Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Govcon GAO Post Award Protest Timeline Article

Contract Disputes Act Claim Timeline

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The Bayh-Dole Act

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Anatomy of a Protest

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

J. Alex Ward

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

Brad is a partner in Morrison Foerster’s Litigation Department, Managing Partner of the Austin office, and Chair of the firm’s Israel practice. He is the former Co-Chair of the firm’s Global Litigation Practice and the Government Contracts + Public Procurement Practice.

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James A. Tucker

The Tortured Regulations Department: SBA’s New Rule and Its Effect on Investments

Bid Protest Spotlight: Standing, Relationships, Responsibility

House’s Passage of the SAMOSA Act Signals Policy Shift Towards Government-Wide Enterprise Software Licensing

New DFARS Regulation on Small Business Affiliate Past Performance

Bid Protest Spotlight: Unclear Criteria, Data Rights, Conflicts

The Government Accountability Office (GAO) has issued an important new decision in the protest of <a href="https://www.gao.gov/assets/820/817444.pdf">AttainX,Inc</a> <a href="https://www.gao.gov/assets/820/817444.pdf" target="_blank">., B-421216, B-421216.2, Jan. 23, 2023, 2023 WL 1860802</a>. The decision addresses how agencies must evaluate the prior experience and past performance of joint venture members when a joint venture bids on a small business set-aside. This case law likely will drive changes in how joint ventures pursue set-aside opportunities and alter the way some agencies evaluate joint ventures’ proposals in competitions for federal contracts.   Regulatory BackgroundWe have previously discussed the Small Business Administration’s (SBA) changes to its joint venture regulations over the past few years, including regulations governing agencies’ evaluation of a joint venture’s past performance, prior experience, and capabilities. (<a href="https://govcon.mofo.com/topics/new-small-business-rules-capabilities-of-small-business-joint-venture-members-and-first-tier-subcontractors.html" target="_blank">New Small Business Rules: Capabilities of Small Business Joint Venture Members and First-tier Subcontractors</a> and <a href="https://govcon.mofo.com/topics/new-small-business-regulation-reliance-on-past-performance-gained-as-a-subcontractor-or-joint-venture-member" target="_blank">New Small Business Regulation: Reliance on past Performance Gained as a Subcontractor or Joint Venture Member</a>, for example.) These changes have largely favored joint ventures by allowing a joint venture offeror (which, under current regulations, is unpopulated and has only a limited time in which to win contracts) to rely upon the past performance, prior experience, and capabilities of its member companies in the aggregate. It is often the case (particularly in the context of mentor-protégé joint ventures) that the joint venture’s managing member (which always must be a small business in small joint venture) may be significantly less experienced than its minority member. Indeed, under the mentor-protégé program, the minority member is frequently a large business. Although the SBA regulations are clear that the managing member must make meaningful contributions to the joint venture’s success, there is no express regulatory requirement that the managing member—the small business—must provide some of the prior experience or past performance for any given procurement. If the joint venture itself does not have prior experience or past performance (which is often the case), the regulations simply direct agencies to consider the prior experience or past performance of the individual member companies, which “in the aggregate” must meet the necessary requirements:Capabilities, past performance and experience. When evaluating the capabilities, past performance, experience, business systems and certifications of an entity submitting an offer for a contract set aside or reserved for small business as a joint venture established pursuant to this section, a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously. A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.  The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.13 C.F.R. § 125.8(e). In practice, unless a solicitation specifically requires otherwise, small business joint ventures often have submitted proposals where the only relevant past performance comes from the non-managing member, perhaps supplemented by subcontractors.Case AnalysisAnd that is what happened in the protest of AttainX, Inc. The procurement was a small business set-aside task order competition, limited to holders of the General Services Administration’s (GSA) 8(a) STARS III government-wide acquisition contract. As relevant here, the Request for Quotations (RFQ) provided for the evaluation of vendors’ similar experience. The RFQ required vendors to submit a minimum of two similar experience examples “that reflect and identify experience on [current or recent] projects.” For each project example submitted, “the contractor shall explain in a detailed narrative how the characteristics of the selected contract relate to the overall project for which they are being considered.”The eventual awardee was a joint venture between an 8(a) small business (as managing member) and a non-8(a) small business (as the minority member). The GAO noted the record was not clear whether the two members were an SBA-approved mentor-protégé pair (which would not have been necessary to maintain the 8(a) status of the joint venture). For its two similar experience projects, the joint venture submitted one contract performed by its more experienced non-managing member and a second contract performed by one of the same member’s other joint ventures. The record did not establish that the managing member