SmallGovCon: The Dog Ate my Addendum: Don’t Neglect your Joint Venture Addendum, says OHA

In Focus Revision Partners, SBA No. SIZ-6188, 2023 (Jan. 31, 2023), a size appeal alleged that, among other arguments, an awardee didn’t complete its JVA and addendum on time, nor properly fill it out. As we discussed last year, joint venture regulations can be complicated, and often joint venture agreements may need project specific addendums to ensure compliance with each project specific requirement found in the regulations (all the more reason you should check out our handbook on Joint Ventures, released in fall 2022!). But what happens if you don’t fill out the addendum correctly, or even execute it correctly? OHA’s decision in Focus Revision addresses that very issue…

In the Appeal the protestor once again argued that the awardee JV’s protégé member would not perform the required amount of work, and that the MPA was invalid due to the name change, but OHA’s focus seemed to turn to whether the JVA is deficient. The protestor’s initial argument on appeal related to the JVA was that the JVA did not properly itemize major equipment, facilities, and other resources, and didn’t properly name a protégé employee as the Responsible Manager. The protestor subsequently filed a supplemental appeal stating that the JVA addendum was submitted two weeks after the final proposal revisions were completed, and as such should not have been considered. Additionally, the protestor argued that the JVA required a signature of any addendum, and since the addendum was not signed, then it was not a valid addendum (regardless of how deficient its contents were). The awardee and SBA Area Office both submitted arguments against these allegations stating in numerous ways that the JVA was proper, the MPA did not need updating, and there were no clear errors of fact or law (which is the standard for OHA appeals).

As alluded to earlier, OHA focused on the joint venture documents themselves. OHA stated that as an initial matter the JVA itself, without the addendum, was not sufficient to meet the level of contract specific detail required by 13 C.F.R. § 125.8(b). This regulation lays out very specific requirements for what must be included in a JVA for parties to a mentor-protégé joint venture, including: 1) “Itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each, where practical”; 2) “specifying the responsibilities of the parties with regard to negotiation of the contract, source of labor, and contract performance, including ways that the parties to the joint venture will ensure that the joint venture and the small business partner(s) to the joint venture will meet the performance of work requirements”; and 3) “designating a named employee of the small business managing venturer as the manager with ultimate responsibility for performance of the contract (the “Responsible Manager”)” among a multitude of other requirements. Of course many contracts are indefinite in nature, and thus it would be hard to be extremely specific, but the regulations take that into account, requiring “general descriptions” of how JV members will address these requirements based on what is known about the contract. After review, OHA found that the JVA itself didn’t even meet these standards… Read the full article here.