Hundreds of small businesses are now in an unenviable position of having to make a tough decision — to bid or not to bid on the Polaris governmentwide acquisition contract.
For those small businesses not in a mentor-protégé joint venture relationship with a large business, they now have to weigh their chances of winning based on a last minute change to the solicitation for this potential 10-year contract with a $10 billion ceiling.
This decision point came because many experts believe the General Services Administration swung the pendulum too far in an effort to give small businesses more opportunities under another massive governmentwide IT contract.
On March 18, GSA released new details under the section for joint ventures and mentor-protégés that removes any requirement for the small business to submit any relevant experience or past performance as part of the bid.
“The [mentor-protégés joint ventures (MP-JV)] with a large business can max out their scores because now you have small businesses competing with multi-billion dollar corporations, and they just can’t win. The MP-JVs can max out almost every category based on the experience of mentors,” said Stephanie Mitchell, co-owner of BD Squared, a bid and proposal consulting firm. “The optics are terrible here. This will be a small business vehicle controlled by large businesses when they already have Alliant 2 and now rolling into Alliant 3. Based on the new information from GSA, they are not evaluating small businesses at all in Polaris, since the information in the bids will mainly come from large businesses.”
Experts question whether Polaris will end up just being a pass-through contract for large businesses given this change as well as the fact GSA is letting small businesses subcontract out as much as 60% of the work on any single task order.
The Small Business Administration lists more than 1,500 mentor-protégé teams, though not all of them include a large business mentor.
Brian Friel, also the co-owner of BD Squared, said if the large business mentor can bring all the relevant project and past performance experience, it’s nearly impossible for a non-MP-JV small business to compete for any of the expected 100 spots under the Polaris small business pool.
Mitchell, small business owners and other experts say GSA’s last minute change means that for many companies the bid-no bid decision comes at the expense of months or more of work and tens of thousands of dollars in preparation.
One small business owner, who requested anonymity so as not to potentially anger GSA, said they have spent about $80,000 over the last 12-15 months preparing to bid on Polaris. Now, the owner said, they may not bid because the chances of them winning are so small.
“The MP-JVs will just take over the program,” said one small business owner. “If you look at the structure of the self-scoring system, the mentors will give their protégé’s a leg up based on their references, systems like cost accounting or earned value management and purchasing. If the protégés can get everything from their large business partner, then there is no way a small business can compete on Polaris.”
The small business owner said their proposal is about 95% done and now they must decide what to do next given the new information from GSA.
GSA declined to comment on the last minute changes to the mentor-protégé joint venture requirements. A spokeswoman said the agency doesn’t comment on open solicitations.
Waiting for new GWAC for 3 years
Small businesses have been waiting for Polaris since the Alliant 2 small business GWAC collapsed in June 2020. The ordering period for the Alliant small business GWAC ended in February 2019 so it’s been more than three years since agencies have had a large scale small business GWAC for IT services. Agencies have had more specific small business governmentwide contracts to use such as 8(a) STARS II and III, VETS 2 GWAC and others from organizations like NITAAC.
Experts say the changes in the Polaris solicitation seems like the changes are an over-correction by GSA.
Cy Alba, a partner with PilieroMazza, said there are good arguments for both sides.
On one hand, SBA has been pushing agencies to make sure small businesses have more contracting opportunities as it has seen the growth of “best-in-class” (BIC) contracts and category management.
“As agencies are putting more BICs together and making them bigger so it’s less likely small business can secure an award, SBA has been pushing joint-ventures and mentor-protégés to combat that,” Alba said. “That way the government is less likely to say small businesses can’t do the work and therefore it will be set aside. It’s clear the opportunities for joint ventures and mentor-protégé relationships are growing.”
One the other hand, Alba said what has been lost in this discussion is what about those companies who don’t want to be part of a mentor-protégé, joint venture relationship.
“The law, as it currently stands, doesn’t differentiate between MP-JVs with large businesses versus those with small businesses. They are all eligible small businesses and are in one bucket,” he said. “There is no way to separate that out right now, which is part of the concerns we are seeing with Polaris.”
Too strict of an interpretation?
Alba said GSA’s over-correction may come from the experience the National Institutes of Health IT Acquisition and Assessment Center (NITAAC) with its CIO-SP4 solicitation.
NITAAC issued multiple amendments and lost its only protest over its approach and subsequent changes to JV-MPs.
Friel said it seems like GSA is interpreting the policy in a way that says it’s fine for the small business not to have to bring any past performance or relevant experience to the bid.
But, he said, it doesn’t make sense for a small business vehicle to have bids based on large business experience.
“It seems like GSA is interpreting the policy more strictly and against common sense,” he said. “We believe GSA can require the protégé to bring some experience to the table. Maybe they could establish a minimum number of examples like two out of five.”
The small business owner said the timing of the changes also are problematic. If GSA had changed the MP-JV requirements six or nine months ago, it would’ve given companies more time to establish these agreements.
Alba added on average it takes 105 days to set up a formal mentor-protégé agreement through SBA. Firms can set up a joint venture in a matter of days, but that’s assuming everyone agrees to everything, which is rarely the case.
BD Squared and others have sent letters to GSA and members of Congress seeking help and an explanation for the change. But in the week-plus since GSA issued the change, they haven’t heard anything back from agency officials.
Alba and others say they will be watching for small businesses to file pre-award protests over the terms of the solicitation.
“I do think the way the SBA rules are set up allows for use in JVs and MPs where any member’s experience can count so it leaves it up to an agency’s discretion where they are in that process and how many or what restrictions they want to require,” he said. “SBA doesn’t get into that so then it becomes a question for the Government Accountability Office or the Court of Federal Claims to say if it’s unduly restrictive. GSA may say they are increasing competition, but what’s funny they may be also limiting competition in a de facto sense because now people may not bid because they know their chances of winning are so low.”
Mitchell said vendors have invested a lot of time and money since December 2020 and to have GSA spring this change in the last minute is “crushing” to many small businesses.
And after all the challenges GSA had with Alliant 2 small business and the time and effort they put into developing Polaris, it’s a shame that, once again, last minute changes could throw a wrench into this new effort.