A joint venture challenged the SBA's finding that it was "other than small" after its mentor-protégé agreement ended, but before final proposal revisions were made. The protester argued the snapshot-in-time rule meant size could only be evaluated as of initial offers. The Court of Federal Claims rejected this argument, holding that the SBA could properly consider whether a valid mentor-protégé agreement existed as of the final proposal revision date when evaluating joint venture compliance.
Primary Health Care, LLC v. United States, U.S. Court of Federal Claims, No. 25-1795C
- Background - The Defense Health Agency issued a small business set-aside solicitation. Primary Health Care, a joint venture between mentor Distinctive Health Care and protégé Anglin Consulting, submitted an offer and self-certified as small. At the time of initial offers, the parties had a valid SBA-approved mentor-protégé agreement. However, Distinctive terminated the mentor-protégé agreement before the final proposal revision date. After the agency issued a pre-award notice, a competitor filed a size protest. The SBA determined the joint venture was "other than small" because no valid mentor-protégé agreement existed at the final proposal revision date. Primary then filed suit at the Court of Federal Claims
- Snapshot Rule vs. Final Proposal Review - The protester argued that under the snapshot-in-time rule, size determinations are made only once—at the time of initial offers—and subsequent changes are irrelevant. The rule generally provides that if a business qualifies as small when submitting its offer, it remains small even if circumstances change before award. However, the Court found this argument overlooked a critical distinction. While the snapshot rule applies to traditional size determinations, separate regulations require evaluation of mentor-protégé joint venture agreement compliance as of the final proposal revision date. The Court held that the SBA reasonably interpreted its regulations to require a valid mentor-protégé agreement to exist through the final proposal revision date.
- Joint Venture Agreement Requirements - The protester contended the SBA's review should be limited to a "check-the-boxes" facial examination of the joint venture agreement's written terms, not the underlying relationship. The Court disagreed. Regulations require joint venture agreements to meet specific criteria, including provisions designating the small business protégé as managing venturer and ensuring the protégé performs at least 40 percent of the work. These requirements presume an ongoing mentor-protégé relationship. Section 125.8(b)(2) explicitly refers to an agreement "between a protégé small business and its SBA-approved mentor."
- Precedent and Regulatory Changes - The protester cited earlier SBA Office of Hearings and Appeals decisions where joint ventures qualified for set-asides despite expired mentor-protégé agreements. However, the Court found these earlier decisions were based on older versions of SBA regulations that did not require joint venture agreement compliance to be evaluated as of the final proposal revision date. The 2020 regulatory revisions changed this requirement. At the time it changed the rule, the SBA specifically explained it wanted to prevent joint ventures from pointing back to initial offers when control relationships had changed during negotiations.
The plaintiff is represented by Meghan F. Leemon and Eric A. Valle of PilieroMazza PLLC. The government is represented by Ioana C. Meyer, Brett A. Shumate, Patricia M. McCarthy, and Steven Michael Mager of the U.S. Department of Justice, Commercial Litigation Branch.