Joint ventures created between a small business protégé and a large mentor are without a doubt a very alluring and popular aspect of the SBA’s Mentor-Protégé Program. It provides an incentive to potential mentors to share their connections, resources, experience, and industry knowledge with small businesses, many of whom are not only small, but participants in one of the various SBA programs such as the 8(a) Program and Woman-Owned Small Business Program, to name a couple. But, as appealing as mentor protégé joint ventures are, a recent decision demonstrates (yet again) there are a number of joint venture requirements that must be met if you want to experience their benefits. And failure to do so can result in some undesirable consequences.
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Help Please: SBA Asking for Input on Mentor-Protege and Joint Venture Issues
SBA has indicated that it will be holding a tribal consultation meeting in June. Among the topics to be discussed will be the 8(a) Program and SBA Mentor-Protege Program and joint ventures. This request is interesting because it reveals a little bit about what the SBA is thinking with regards to the Mentor-Protégé Program and joint venture issues. While it is especially relevant for entity-owned 8(a) Program firms, it is also revealing for other small businesses.
Continue readingNo More HUBZone Price Preference for Most Mentor-Protege Joint Ventures
An advantage of being a HUBZone Program contractor is the aptly-named HUBZone price evaluation preference. The possibility of utilizing that price preference has been a great reason for contractors to form joint ventures with HUBZone businesses. However, contractors need to be aware that SBA has effectively eliminated the usage of price preference within certain joint ventures.
Continue readingGovCon FAQs: It’s Been Two Years–Has My Joint Venture Reached the End of the Road?
The lifespan of a joint venture is a frequently asked question that can be hard to find in SBA’s regulations if you don’t know where to look. Alternatively, people hear about the “two-year rule” and assume that’s the answer. This question comes up frequently because, like many topics in federal contracting, the answer requires some digging into the regulations and specifically the affiliation rules.
Continue readingSpell it Out for Me: OHA Finds Joint Venture Agreement Compliant When Reviewed with Operating Agreement
When an SBA approved mentor and protégé create a joint venture to pursue contracts set-aside for small businesses, SBA requires the mentor-protégé joint venture agreement to contain the requirements found in 13 C.F.R. § 125.8(b)(2). But how closely does the joint venture agreement have to match the language of these required provisions in order to be found complaint?
In DecisionPoint-Agile Defense JV, LLC, OHA considered whether the language in a joint venture’s operating agreement (OA) can be considered alongside the joint venture agreement (JVA) when determining if a JVA meets all the regulatory requirements.
Continue readingSBA Reminder: Ensure all Joint Venture Requirements are Met to have a Successful JV
Joint ventures pursuing a contract under any of the SBA’s socioeconomic programs (Woman-Owned Small Business Program, Service-Disabled Veteran-Owned Small Business Program, 8(a) Program, and HUBZone) all have requirements beyond the general requirements that a non-joint venture prime contractor must meet to be eligible for those types of set-asides. The joint venture must be considered small, which may take into account the size of both venturers, and the joint venture agreement itself must contain specific information. But what happens when the regulatory text isn’t exactly clear on how those two requirements fit together? And how are unsuccessful offerors, contracting officers, and the SBA itself supposed to challenge the status of those joint ventures if the regulatory text doesn’t explicitly provide for the means to do so? Read our analysis of the decision in Chenega Base and Logistics Services, LLC to find out!
Continue readingGovCon FAQs: How Should a Joint Venture Allocate Profits?
It is a fairly standard business practice to divide profits according to ownership ratio. And a joint venture made up of only small business venturers only pursuing small business set-asides can follow this business practice—or any business practice—to divide up its profits (limited only by any applicable state, local, or Tribal law). But SBA does have specific and strict requirements for allocating the profits of any joint venture (1) between a small business protégé and its SBA-approved large business mentor, and (2) that qualifies for and pursues socioeconomic set-asides (i.e., 8(a) Program, WOSB/EDWOSB, HUBZone, VOSB/SDVOSB) and includes non-similarly situated entities.
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