The Small Business Administration (SBA) Mentor-Protégé Program (MPP) allows small businesses to pair with large contractors to form joint venture (JV) entities that can pursue any small business set-aside contract for which the protégé firm individually qualifies as small. The program is designed to be mutually beneficial for participating firms, allowing the protégé to take advantage of the mentor firm’s business development assistance while simultaneously enabling the mentor firm to perform on certain contracts it would not otherwise have access to. Once the JV has an SBA-approved mentor-protégé agreement, it is not considered affiliated with its mentor or protégé firm. The member firms enter into a joint venture agreement (JVA) that must comply with various SBA regulations to benefit from the exception afforded to the usual requirements regarding affiliations. Under the regulations, the small business protégé firm must be designated as the managing venturer responsible for controlling the day-to-day management and administration of the JV. Additionally, a named employee of the protégé firm must serve as the Responsible Manager and be accountable for contract performance.

Meanwhile, the mentor firm is permitted to participate in all corporate governance activities and decisions of the JV as is commercially customary. However, as the holder of the minority ownership interest in the JV, the mentor firm may not exercise negative control over the JV’s activities unless the provisions of the JVA granting such control are also commercially customary. Negative control is defined as the ability, granted by the JV’s organizing instruments, of a party with a minority interest in the JV to block an action by the JV’s board of directors or shareholders. Notably, the SBA Office of Hearings and Appeals (OHA) has previously held that when a firm with a minority ownership interest in a JV has the ability to exercise negative control over a JV’s activities, the JV does not qualify as an eligible small business for set-aside procurements. In such situations, an interested party may initiate a size protest with the contracting officer (CO), who forwards the protest to the appropriate SBA Area Office (AO) for a formal size determination. The SBA OHA then hears any appeals that follow from the AO’s size determination and issues the final decision of the SBA. As long as the SBA determination is made in connection with a procurement, the Court of Federal Claims (COFC) possesses jurisdiction to conduct judicial review of the OHA decision under the Tucker Act by applying the Administrative Procedure Act (APA) arbitrary and capricious standard.

Enacted in 1994, the Federal Acquisition Streamlining Act (FASA) contains a “task order bar” that removes from the coverage of the Tucker Act any protests that relate to the issuance of a task or delivery order, the contract value of which does not meet the monetary threshold of $35 million for defense procurements and $10 million for non-defense procurements. Thus, if the contract value of a task or delivery order falls below these thresholds, the Government Accountability Office (GAO) will not entertain protests challenging the award due to lack of jurisdiction. The general rule for determining contract value for the purposes of establishing protest jurisdiction is to calculate the amount of the task or delivery order award. However, the GAO may, under unique circumstances, look beyond the amount of the award to establish the contract value for the purposes of jurisdiction. Such unique or extraordinary circumstances may include situations where the government utilized unconventional methods for compensating the contractor or employed atypical price evaluation techniques. Absent such unique circumstances, however, the GAO will not look beyond the value of the task or delivery order award to establish bid protest jurisdiction.

In order to have the necessary standing to file a protest at the Government Accountability Office (GAO), a protester must qualify as an interested party. The GAO’s bid protest regulations define an interested party as an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract. A protester may challenge the procuring agency’s evaluation of the awardee’s proposal as an interested party when there is a reasonable possibility that its proposal would be next in line for award if the protest is sustained. In post-award protests with an intervening offeror between the awardee and the protester, the protester’s economic interest may be considered too remote to qualify as an interested party to raise certain challenges against the awardee’s proposal. This is because when there is an intervening offeror that would be next in line for award should the protester’s protest be sustained, that intervening offeror is deemed to have a greater economic interest in the procurement. To establish standing in such procurements, the protester must challenge the agency’s evaluation of the intervening offeror to either show that it possesses the necessary economic interest to raise the pertinent challenges or otherwise demonstrate that its competitive position is subject to change based on the errors it identifies in the government’s evaluation.