The SBA has corrected a flaw in the profit-splitting provisions of its new joint venture regulations.
Under the corrected regulations, which became effective on December 27, all of the SBA’s joint venture regulations–those for small businesses, SDVOSBs, HUBZones, 8(a)s, and WOSBs–will require that each joint venturer receive profits commensurate with the work it performs. The SBA’s revisions clear up an inconsistency between the 8(a) joint venture regulations and the regulations for the SBA’s other set-aside programs, and eliminates a potential disincentive for joint venturers to avail themselves of the protections of a formal legal entity such as a limited liability company.
The HUBZone program will see significant changes to its rules as a result of major SBA changes set to take effect in late August.
These changes apply generally to two aspects of the HUBZone program: that relating to the SBA’s processing of HUBZone applications, and a significant expansion of the HUBZone joint venture requirements.
The SBA has proposed major changes to rules governing joint venturing for set-aside contracts.
As part of a proposed rule released last week, the SBA proposes to eliminate so-called “populated” joint ventures, and proposes additional changes regarding joint venture certifications, performance of work reports, and more.