had any role at all in either of these two contracts. The record also suggested the evaluators may not have understood that the joint venture cited for one of the experience projects was a different (though similarly named) joint venture from the one submitting a quotation here. Considering these two projects, the agency evaluated the awardee’s similar experience as “acceptable.” In light of the joint venture’s “exceptional” ratings for the other non-price factors, the agency rated the joint venture’s quotation as “exceptional” overall, and found its much lower price justified award to it, rather than the next-in-line competitor, AttainX, which had slightly higher technical merit but a much higher price. AttainX protested. Among various protest grounds, AttainX argued the awardee’s “acceptable” rating for similar experience was unreasonable because the agency failed to consider the fact that none of its experience examples came from the joint venture’s managing member. The agency countered that nothing in the solicitation required each member of a joint venture to submit its own experience examples, and thus the agency had discretion to evaluate favorably a quotation where all the experience examples came from a single member (or from other joint ventures in which that member performed). The GAO disagreed, citing the small business regulation requiring that “a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously,” 13 C.F.R. § 125.8(e) (emphasis added); see also 13 C.F.R. § 124.513(f). The GAO appears to have read the regulation to mean that, if a joint venture offeror does not submit experience references in its own name, then the procuring agency must consider experience references from each of the joint venture’s members, even if the solicitation does not require references for each member. It is not enough for the agency to consider the experience of either member:  Notwithstanding the fact that the solicitation does not require examples from the joint venture itself or the individual members, the SBA regulations require the agency to evaluate each joint venture member individually when the joint venture itself does not demonstrate it has the required experience; the agency does not have license to ignore SBA regulations in its evaluation.. . . Because [the awardee] did not submit experience for the joint venture and the agency’s evaluation is based on a consideration of only one joint venture member’s experience, we conclude that the agency failed to properly evaluate [the awardee’s] quotation in accordance with SBA regulations.For this reason, and on the basis of additional errors found in the evaluation and best value analysis, the GAO sustained the protest. TakeawaysOfferors, agencies, and protest counsel alike should all pay attention to the AttainX decision:  <ul><li>In procurements with past performance or experience evaluation factors, joint venture offerors without their own past performance or experience should do their utmost to demonstrate the past performance or experience of each of their joint venture members. The SBA regulations are clear that agencies may not hold protégés to the same standards as other offerors, but AttainX illustrates the risk of relying entirely on a single joint venture member for all past performance or experience. </li><li>Although it was already clear that agencies were permitted to require some prior experience from protégé/managing members, most observers likely assumed that, in the absence of a specific solicitation requirement, agencies had discretion to allow either joint venture member to supply the required experience. AttainX now makes clear that agencies must consider the experience of each member, at least for joint venture offerors that do not have relevant experience in the name of the joint venture itself. </li><li>The GAO held that the agency was required to “consider” each joint venture member’s experience or lack thereof, but it did not hold that a joint venture without experience from both members was ineligible for award. Nor did the GAO hold that agencies are required to evaluate adversely those joint ventures without experience from both members. It simply held agencies must “consider” that fact as part of the experience evaluation. Indeed, at least in the context of a past performance evaluation (rather than an experience evaluation), an agency is arguably prohibited from evaluating a joint venture unfavorably if its managing member lacks relevant past performance. See 41 U.S.C. § 1126(b) (“If there is no information on past contract performance of an offeror or the information on past contract performance is not available, the offeror may not be evaluated favorably or unfavorably on the factor of past contract performance.”); FAR 15.305(a)(2)(iv) (“In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance.”). Future protest decisions are likely to sketch the outlines of what agencies may, must, and must not do.       </li><li>Rightly or wrongly, traditional small businesses with solid past performance often complain of small businesses with no past performance of their own using the joint venture regulations to win set-aside contracts with the past performance of their large business mentors. Those traditional small businesses and their protest lawyers will find AttainX a useful tool in future bid protests against awards to some joint ventures.  </li></ul>

Joint Venture Member Experience: “Considering Each Member” vs. “Considering Either Member”

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Damien is a partner in the firm’s Government Contracts & Public Procurement practice. He represents clients in all facets of government contracts transactions, as well as regulatory counseling, subcon

Damien Specht

Damien C. Specht

Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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Joint Venture Member Experience: “Considering Each Member” vs. “Considering Either Member”

