VA Updates Guidance on SDVOSB Joint Ventures, Fixes Error

As of September 2019, the VA has updated its Verification Assistance Brief on SDVOSB joint ventures. The old assistance brief was last revised in 2017 and contained some incorrect information. To its credit, this update removes the wrong info and it contains some additional guidance that could be helpful for SDVOSB joint venture members.

The new assistance brief contains a lot of the same information as the old, but it has been updated in some key ways.

First, the the incorrect guidance about how joint venture members split profits is gone. (The two and half year revision period, not so good). The old version of the document said that “the SDVO SBC must receive profits from the joint venture…commensurate with their ownership interests in the joint venture.” This has not been right since December 2016.

Now, the the VA correctly states:

4. The Joint Venture agreement must contain a provision “[s]tating that the SDVO SBC must receive profits from the joint venture commensurate with the work performed by the SDVO SBC….” 13 CFR § 125.18(b)(2)(iv)

The updated brief also cites to the new SDVOSB rules that are found in the SBA’s regulations, rather than the VA’s rules.

Furthermore, the brief now includes a few lessons learned from OHA SDVOSB protest decisions. These include:

  • A joint venture need not meet the eligibility requirements of 13 CFR §§ 125.12 and 125.13 but must meet the specific requirements governing joint ventures found at 13 C.F.R. § 125.18 (b)(2).
  • The regulations do not require the VOSB/SDVOSB members of the joint venture to possess the critical licenses needed for a joint venture to perform a contract.
  • The joint venture regulations do not contain provisions for finding one joint venturer inordinately reliant upon another joint venturer.

These bits of advice are helpful. Good on the VA for providing this guidance to veteran business owners.

One last statement in the brief is a bit mysterious:

When submitting a bid package on a setaside [sic] procurement, the joint venture should submit to the Contracting Officer an amendment to its joint venture agreement to conform to the specific requirements of the solicitation, including the requirements relating to 13 C.F.R. § 125.18 (b)(2).

Frankly, I don’t know where this is coming from. There is no citation provided, and I could not locate it anywhere in the OHA decisions cited in the brief. I’m not aware of a requirement to submit SDVOSB joint venture amendments to a contracting officer. While it may be an individual solicitation requirement, it is not a VA rule as far as I can tell. The VA should clarify this point in the Assistance Brief to explain it more fully or simply remove this recommendation.

Beyond that, the updated assistance brief should be helpful to those companies looking to establish or maintain SDVOSB joint ventures. The incorrect info about profit sharing has now been revised. But the advice about where to submit an amended joint venture could use additional revision.