We at SmallGovCon are excited to announce this first in a new line of blogs we call GovCon FAQs. Our firm handles a wide variety of federal procurement and contract matters, from bid protests, size protests, joint ventures, socio-economic certifications, to everything in between. Often, when talking to blog readers and contractors we hear the same sort of questions pop up. Of course, we can only provide direct legal advice to our clients. But many of these questions hit on issues that face contractors as a whole, or are items that are commonly misunderstood. So, we decided contractors needed an FAQ page for those common general questions. This blog will kick off that FAQ page for contractors. The first big frequently asked question:
Do I need an SBA Mentor-Protege Agreement to form a joint venture and perform on federal contracts as a joint venture?
The short answer to that FAQ: No, not always.
For unrestricted solicitations (i.e., solicitations that are not set aside for small business or socio-economic set-asides), you can generally joint venture without an SBA Approved Mentor-Protege Agreement in place between the joint venture members. Of course there may be set-aside pools, and terms that do bring this into play. So, as always, make sure to read your solicitations very carefully.
For set-aside solicitations, it depends on the size of the joint venturers themselves. SBA regulations state: “A joint venture of two or more business concerns may submit an offer as a small business for a Federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract, or qualify as small under one of the exceptions to affiliation set forth in § 121.103(h)(4) of this chapter.”
So, if both venturers are “small” under the NAICS code assigned to the procurement (more on how to determine size here) then their joint venture can bid on small business set-asides without needing to form the joint venture under an SBA-Approved Mentor-Protege Agreement.
Similarly, for socioeconomic set-asides, if both venturers are small for the procurement, and the small business venturer holds the necessary certification (8(a), SDVOSB, WOSB etc.), then the joint venture may bid on that procurement without needing to form the joint venture under an SBA-Approved Mentor Protege Agreement.
Where the Mentor-Protege Agreement comes into play as a necessity, is when one of the venturers is not a small business for the particular target solicitation. One of the many benefits of the SBA’s Mentor-Protege Program (here is part 1 and part 2 of our series on misconceptions of the SBA Mentor-Protege Program) is the ability to enter into a joint venture with your mentor, and just completely disregard that mentor’s size when determining whether a joint venture can bid on a solicitation.
SBA regulations state:
“A protégé and mentor may joint venture as a small business for any government prime contract, subcontract or sale, provided the protégé qualifies as small for the procurement or sale. Such a joint venture may seek any type of small business contract (i.e., small business set-aside, 8(a), HUBZone, SDVO, or WOSB) for which the protégé firm qualifies (e.g., a protégé firm that qualifies as a WOSB could seek a WOSB set-aside as a joint venture with its SBA-approved mentor). Similarly, a joint venture between a protégé and mentor may seek a subcontract as a HUBZone small business, small disadvantaged business, SDVO small business, or WOSB provided the protégé individually qualifies as such.”
So, if there is a large business in the joint venture, then to bid on small business or socio-economic set-asides, a SBA-approved Mentor Protege agreement is necessary.
This MPA advantage is likely where this FAQ arises among contractors. The large-business mentor setup is so frequently used that, presumably, contractors have interpreted it’s wide usage as indicative of a requirement of a joint venture. Instead, it’s simply an advantage provided to those within the SBA’s Mentor-Protege Program.
Of course, there are more nuances to joint ventures not covered here. So we encourage you to read our other blogs on joint ventures (for a good starting point check out our Back to Basics on joint ventures or our joint venture handbook), and check back in for more installments in our GovCon FAQs series. As always, don’t hesitate to reach out to a federal contracting attorney, such as those at SmallGovCon, if you have deeper federal contracting questions.
Questions about this post? Email us Need legal assistance for a federal government contracting matter, give us a call at 785-200-8919.
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