Check Your Joint Venture Agreements: Under-the-Radar SBA Change Could Cause Problems

Joint ventures operating under the SBA’s All Small Mentor-Protege Program may need to adjust their joint venture agreements because of a little-noticed change to SBA’s joint venture rules.

In its recent final rule, effective November 16, SBA amended two of the mandatory requirements for mentor-protege joint ventures pursuing small business set-aside contracts. SBA did not make corresponding changes to the joint venture rules for SBA’s four major socioeconomic programs–meaning that a joint venture agreement that complies with the small business set-aside rules may not be valid if the joint venture pursues 8(a), SDVOSB/VOSB, HUBZone or WOSB/EDWOSB contracts (and vice versa).

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SBA Confirms Mentor can Own 40% of Protégé and Get 60% of Joint Venture Workshare

The SBA’s recent final rule on Mentor-Protégé Program consolidation included a number of important updates and clarifications. Among these was an explanation of the rules involving a mentor owning part of a protégé while also being part of a joint venture with the same protégé. It’s something I’ve always wanted SBA to confirm, so I’m glad they did.

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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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VA Updates Guidance on SDVOSB Joint Ventures, Fixes Error

As of September 2019, the VA has updated its Verification Assistance Brief on SDVOSB joint ventures. The old assistance brief was last revised in 2017 and contained some incorrect information. To its credit, this update removes the wrong info and it contains some additional guidance that could be helpful for SDVOSB joint venture members.

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SBA OIG All Small Mentor-Protégé Program Evaluation Reveals Concerns and Suggests Improvements

In 2016, SBA established the All Small Mentor-Protégé Program, or ASMPP, enabling mentors of any size to provide business development assistance to small protégé businesses to enhance the protégé’s ability to compete for federal contracts. Since then, the ASMPP has served as a powerful tool for many businesses and, as of August 1, there were 885 active mentor-protégé agreements.

Recently, however, the SBA’s Office of the Inspector General released a report highlighting some opportunities to improve the program and recommending SBA take additional steps to ensure compliance with the program’s requirements.

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5 Things You Should Know: Joint Ventures

In the age of consolidated contracts and increased competition, small business federal contractors are searching for a way to improve their odds of winning the next opportunity. One of the most important tools for doing so is to form a joint venture.

Here are five things you should know about small business joint ventures:

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Failure to Update Joint Venture Agreement Costs Mentor-Protégé SDVOSB JV a Contract

Updating your joint venture agreement is essential to maintaining compliance with SBA’s regulations and failing to update could cost you contracts.

In Stacqme, LLC, SBA No. SIZ-5976 (Dec. 10, 2018), the SBA Office of Hearings and Appeals held that a mentor-protege joint venture’s failure to update its JV agreement caused the agreement to be non-compliant with the SBA’s rules, and meant that the joint venture was ineligible for an SDVOSB set-aside contract.

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