In business a Joint Venture (JV) is two or more businesses joining together for a profit and sharing the risk associated with its development. In Federal Contracting, a JV competing on small business contracts contains additional definitions. According to the SBA a SB JV must be between an SBA approved Mentor and Protégé under the SBA MPP where the protégé individually qualifies as small.
The creation of a SB JV allows two businesses to bid on set-aside contracts that would usually be unobtainable due to the requirements, such as the Protégé lacking past performance and the mentor being a large business. Prior to competing on set-aside contracts the JV must be approved by the SBA to exclude affiliation.
The JV is a new and separate entity from its two constituent “venturer” companies, with its own Unique Entity Identification (UEI) and SAM registration.
The Small Business Administration has specific rules for the operation of Joint Ventures under the limitations on subcontracting:
Limitations on Subcontracting
- “As the joint venture prime of either a full or partial set-aside contract, the small business concern must agree to the following limitations on subcontractor for the respective contract types:
- Pay no more than 50% of the amount paid by the government to non-similarly situated firms for service contracts.
- Pay no more than 50% of the amount paid by the government to non-similarly situated firms for supplies or products contracts.
- Pay no more than 85% of the amount paid by the government to non-similarly situated firms for construction contracts.
- Pay no more than 75% of the amount paid by the government to non-similarly situated firms for special trade contracts.”
Performance on Contracts
- The protégé must perform at least 40% of the work done by the joint venture.
- On contracts under the JV, the protégé must perform at least 20% of the work, but 40% of revenue will be considered in determining protégé size.
- The JV must submit annual report to the SBA
- Annual evaluation reports,
- Annual performance-of-work statements, and
- Project-end performance-of-work
- Once a JVs first contract is awarded, it has two years to submit proposals and win contracts before being considered affiliated.
- However, the JV may still issued and perform on orders under a previously awarded contract beyond the two years (a la GSA contracts)
What are the benefits of pursuing a Joint Venture?
Joint Ventures are a great opportunity for small businesses to expand their opportunities by increasing their past performance and internal management abilities through the support of their Mentor.
For the Mentor, they now have access to small business and set-aside contracts not usually open for them, while sharing best practices and mentoring other businesses.
Where can I find a business to partner with?
If you don’t already have a business you want to partner with, Coley invites you to join the FedMap community, a place for growth-focused government contractors are engaging and eager to work with others. Attend virtual and in-person events but keep in mind that you must truly vet your partner and ensure company’s values and culture are aligned.
Coley has over 20 years’ experience helping Joint Ventures obtain their GSA Schedule and keep it compliant. We are available to help make the process easy. Contact us today at firstname.lastname@example.org, by phone at 210-402-6766 or schedule a call at a time convenient for you to get started on obtaining your GSA Schedule—a critical step on your road to success in the government market.
Roman, a GSA Schedule consultant, provides support to contract holders working tirelessly to keep clients up to date and compliant.