SBA Issues Final Rule on Appeals Process for PPP Loan Review Decisions

The Government Accountability Office (GAO) has issued an important new decision in the protest 

On February 9, 2023, the Office of Management and Budget (OMB) issued a <a href="https://www.govinfo.gov/content/pkg/FR-2023-02-09/pdf/2023-02617.pdf" target="_blank">proposed rule</a> that would subject all federally funded infrastructure projects to domestic preference requirements that are materially similar to the Buy American Act requirements applicable to many federal procurements. For purposes of this rulemaking, “infrastructure project” is “any activity related to the construction, alteration, maintenance, or repair of infrastructure in the United States regardless of whether infrastructure is the primary purpose of the project.” The proposed rule would largely apply the Federal Acquisition Regulation (FAR) “cost of components” definition to Federal Financial Assistance programs, thereby establishing a common framework to determine the cost of components in manufactured products.  The proposed rule adds a new Part 184 to OMB Guidance on Grants and Agreements (2 CFR Chapter I) and revises existing guidance on Domestic Preferences for Federal Awards (2 CFR Chapter II).  The new part defines the terms “Manufactured products,” “Produced in the United States,” and “Construction materials”; incorporates the FAR component test for manufactured products (subject to a 55% domestic content requirement); and provides “preliminary” standards unique to construction materials for assessing whether the materials were produced in the United States. The revision to the existing guidance on federal awards directs federal agencies to look to the new Part 184 for guidance on all awards that include infrastructure projects. This is the latest in a series of actions by the Trump and Biden administrations to tie federal spending to increased domestic preferences. Previously, we commented on the existing <a href="https://govcon.mofo.com/topics/220331-far-council-tightens-requirements.html" target="_blank">FAR</a> and <a href="https://govcon.mofo.com/topics/chasing-the-far-dods-buy-american-act-final-rule" target="_blank">DFARS</a> rules, and the <a href="https://govcon.mofo.com/topics/new-year-new-domestic-preference-restrictions-trump-final-rule-and-biden-executive-order" target="_blank">Buy American Act</a> generally. Comments on this proposed rulemaking are due by March 13, 2023.

OMB Proposes New Domestic Preference Requirements for Federally Funded Infrastructure Projects

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Associate

Markus Speidel is an associate in Morrison & Foerster’s Government Contracts & Public Procurement group, in Washington, D.C. Markus assists clients across a wide range of contract matters, including contract claims and disputes, bid protests, compliance counseling, and investigations.

Markus Gerhard Speidel

Markus Speidel

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OMB Proposes New Domestic Preference Requirements for Federally Funded Infrastructure Projects

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

On February 9, 2023, the Office of Management and Budget (OMB) issued a proposed rule that would subject all federally funded infrastructure projects to domestic preference requirements that are materially similar to the 

