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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations
ineligible for an award as a small business. Because size protests are authorized for competitive 8a contracts, SBA reasoned that prior approval is no longer necessary for joint venture agreements seeking to be awarded such contracts.
The final rule inadvertently did not adequately address how the Area Office will review certain joint venture agreements to perform 8a contracts formed outside the Mentor-Protege Program, such as a joint venture between an 8a Participant and one or more other small business concerns.
Currently, an unsuccessful offeror, SBA, or a contracting officer may protest the status of the apparent successful offeror for a Service-Disabled Veteran Owned SDVO, Historically Underutilized Business Zone HUBZone, WomenOwned Small Business WOSB, or Economically-Disadvantaged WomenOwned Small Business EDWOSB
contract. In determining the status eligibility of a joint venture apparent awardee, SBA will review the joint venture agreement to assess whether it complies with the formal requirements to receive and perform the award as a joint venture. If the joint venture does not comply with these requirements, SBA will sustain the protest and deem the joint venture ineligible for award.
However, there is no existing regulatory process for an unsuccessful offeror, SBA, or a contracting officer to challenge whether a joint venture meets the formal requirements to receive and perform a competitive 8a contract. To this end, the eligibility of a Participant for a sole source or competitive 8a requirement may not be challenged by a disappointed offeror or any other party because SBA reviews the apparent successful offerors eligibility for award in connection with each 8a contract. In addition, prior to the final rule, where the apparent successful offeror was a joint venture, the joint venture had to be approved by SBA prior to or concurrent with the contract eligibility review. In eliminating SBAs role to review and approve joint ventures formed to perform competitive 8a contracts, it was not SBAs intent to allow 8a contract benefits to flow to joint ventures that do not meet the applicable regulatory requirements. To the contrary, as noted above, SBA
envisioned that the size protest process would work to ensure compliance with the formal 8a joint venture requirements. However, in the context of a joint venture between an 8a Participant and one or more other small business concerns, the current size protest procedures are not adequate.

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Under SBAs size regulations, a joint venture is small if each of the partners to the joint venture individually qualify as small. Thus, a joint venture that does not comply with the applicable requirements set forth in 124.513c and d could still qualify as small even though the 8a partner to the joint venture was not the lead or controlling partner. This rule amends 121.103h1i to implement SBAs intent that a joint venture must meet the requirements of 124.513c and d in order to be eligible for a competitive 8a procurement and to make joint ventures in the 8a program consistent with those in the HUBZone, WOSB and SDVO programs. Additionally, SBA
inadvertently left out conforming revisions in the final rule to remove references to SBAs now obsolete review and approval of joint ventures formed to receive and perform competitive 8a contracts. Specifically, the final rule did not make corresponding changes to 124.513a, f, g, h, and j, leaving inconsistency with respect to the requirement for SBA approval. This rule corrects this inconsistency by removing or clarifying references to joint venture approval in 124.513a, f, g, h, and j.
Third, the final rule added a new 124.501k to clearly make the bona fide office requirement applicable to both sole source and competitive 8a awards and better defined the geographical area in which an office needs to be in order to meet the bona fide place of business requirement.
Although SBA intended to allow an office in the geographic area served by a contiguous SBA district office to meet the bona fide place of business requirement, the final regulatory provision did not make that clear. This rule corrects that ambiguity.
Fourth, the final rule clarified a procuring activitys responsibilities when evaluating the past performance, experience, business systems and certifications of an entity submitting an offer for a small business contract as a joint venture. Specifically, the final rule amended 125.8e to provide that when evaluating such offers, the procuring activity should not require a small business protege partner to the joint venture to individually meet any evaluation or responsibility criteria as those required of other offerors generally. SBA inadvertently left out conforming revisions in the final rule to 124.513, 125.18, 126.616, and 127.506 to address the evaluation of past performance, experience, business systems and certifications of a joint venture formed outside SBAs MentorProtege Program to pursue a contract
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set-aside or reserved for 8a Participants, SDVO small business concerns, HUBZone small business concerns, WOSB concerns, or EDWOSB
concerns. This rule corrects the inconsistency by revising 124.513, 125.18, 126.616, and 127.506 to incorporate this clarification.
List of Subjects 13 CFR Part 121
Administrative practice and procedure, Government procurement, Government property, Grant programs business, Individuals with disabilities, Loan programsbusiness, Small businesses.
13 CFR Part 124
Administrative practice and procedure, Government procurement, Government property, Small businesses.
13 CFR Part 125
Government contracts, Government procurement, Reporting and recordkeeping requirements, Small businesses, Technical assistance.
13 CFR Part 126
Administrative practice and procedure, Government procurement, Penalties, Reporting and recordkeeping requirements, Small businesses.
13 CFR Part 127
Government contracts, Reporting and recordkeeping requirements, Small businesses.
Accordingly, 13 CFR parts 121, 124, 125, 126, and 127 are corrected by making the following correcting amendments:
PART 121SMALL BUSINESS SIZE
REGULATIONS
1. The authority citation for part 121
continues to read as follows:

Authority: 15 U.S.C. 632, 634b6, 636a36, 662, and 694a9; Pub. L. 116136, Section 1114.

2. Amend 121.103 by adding a sentence to the end of paragraph h1i to read as follows:

121.103 How does SBA determine affiliation?

h
1
i For a competitive 8a procurement, a joint venture between an 8a Participant and one or more other small business concerns including two firms approved by SBA to be a mentor and protege under 125.9 of this chapter must also meet the requirements of 124.513c and d of
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