting your supporting SBA office for eligibility related questions. Also refer to Q6 in the Eligibility section of Q&R #1 posted with the solicitation on on July 6, 2020.

Q7) Can an 8(a) company be a member of multiple joint ventures or Mentor/Protégé arrangements which receive STARS III awards?

Joint Venture eligibility (including Mentor/Protégé eligibility) is governed by SBA rules and regulations. The SBA has shared its position with GSA that an 8(a) firm can only be a part of one joint venture on STARS III. Contact your supporting SBA office for JV eligibility related questions.

Thus, it is now clear from GSA and SBA that 8(a) firms cannot submit a proposal both as itself and as any member of a joint venture.  This is not limited to JVs where the 8(a) is the company upon whom eligibility for the JV is based.  Similarly, GSA and SBA have also made clear that an 8(a) firm cannot be part of multiple JVs to bid on STARS III.  These are major prohibitions that all offerors looking to go after STARS III must be aware of and comply with.  If this is not complied with, the offeror risks being found ineligible for award by SBA (even if GSA decides to award them the contract!).  Additionally, if an 8(a) firm participates in multiple JVs, they risk, or even guarantee, a finding of ineligibility by SBA when SBA looks to approve the JVs prior to award.  Again, this may happen after the JV is awarded the contract by GSA, as, when SBA reviews the JV to approve the entity or the award, SBA may deny the approval and all JVs with whom that 8(a) was a member will lose the award.

For these reasons, it is critical that you vet all your 8(a) JV members and make all such 8(a) members certify that they will not, and have not, bid alone or with another JV.  If you do not perform this proper diligence, and verify the truth of the certifications, your JV may lose the award it fought so hard to secure.

We are not sure if this is the final word from SBA on this issue, but it may be.  Suffice it to say, however, that we have multiple clients who are very worried about this development as it is causing major changes to bid strategies.  As such, we are still in contact with SBA on this to try and see what softening can occur to this as we believe there are numerous reasons why the prohibitions here go far beyond the language in 13 CFR 124.513(a)(2).

If you have any questions on this or any STARS III issue, please contact Cy Alba ([email protected]), Meghan Leemon ([email protected]), or a member of PilieroMazza’s Government Contracts Group.