It’s no secret that federal contract opportunities are becoming more and more competitive. But as we’ve previously gushed, small businesses enjoy a tremendous tool for enhancing their competitiveness: participating in a joint venture with another company.
Properly formed, a joint venture allows its participants to augment their capabilities and experiences in the quest to win (and successfully perform) a particular opportunity. But there’s the trick—to enjoy the benefits of a joint venture, that joint venture must meet various regulatory requirements. One misstep and the joint venture might not be eligible for the award.
A recent SBA Office of Hearings and Appeals decision shows the importance of making sure these regulatory requirements are met.
Joint venture agreements continue to be a hot topic among small business federal contractors. For good reason: if the agreement is properly prepared, a joint venture allows two companies (including, in the case of an approved mentor and protégé, a large business) to augment their capabilities and jointly bid on a federal project.
But to avail themselves of this benefit, the venturers must first prepare a joint venture agreement that complies with the SBA’s requirements. Sometimes, this task can be quite tricky. And as a recent decision of the SBA’s Office of Hearings and Appeals shows, the failure to have a compliant joint venture agreement can cost the joint venture an award.
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.
The SBA’s All Small Mentor-Protégé program offers a tremendous opportunity for participants to pursue set-aside contracts as joint venture partners. But misunderstandings and misconceptions about how SBA mentor-protégé joint ventures work are pervasive.
One very common misconception is that the SBA must pre-approve a mentor-protégé joint venture. In most cases, that’s not so. In a recent bid protest decision, even the GAO appeared a little confused, repeatedly mentioning SBA approval of a joint venture even though no such approval was required for the contract in question.
I am excited to announce the publication of Government Contracts Joint Ventures, the first in a new series of new government contracting guides we’re calling “Koprince Law LLC GovCon Handbooks.” Packed with easy-to-understand examples and written in plain English, Government Contracts Joint Ventures should help you maximize your understanding of this important option for pursuing federal contracts.
What does the Handbook contain? I’m glad you asked.
A non-SDVOSB company couldn’t protest the terms of a VA SDVOSB set-aside solicitation, despite entering into a joint venture agreement with an SDVOSB–because the joint venture hadn’t started the process of becoming verified by the VA.
In a recent bid protest decision, GAO held that because neither the protester nor the joint venture was included in the VIP database, or likely to be included during the protest process, the protester wasn’t an “interested party” under the GAO’s bid protest regulations.