Picking Your Teams: Joint Ventures Versus Prime/Subcontractor Teams (Part One, Workshare)

Federal contractors often ask: “It is better to team up for government work with a prime-sub arrangement or with a joint venture?” Well, (spoiler alert) the answer is: it depends. But I won’t leave you with just that. This three-part series will provide insight on some of the major differences between these two types of “teams” that offerors should consider when making the decision between a joint venture or prime/subcontractor team in competing for and performing federal contracts. While this series will not provide a comprehensive list of all the differences between these two types of teams, it will cover some of the big ones that seem to come up more frequently in this decision-making process. The focus of this first article will be work share.

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SBA Clarifies How to Calculate Joint Venture Receipts for Small Business Size Purposes

In many industries, small business status under SBA’s government contracting rules depends on a company’s average annual receipts. But if a company is a member of a joint venture, it can be confusing figuring out which joint venture receipts count toward the company’s small business size.

Fortunately, in its recent new rule, SBA has provided two important clarifications. Let’s take a look.

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Joint Ventures and the Limitations on Subcontracting: SBA Provides Some Clarity

Joint ventures operating under the SBA’s regulations are subject to two work share restrictions: the limitations on subcontracting, which governs work share between the joint venture and its subcontractors) and the so-called “40 percent rule,” which governs work share between the joint venture partners.

It can be easy to get confused about how the rules work together. Fortunately, in a new rule published on October 16, SBA has provided some much-needed clarity.

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