In Size Appeal SES-TECH Global Solutions, SBA No. SIZ-4951 (May 7, 2008), SES-TECH Global Solutions, a mentor-protégé joint venture approved by the Small Business Administration appealed the size determination of Area Office for a total small business set-aside procurement. The size appeal resulted from total small business set-aside procurement issued by the Department of Energy National Nuclear Security Agency (NNSA) for the installation of sustainable radiation detection equipment in the government’s effort to curtail the illicit trafficking of nuclear and other radiological materials. SES-TECH Global Solutions, Appellant in this instant case, was among a list of apparent successful offers; however, NNSA filed a protest of Appellant’s size status with regional SBA office.
In reaching its size determination, the regional SBA office concluded that Appellant was a joint venture under SBA mentor protégé program and found the 8(a) concern to be small based upon its receipt. However, the SBA office, analyzing factors under the “joint venture” exception from affiliation under the 8(a) program, found that Appellant was other than “small” because the 8(a) protégé “lack[ed] the resources and expertise to perform the instant procurement, and [that] all key personnel” were the mentor entity. Thus, concluding that the 8(a) brought nothing to the joint venture other than 8(a) status, “Appellant did not meet joint venture requirements for joint venture exception from affiliation under 13 CFR 124.513,” and Appellant was considered other than “small.”
The SBA Office of Hearings and Appeals (OHA), however, overturned the Area Office’s size determination. OHA noted that under normal circumstances, “firms submitting offers on a particular procurement as joint ventures are affiliates with regard to the contract and thus will be aggregated for purpose of size determination.” However, as OHA recognized, mentor-protégé joint ventures are expressly exempted from finding of affiliation and, thus “[t]wo firms approved by SBA to be mentor-protégé may form a joint venture for any Federal Government procurement” and “the joint venture becomes exempt from normal rules of affiliation. The exemption continues as a long as protégé concern qualifies as small business for the size standard applicable to the contract.” Furthermore, “[t]he assistance which a mentor extends to its protégé under an approved joint venture agreement cannot be relied upon to make a finding of affiliation.” Where Appellant is an SBA approved 8(a) mentor-protégé and where the 8(a) protégé is considered “small” under the applicable NAICS code for the procurement (or dollar value limit), Appellant should have been considered “small.” In concluding that Appellant should be considered “small,” OHA concluded that 8(a) regulations regarding joint venture agreements entered into for the purpose of 8(a) contracts under 13 CFR 124.513 do not apply to procurement not within the 8(a) programs.