Partner in a Mentor-Protege JV Was Acquired After JV Submitted Proposal. Did the Acquisition Invalidate JV’s Mentor-Protege Agreement?

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The solicitation in this protest required mentor-protege joint ventures to submit a copy of their SBA-approved mentor-protege agreement with their proposal. The awardee was a mentor-protege JV. But after the awardee had submitted its proposal, its mentor-partner had been acquired by another company. The protester contended this acquisition had invalidated its mentor-protege agreement. GAO disagreed, finding that although the mentor had been acquired, there was no change in its business operations, and the mentor had certified that it would still abide by the terms of the existing mentor-protege agreement.

ASRC Federal Systems Solutions, LLC, GAO B-420443, B-420443.2

NASA posted an RFP seeking engineering technical and trade support services. The procurement was set aside for small businesses. NASA received three offers, including proposals from ASRC Federal Systems Solutions and RSi-QuantiTech, JV. RSi was an SBA-approved mentor-protege joint venture. NASA awarded the contract to RSi, finding that the company had a superior approach.

ASRC filed a protest with GAO. ASRC argued among other things, that RSi had an organizational conflict of interest and that NASA conducted misleading discussions. GAO did not find those arguments persuasive. (A summary of the GAO decision on those argument can be found here.)

ASRC also asserted an argument concerning mergers and acquisitions. The RFP required mentor-protege JV’s, like RSi, to submit a copy of their mentor-protege agreement. The RFP required that a mentor-protege joint venture had to be approved by the SBA at the time they submitted an offer. After RSi had submitted its offer, the the JV’s mentor-partner had been acquired by another company. ASRC alleged that the mentor-partner in RSi had undergone a corporate change, and that this change should have been approved by the SBA

GAO rejected this argument, finding that while the ownership of the mentor had changed, there had been no change in the company’s business systems or operations. The mentor had notified the SBA of the change and had avowed there would be no changes in the agreement itself. Moreover, the mentor-partner had also certified that it would continue to abide by the terms of the mentor-protege agreement. Under the circumstance, GAO declined to find that the transaction had invalidated RSi’s mentor-protege agreement.

ASRC is represented by Amy L. O’Sullivan, Zachary H. Schroeder, Issac D. Schabes, and Karla V. Perez Chacon of Crowell & Moring LLP. The intervenor RSi-QuantiTech JV, is represented by Carla J. Weiss, David B. Robbins, Noah B. Bleicher, Moshe B. Broder, and Scott E. Whitman of Jenner & Black LLP. The agency is represented by Ian Rotfuss and Jerry L. Seemann of NASA. GAO attorneys Kasia Dourney and Alexander O. Levine participated in the preparation of the decision.

GAO - ASRC Federal System Solutions