Congress Says Small Businesses Without Past Performance Can Submit Joint Venture Experience Instead

Per the 2021 NDAA that was recently approved by Congress, small business offerors without their own past performance experience can now submit experience earned as part of a joint venture–and the procuring agency must consider it. This change will significantly benefit newer companies that do not yet have the individual experience to successfully compete for government contracts (that is, assuming the President signs the NDAA). It will also add an incentive for start-up companies to take advantage of SBA’s joint venture opportunities.

The Conference Report on the 2021 National Defense Authorization Act proposes some landmark changes to the rules of government contracting, some of which we have previously blogged on here, here, and here. While this change regarding past performance evaluations may not sound quite as “groundbreaking” as some of the others, it has a whole lot of potential for some lasting effects in the federal procurement world.

Section 868 of the NDAA amends Section 15(e) of the Small Business Act (15 U.S.C. § 644(e)) by adding the following paragraph:

With respect to evaluating an offer for a prime contract made by a small business concern that previously participated in a joint venture with another business concern (whether or not such other business concern
was a small business concern), the Administrator shall establish regulations—

(A) allowing the small business concern to elect to use the past performance of the joint venture if the small business concern has no relevant past performance of its own;

(B) requiring the small business concern, when making an election under subparagraph (A)— (i) to identify to the contracting officer the joint venture of which the small business concern was a member; and (ii) to inform the contracting officer what duties and responsibilities the small business concern carried out as part of the joint venture; and

(C) requiring a contracting officer, if the small business concern makes an election under subparagraph (A), to consider the past performance of the joint venture when evaluating the past performance of the small business concern, giving due consideration to the information provided under subparagraph (B)(ii).

For many small businesses that are just getting their feet wet in the massive pool of government contracting, joint venturing was already a very valuable option. It allows companies to partner with larger and/or more experienced companies to do government work (specifically, work that many new and inexperienced companies wouldn’t have the capability to perform alone). Now that such companies can accumulate joint venture experience in the industry and use it to compete for contracts on their own later on, there are even more benefits to participating in joint ventures.

So long as the small business properly identifies the joint venture it was a party to, as well as its individual duties and responsibilities in the joint venture’s performance of contracts, agencies are now required to consider that information when evaluating past performance. Though some solicitations have previously provided this option to offerors (the option to submit joint venture past performance), the fact that joint venture experience is now guaranteed to count is a pretty big deal.

Let’s take a look at a quick example to see how this works. We’ll say that Kevin’s Chili, LLC, is a small company in its first year of business. Kevin’s wants to bid on an event planning contract issued by the VA, but it has not yet performed any government contracts on its own. Kevin’s has, however, performed under a prior federal event planning contract as a member of Angela’s & Kevin’s JV, a joint venture with Angela’s Brownies, LLC. The VA’s solicitation for the work does not expressly allow offerors to submit work performed as a joint venture. However, under the NDAA’s amendment to the Small Business Act, Kevin’s can still submit the experience it earned under Angela’s & Kevin’s JV–so long as it clearly identifies the joint venture and its own role in contract performance to the VA’s contracting officer. And the VA has to consider it!

Notably, this is separate and distinct from SBA’s requirement that the “procuring activity must consider work done individually by each partner to the joint venture as well as any work done by the joint venture itself previously[]” when evaluating the past performance of a joint venture offeror. Here, we are talking about one of the joint venture partners bidding individually on work and (now) being able to leverage its joint venture experience in doing so.

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