Joint Ventures

in Government Contracting

Strategies & Legal Considerations

Joint Ventures in Government Contracting

• Agenda– Introductions– Presentation– Q & A

Joint Venturesin Government Contracting

– Introductions:• Fed Bid Speed• Fierce Government• Mark A. Amadeo – Amadeo Law Firm, PLLC• Jennifer Schaus – JS & Associates

Joint Venturesin Government Contracting

• Fed Bid Speed* Software program to manage B2G Opps

* Single click integration with FBO.gov

* Share notes & project manage RFP’s

Joint Venturesin Government Contracting

• Fierce Government* Free Govt IT Newsletter

* IT in Govt Agencies / Defense / Cloud / Cyber

* White Papers / Events / Analysis

* In-depth & Quality = Differentiator

Joint Venturesin Government Contracting

Amadeo Law Firm, PLLC* Local and Federal Contracting

* Employee Benefits

* Employment

Joint Venturesin Government Contracting

• Jennifer Schaus & Associates• B2G Services and Events

GSA Schedules

Federal Sales / Marketing

Joint Ventures in Government Contracting

Joint Venturesin Government Contracting

Two Types of Teaming Arrangements Under FAR (9.601)Two Types of Teaming Arrangements Under FAR (9.601)

Vertical (Prime-Sub)

“A potential prime contractor agrees with one or more other companies

to have them act as its subcontractors under a specified Government

contract or acquisition program.”

Horizontal (JV)

“Two or more companies form a partnership or joint venture to act as a potential prime contractor.”

TEAMING

Joint Venturesin Government Contracting

Why Government Approves of Teaming ArrangementsWhy Government Approves of Teaming Arrangements

FAR 9.602 (a) Contractor team arrangements may be desirable from

both a Government and industry standpoint in order to enable

the companies involved to —

(1) Complement each other’s unique capabilities; and

(2) Offer the Government the best combination of performance,

cost, and delivery for the system or product being acquired.

TEAMING

Joint Venturesin Government Contracting

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

Joint Venture Rules Ease Tension Joint Venture Rules Ease Tension

General Rules of AffiliationGeneral Rules of Affiliation

• Revenues and # employees are combined for small biz size standardRevenues and # employees are combined for small biz size standard

• Joint venture parties are deemed affiliatedJoint venture parties are deemed affiliated

Relaxed JV RulesRelaxed JV Rules

• Exceptions to affiliation: Exceptions to affiliation: Considered small even if combined size > size standardConsidered small even if combined size > size standard

• Businesses participate in contracts don’t typically qualify for aloneBusinesses participate in contracts don’t typically qualify for alone

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

EExceptions to Affiliation – 8(a) & Small Businessesxceptions to Affiliation – 8(a) & Small Businesses

Small Business Joint Ventures Competing for Larger ContractsSmall Business Joint Ventures Competing for Larger Contracts

Applies To: bundled contracts, contracts over $10 million (when size standard is based Applies To: bundled contracts, contracts over $10 million (when size standard is based

on # employees), or contracts that are greater than ½ the size standard (when on # employees), or contracts that are greater than ½ the size standard (when

size standard is based on revenue)size standard is based on revenue)

Requirement:Requirement:

Each JV participant must be small under the size standard for the contractEach JV participant must be small under the size standard for the contract

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

EExceptions to Affiliation – 8(a) & Small Businessesxceptions to Affiliation – 8(a) & Small Businesses

8(a) Joint Ventures Competing For Larger 8(a) Contracts8(a) Joint Ventures Competing For Larger 8(a) Contracts

Applies To: Applies To:

Contracts set aside for 8(a) businesses as long as contract is either greater than $10M Contracts set aside for 8(a) businesses as long as contract is either greater than $10M (when size standard is based on # employees) or greater than ½ the size standard (when (when size standard is based on # employees) or greater than ½ the size standard (when size standard is based size standard is based on revenue)on revenue)

Requirements:Requirements:

• Each JV company must be small under the size standard for the contractEach JV company must be small under the size standard for the contract

