Back in 2020, we discussed an SBA Office of Hearings and Appeals (OHA) decision stating that the managing venturer must control every aspect of the joint venture. This position, which we questioned in that article, has changed since that time, and we explored the changes to the regulatory language in question not long thereafter. But this regulatory language was still vague. Since that time, there has been much case law development. The Court of Federal Claims (COFC) held in 2022, “[a] minority owner’s control over “extraordinary” actions, such as actions intended to protect the investment of minority shareholders, will not result in a finding of negative control” and applied this idea to a populated joint venture. Swift & Staley, Inc. v. United States, No. 21-1279, 2022 WL 1231428 (Fed. Cl. Mar. 31, 2022), aff’d, No. 2022-1601, 2022 WL 17576348 (Fed. Cir. Dec. 12, 2022). It now appears, fairly established at this point, that non-managing venturers can have a say in what can best be described as “extraordinary actions.” These are the sorts of decisions that can completely change the trajectory of the joint venture. But contractors must still be very careful in giving the non-managing venturer a say in the joint venture’s decisions. As one firm learned the hard way in a recent COFC case, a joint venture with too many actions controllable by the non-managing venturer may end up ineligible for set-asides. Here, we explore this decision.
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OHA: JV Violates Two-Year Rule, Loses Award
The joint venture two-year rule always generates a lot of questions. But it’s an important one for small business joint venture members to understand and comply with. A recent decision from the Small Business Administration Office of Hearings and Appeals (OHA) shows why. In the case, a joint venture lost an award because it violated the two-year rule.
Continue readingGovology Webinar: Compliant and Effective Teaming Agreements, Joint Ventures & Subcontracts – 3-Part Series (2023 Update) July 11-13, 2023, 1:00pm EDT
For large and small contractors alike, teaming agreements, joint venture agreements, and subcontracts can be essential to winning and successfully performing federal government contracts. In this three-part series, government contracts attorneys Nicole Pottroff and John Holtz will explain how to develop, negotiate and administer agreements that are both compliant and effective. The presentations will cover both the key rules (such as flow-downs and ostensible subcontractor affiliation) and best practices for agreements that go beyond the bare minimum legal requirements. Hope you will join us! Register here.
OHA: Ill-Defined Joint Venture Agreement and State Law Requirements Means JV was Invalid
As readers of SmallGovCon know, SBA interprets its small business joint venture rules very strictly. A small business joint venture must follow all of SBA’s requirements down to the letter, or risk being found noncompliant. In a recent case, SBA’s Office of Hearings and Appeals (OHA) examined how a joint venture was managed under the state law of Michigan and found that the joint venture was noncompliant with small business rules.
Continue readingOpen to Interpretation? Don’t Guess if Your Joint Venture Agreement Plays by the Rules
A recent SBA decision showcased the strict manner in which SBA interprets its joint venture agreement rules. After an agency awarded a contract to a joint venture entity, SBA determined the joint venture was ineligible due to fairly small deficiencies in a joint venture agreement. It’s a situation that no federal contractor wants to encounter. SBA requires strict adherence to the requirements that must be contained in nearly all joint venture agreements. Unfortunately, one company learned this lesson the hard way.
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