Megen-Awa 2, LLC v. United States

In the United States Court of Federal Claims
No. 17-1923C
(Filed May 30, 2018)
NOT FOR PUBLICATION
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MEGEN-AWA 2, LLC, *
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Plaintiff, *
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v. *
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THE UNITED STATES, *
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Defendant, *
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and *
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VETERANS CONSTRUCTION *
COALITION, LLC, *
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Defendant–Intervenor. *
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ORDER
For the reasons stated on the record at the May 24, 2018, status conference,
plaintiff ’s motion for judgment on the administrative record, ECF No. 28, is
DENIED and the cross-motions for judgment on the administrative record of
defendant and intervenor, ECF Nos. 36 and 33, are GRANTED.
In sum, the Small Business Administration’s (SBA) Office of Hearings and
Appeals (OHA) did not violate the applicable regulations or act arbitrarily in finding
that the two joint venture (JV) partners composing plaintiff were affiliated based on
an identity of interest. The two entities are owned by brothers, and OHA found
there were more than minimal business relations between them, in the form of
subcontracts and joint ventures. The Court did not find that 13 C.F.R. § 121.103(h)
(2015) † created a safe harbor from general affiliation for entities in a joint venture
receiving three or fewer contracts over two years, and held that the
§ 121.103(h)(3)(ii) exception for 8(a) joint ventures did not shield the entities in a
joint venture from a finding of affiliation under paragraphs (c) through (g) of that
section. Each of the several tests for determining affiliation under § 121.103 is a
separate hurdle to be cleared, so it was not improper for OHA to apply the identity
of interest test under 13 C.F.R. § 121.103(f) to the two entities. Nothing in
§ 121.103 precluded the SBA from considering revenues derived from 8(a) JVs in
determining whether businesses owned by family members were affiliated, and the
OHA decisions recognizing such an exclusion for mentor–protégé joint ventures
rested on specific regulatory text that applied only to mentor–protégé JVs. And finally,
the affirmance of the finding of no clear fracture between the two entities was
sufficiently explained and did not omit any required analysis.
Thus, plaintiff ’ s motion for judgment on the administrative record is
DENIED and the cross-motions of defendant and intervenor are GRANTED. The
Clerk shall enter judgment accordingly.
IT IS SO ORDERED.
s/ Victor J. Wolski
VICTOR J. WOLSKI
Judge
† Because the relevant solicitation issued on June 9, 2016, the controlling
regulations were the version of § 121.103 in effect until June 30, 2016. See IU Int’l
Corp. v. United States, 116 F.3d 1461, 1462 n.1 (Fed. Cir. 1997).
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