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Benefits and Rules of the Joint Venture Program

Benefits of Joint Ventures for Participants Include:

  • Combining past performance records
  • Sharing costs and resources
  • Using each other’s experience and market share

A mentor and their protégé can form a joint venture as a small business for any small business contract, as long as the protégé qualifies as small on its own. This joint venture can also pursue contracts set aside for specific groups like 8(a), service-disabled veteran-owned, woman-owned, and HUBZone businesses.

To bid on small business contracts, your joint venture must meet the requirements for an exclusion of affiliation for contracting purposes.

The SBA no longer approves joint venture agreements for competitive 8(a) contracts, including those formed under the SBA Mentor-Protégé Program (MPP). However, the SBA will still review and approve joint venture agreements for sole-source 8(a) contracts. Realize this makes it somewhat confusing on the status of your Joint Venture since companies won’t have any documentation to prove their status as an 8(a) JV until/unless they are receiving a sole-source 8(a) contract. Companies need to follow proper procedures and obtain the correct documentation because competitive 8(a) awards can be protested and the company will be forced to prove it has qualified for the award.

Setting Up a Joint Venture

Your joint venture agreement must be written and comply with SBA requirements. It must have its own name, Unique Entity Identifier (UEI), and Commercial And Government Entity (CAGE) code in the federal System for Award Management at SAM.gov. In SAM, list the entity type as a joint venture, with individual partners as immediate owners.

To get an exclusion from affiliation, the mentor-protégé agreement must be approved before submitting an offer for a small business contract as a joint venture. Email the certificate to mppjvreporting@sba.gov. The protégé must provide a joint venture compliance certificate to the SBA and the contracting officer.

Rules for Joint Ventures

Limitations on Subcontracting:

  • For service contracts, pay no more than 50% to non-similarly situated firms.
  • For supplies or products contracts, pay no more than 50% to non-similarly situated firms.
  • For construction contracts, pay no more than 85% to non-similarly situated firms.
  • For special trade contracts, pay no more than 75% to non-similarly situated firms.

Performance of Work:

The protégé must perform at least 40% of the joint venture’s work. If the joint venture and protégé meet the minimum work share requirements, the protégé will do 20% of the contract work. For size determination purposes, 40% of the contract revenues must go to the protégé.

Allocation of Joint Venture Receipts:

The joint venture must submit annual evaluation reports, annual performance-of-work statements, and project-end performance-of-work reports to the SBA and contracting agencies. These reports explain how the work is performed for each contract. Annual evaluations are due 30 days after the anniversary date on your welcome letter. Annual reports are due 45 days after each operating year, and project-end reports are due 90 days after contract completion. The protégé is responsible for reporting the evaluation under its DUNS number.

For detailed regulations on joint ventures under the SBA MPP, see 13 CFR 125.8 and 13 CFR 125.9.

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SDB Growth has significant experience developing Small Disadvantaged Businesses and supporting business development. We can support your application to enter the SBA’s SDB program, help you win sole-source contracts, or even help you market to the Federal Government. We have supported the award of over 30 sole-source awards. Contact SDB Growth at https://sdbgrowth.com/ for more information.

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