Joint Venture Agreements
A certified VOSB or SDVOSB may enter into a joint venture agreement with one or more other small business concerns, or with an approved mentor, to submit an offer for an SDVOSB or VOSB set-aside contract.
The SBA has enacted regulations regarding Joint Ventures for SDVOSB or VOSB set aside procurements. The joint venture itself need not be a certified VOSB or SDVOSB. The VOSB or SDVOSB joint venture partner must be certified. And the SDVOSB or VOSB joint venture partner must be the managing venturer of the joint venture.
A joint venture between a protégé firm certified as a VOSB or SDVOSB and its SBA-approved mentor (see 13 CFR §125.9) will be deemed small provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the VOSB or SDVOSB procurement or sale.
Managing Venturer
The certified VOSB or SDVOSB must be the managing venturer responsible for controlling the day-to-day management and administration of the contractual performance of the joint venture. Other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary.
Responsible Manager
An employee of the managing venturer must be the manager with ultimate responsibility for performance of the contract (Responsible Manager).The Responsible Manager of the joint venture need not be an employee of the certified VOSB or SDVOSB at the time the joint venture submits an offer, but, if he or she is not, there must be a signed letter of intent that the individual commits to be employed by the certified VOSB or SDVOSB if the joint venture is the successful offeror. The individual identified as the Responsible Manager cannot be employed by the mentor and become an employee of the certified VOSB or SDVOSB for purposes of performance under the joint venture; and
Ownership
The certified VOSB or SDVOSB must own at least 51% of the joint venture entity.
Profits
The certified VOSB or SDVOSB must receive profits from the joint venture commensurate with the work performed by the certified VOSB or SDVOSB, or a percentage agreed to by the parties to the joint venture whereby the certified VOSB or SDVOSB receives profits from the joint venture that exceed the percentage commensurate with the work performed by the certified VOSB or SDVOSB;
Performance of Work
The SDVOSB partner of the Joint Venture must perform at least 40% of the work. This work must be more than administrative or ministerial in nature.
The Joint Venture must perform the applicable percentage of work required by § 125.6 (see our webpage for Limitation on Subcontracting)
Limitation on Subcontracting Requirements
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.