The Small Business Administration’s (SBA) popular shields from affiliation for all-small and mentor-protégé joint ventures are powerful tools for helping small businesses succeed in the federal procurement marketplace. These tools, however, are subject to strict enforcement, iterative rule changes, and growing bodies of case law. To that end, a <a href="https://govt.westlaw.com/sbaoha/Document/Ieea4733b9eb011ed8f9bf7816281f32a" target="_blank">new decision</a> from SBA’s Office of Hearings and Appeals (OHA) reverses a previous OHA rule that had, for the past two years, rendered many otherwise compliant joint venture agreements ineligible for favorable treatment under SBA regulations. This is the latest instance in which the rules for joint ventures have changed, and a good reminder for companies to be sure their joint venture agreements are compliant with the most current regulations and OHA case law. BackgroundIn Strategic Alliance Solutions, LLC, SBA No. VET-278 (2023), OHA took a second look at whether the joint venture appellant was fully controlled by its Service-Disabled Veteran-Owned Small Business (SDVOSB) member and qualified for award in a procurement set aside for SDVOSB concerns. OHA had previously found the appellant’s joint venture agreement was generally compliant with the governing regulations, with one exception: it required unanimous consent of the joint venture members before the joint venture was permitted to initiate litigation or pursue a claim under the contract. OHA relied on its precedents in Seventh Dimension, LLC, SBA No. VET-6057 (2020) and Swift & Staley, Inc., SBA No. SIZ-6125 (2021) for the principle that initiation or settlement of litigation was “essential to day-to-day operation” of the joint venture and, therefore, was not allowed to be subject to minority shareholder consent. OHA found this provision violated 13 C.F.R. § 125.18(b)(2)(ii)(A) (now re-codified at 13 C.F.R. §128.402(c)(2)(i)), which requires a joint venture’s managing member to have full control of all “day-to-day management and administration of the contractual performance of the joint venture.” And, because the SDVOSB managing member did not wholly control the joint venture, the joint venture was ineligible for award of the SDVOSB set-aside contract. After its loss at OHA, the appellant filed a protest at the Court of Federal Claims, arguing that OHA’s decision was improper. In an interesting turn of events, SBA’s Office of the General Counsel took the position that SBA’s OHA was wrong: initiating or settling contract litigation is not an ordinary day-to-day activity, and therefore minority members may be given veto power over litigation decisions without running afoul of the joint venture regulations. SBA also argued that OHA improperly imposed the “negative control” provisions of the general affiliation regulations on the very different regulations governing joint ventures. The parties convinced the court (over the objection of the intervenor) to <a href="https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2022cv1562-35-0" target="_blank">remand</a> the matter to OHA for further consideration. Decision on RemandOn remand, OHA observed that its first decision relied on Seventh Dimension, LLC, SBA No. VET-6057 (2020) and its progeny. OHA then noted that later in 2020, after issuance of Seventh Dimension, SBA revised its regulations governing SDVOSB joint ventures. Although OHA did not find the new regulations were promulgated expressly to undo Seventh Dimension, OHA found the new regulation made a material change by expressly providing that the non-managing partner(s) to a joint venture may participate in corporate governance and decisions “as is commercially customary.” 13 C.F.R. § 125.18(b)(2). In light of this regulatory update, OHA found a litigation decision “is more properly seen as part of corporate governance and is thus an area where the other partners to the joint venture may participate” because “[l]itigation on behalf of the joint venture can have results which might impair the interests of the venturers, and thus it is not inappropriate that [minority member(s)] have the right to approve contract litigation.” Accordingly, a minority member’s ability to block litigation decisions should be permissible under the governing regulations. Therefore, “upon further reflection,” OHA overturned its prior Strategic Alliance Solutions decision and granted the appeal. ImpactAs numerous OHA decisions over the years have demonstrated, it is extremely easy (and perhaps common) for a company accidentally to sign up to a joint venture agreement that fails to comply with one of the many nuanced requirements of the small business regulations or applicable case law. Noncompliance often involves omission of one of the long list of items the regulations require joint venture agreements to have. For some time now, savvy companies have had their attorneys review joint venture agreements prior to proposal submission to ensure the agreements are not missing anything that current regulations require. This is particularly prudent given the significant revisions to the joint venture regulations in recent years. Since OHA issued its Seventh Dimension decision in 2020, however, SBA and protesters are more heavily scrutinizing additional terms joint venture agreements might include for the possibility of “negative control”—i.e., whether a particular provision gives minority member(s) the ability to block activities that an SBA analyst or OHA might consider “ordinary” business decisions. Companies not well versed in the nuances of OHA case law may not see any risk in a customary provision that could render them ineligible for award. Many companies do not seek legal review for these risks. Or they did so years ago, before Seventh Dimension articulated a harsher standard than SBA previously applied in practice. Strategic Alliance Solutions has now altered the rules again, rolling back Seventh Dimension, at least with respect to the question of whether litigation decisions are ordinary or extraordinary actions, but apparently leaving it otherwise unchanged. It is uncertain how or whether the Strategic Alliance Solutions decision will affect negative control analysis under the separate regulations governing small business affiliation in general. Is the ability of a third party to veto litigation decisions indicative of negative control outside the context of joint ventures? The Strategic Alliance Solutions decision does not directly answer that question. The new Strategic Alliance Solutions decision is welcome news, but also a good reminder for companies to consider whether their own joint venture agreements comply with both current regulations and OHA’s most recent case law.

Is Your Joint Venture Agreement Compliant with Current Sba Regulations and Current Case Law? 

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Ali Young is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.

Alissandra Young McCann

Ali Young is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.

Alissandra McCann

Is Your Joint Venture Agreement Compliant with Current Sba Regulations and Current Case Law?

The Small Business Administration’s (SBA) popular shields from affiliation for all-small and mentor-protégé joint ventures are powerful tools for helping small businesses succeed in the federal procurement marketplace.

Is Your Joint Venture Agreement Compliant with Current SBA Regulations and Current Case Law?

