PilieroMazza has received a flood of questions related to STARS III and Cy Alba gave a presentation (link) earlier today walking through a number of keys issues and our interpretation of key requirements in the RFP. As a part of that, one key question being asked is whether clients are able to bid themselves as a prime contractor and also as the managing member of a joint venture? 

While there is nothing in the STARS III RFP that expressly disallows submitting an offer under an 8(a) firm’s own name and under the name of a joint venture where that same 8(a) is the managing member, SBA indicated that, at least initially, it was going to take a different interpretation. Specifically, we were told by SBA that it will not approve simultaneous awards to the 8(a) individually and to a joint venture involving the same 8(a) company. 

As we understand it, SBA is interpreting 13 C.F.R. 124.513(a)(2) as prohibiting both an 8(a) firm itself and an 8(a) JV, where that same 8(a) firm is the qualifying member of the JV, from being awarded the same contract (here, STARS III). It is of note that we have never seen SBA take the position that this regulation precludes two offers on an IDIQ contract where the real capabilities needed to perform the work will not be known until Task Orders are released. In fact, this very strategy has been employed under multiple IDIQs in the past, including STARS II. 

The regulation at issue states that:  

A joint venture agreement is permissible only where an 8(a) concern lacks the necessary capacity to perform the contract on its own, and the agreement is fair and equitable and will be of substantial benefit to the 8(a) concern. However, where SBA concludes that an 8(a) concern brings very little to the joint venture relationship in terms of resources and expertise other than its 8(a) status, SBA will not approve the joint venture arrangement. 

It appears that SBA’s initial reasoning on this is that mere existence of an IDIQ award to the 8(a) firm itself definitively shows that the firm clearly had the “capacity to perform on its own” for if it did not, it would have never received the award. We submit, however, that this ignores the fact that an award at the IDIQ level is virtually meaningless and does not indicate that the 8(a) actually has the capability to win any awards at the task order level. Given this fact, we are working to try and clarify this position with SBA.

While we do not know what SBA’s final position will be, we understand that SBA is currently working with GSA to put out definitive guidance on this in the coming days. To assist SBA in this, we provided our position in the matter, stating that bidding under multiple JVs or bidding alone and as the managing member of a JV should be allowed, especially at the master IDIQ level. As soon as any information is released, we will certainly report it here and provide as much information as we can since we know our clients are working furiously to prepare proposals for STARS III.

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.