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January 2023 Bid Protest Roundup: Size Protests, Blue & Gold, Sole Source

Since the January Bid Protest Roundup marks the beginning of February, we begin with a takeaway that needs no supporting authority beyond common sense: if you have not already done so, get your Valentine’s Day gift now. And, like a box of chocolates desperately procured at the last minute, this Roundup has a bit of everything: a case from the Federal Circuit on bid protest jurisdiction, a Court of Federal Claims case exploring the nuances of the Blue & Gold Fleet rule, and a capstone from the GAO on the Small Business Innovative Research (“SBIR”) program. We begin with a case from the Federal Circuit concerning the bid protest jurisdiction of the Court of Federal Claims.

January 2023 Bid Protest Roundup: Size Protests, Blue & Gold, Sole Source

On January 12, 2023, the <a href="https://www.opn.ca6.uscourts.gov/opinions.pdf/23a0006p-06.pdf" target="_blank">U.S. Court of Appeals for the Sixth Circuit</a> joined the Fifth and Eleventh Circuits in upholding a preliminary injunction against the enforcement of the Biden Administration’s effort to impose on federal contractors a variety of COVID-19 safety-related protocols, including a vaccine mandate. Describing the scope of the executive mandate as “stunning,” the Sixth Circuit concluded that the Federal Property and Administrative Services Act (commonly known as the Procurement Act or Property Act) “does not confer the authority to promulgate a rule, including the contractor mandate, that simply makes contractors more efficient,” and that “the President exceeded his authority in issuing” Executive Order 14042. The district court nonetheless abused its discretion in enjoining the requirement for all federal contractors in the plaintiff states, the Court of Appeals held, and limited the preliminary injunction to the parties to this case only: Ohio, Kentucky, Tennessee, and two Ohio sheriff’s offices.In an opinion authored by Judge Larsen and joined by Judges Siler and McKeague, the Sixth Circuit rejected the government’s arguments that the Procurement Act authorized the president to take actions that made performance of a federal contract more efficient. Relying on the history and construction of the Procurement Act, the Court concluded that the logic of the D.C. Circuit’s frequently cited and long-standing decision in AFL-CIO v. Kahn, 618 F.2d 784 (D.C. Cir. 1979) (en banc), was “mistaken.” Instead, the Court determined that statutory language referring to “an economical and efficient system” of federal contracting was focused on the government itself and did not authorize actions that make contractors more efficient. “The Property Act does not authorize the President to issue directives that simply ‘improve the efficiency of contractors and subcontractors,’” the Court said.The Sixth Circuit found other equitable factors supported injunctive relief as well. “[T]he loss of new or renewed contracts due to the imposition of the contractor mandate” was irreparable, as were “unrecoverable compliance costs in the absence of a preliminary injunction.” Public interest and the balance of harms favored the plaintiffs in part because “the federal government’s current claims of urgency are difficult to swallow in the face of their dilatory response to the availability of vaccines.”While it affirmed the basis for the preliminary injunction, the Sixth Circuit also modified its scope, tailoring the injunction to apply only to the parties to the litigation, and not to all federal contractors in the plaintiff states, as the district court had originally ordered. “Although a geographically limited injunction like the one issued here does not create all of the practical problems associated with ‘nationwide’ or ‘universal’ injunctions, . . . affording relief beyond the parties nonetheless raises substantial questions about federal courts’ constitutional and equitable powers,” the Court said. Plaintiffs had not offered evidence that the government would “simply choose to do business with those against whom it could enforce the mandate,” nor was a geographical injunction necessary to protect plaintiff states’ sovereign interest in enforcing their own laws.The Sixth Circuit’s decision comes on the heels of a pair of similar rulings <a href="https://www.mofo.com/resources/insights/220830-eleventh-circuit-preliminary-injunction-contractor-vax-mandate" target="_blank">by the Eleventh Circuit</a> in August and the <a href="https://govcon.mofo.com/topics/fifth-circuit-affirms-preliminary-injunction-of-contractor-vaccine-mandate" target="_blank">Fifth Circuit</a> in December in which those courts affirmed other preliminary injunctions of the vaccine mandate. At least one additional court of appeals decision from the Eighth Circuit is expected to address Executive Order 14042 in the coming months, and the cases may ultimately <a href="https://www.mofo.com/resources/insights/220113-supreme-court-nixes-osha.html" target="_blank">tee up Supreme Court review</a>. A number of challenges to Executive Order 14042 are also proceeding in federal district courts. We will continue to monitor these cases and provide updates as they develop.

Sixth Circuit Follows Suit in Affirming Preliminary Injunction of Contractor Vaccine Mandate

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Joseph Palmore