• At least one JV company must be an 8(a) businessAt least one JV company must be an 8(a) business

• At least one 8(a) business must be very small (i.e., less than half the size standard)At least one 8(a) business must be very small (i.e., less than half the size standard)

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

EExceptions to Affiliation – 8(a) & Small Businessesxceptions to Affiliation – 8(a) & Small Businesses

8(a) Mentor-Protégé Joint Ventures8(a) Mentor-Protégé Joint Ventures

Applies To:Applies To:

Any contract with a small business requirement, including 8(a) contractAny contract with a small business requirement, including 8(a) contract

Requirements:Requirements:

• Mentor and protégé approved by SBA under the mentor-protégé programMentor and protégé approved by SBA under the mentor-protégé program

• 8(a) Protégé meets the size standard for the contract8(a) Protégé meets the size standard for the contract

**Mentor can be any size**Mentor can be any size

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

EExceptions to Affiliation – Other Joint Venturesxceptions to Affiliation – Other Joint Ventures

HUBZone Joint VenturesHUBZone Joint Ventures

SDVOSB Joint VenturesSDVOSB Joint Ventures

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

Limits To Relaxed Rules On AffiliationLimits To Relaxed Rules On Affiliation

3 in 2 Rule:3 in 2 Rule:

Joint venture can engage in and carry out no more than three specific Joint venture can engage in and carry out no more than three specific

or limited-purpose business ventures for profit over a two year periodor limited-purpose business ventures for profit over a two year period

But . . . But . . .

No limit on number of JV’s that same JV participants can formNo limit on number of JV’s that same JV participants can form

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

Even if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For AloneEven if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For Alone

8(a) Joint Ventures Competing For Smaller 8(a) Contracts8(a) Joint Ventures Competing For Smaller 8(a) Contracts

Applies To: Applies To:

8 (a) set-aside contracts that are too small to qualify for affiliation exception8 (a) set-aside contracts that are too small to qualify for affiliation exception

Requirements:Requirements:

• Each JV company must be small under the size standard for the contractEach JV company must be small under the size standard for the contract

• At least one JV company must be an 8(a) businessAt least one JV company must be an 8(a) business

• At least one 8(a) business must be very small (i.e., less than half the size standard)At least one 8(a) business must be very small (i.e., less than half the size standard)

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

Even if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For AloneEven if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For Alone

EDWOSB /WOSB Joint Ventures Competing For Smaller ContractsEDWOSB /WOSB Joint Ventures Competing For Smaller Contracts

SDVOSB Joint Ventures Competing For Smaller ContractsSDVOSB Joint Ventures Competing For Smaller Contracts

Joint Venturesin Government Contracting

Competitive Benefits – Small BusinessesCompetitive Benefits – Small Businesses

Additional Requirements On Any Joint Venture Competing For An 8(a) ContractAdditional Requirements On Any Joint Venture Competing For An 8(a) Contract

• SBA approval of JV agreement before awardSBA approval of JV agreement before award

• Unpopulated:Unpopulated: 8(a) partner(s) must do at least 40% of the work 8(a) partner(s) must do at least 40% of the work

JV may subcontract to non 8(a) partner(s), if JV may subcontract to non 8(a) partner(s), if subcontracts subcontracts

40% work to 8(a)40% work to 8(a)

• Populated:Populated: 8(a) partner(s) must show what it gains + business 8(a) partner(s) must show what it gains + business developmentdevelopment

Non-8(a) partners cannot be subcontractors to the JVNon-8(a) partners cannot be subcontractors to the JV

Joint Venturesin Government Contracting

Joint Venture Agreement RequirementsJoint Venture Agreement Requirements

Example: Joint Venture Agreement to Perform 8(a) ContractsExample: Joint Venture Agreement to Perform 8(a) Contracts

(1) State purpose of JV (1) State purpose of JV (2) Designate 8(a) participant as managing venture and an employee of managing venture as (2) Designate 8(a) participant as managing venture and an employee of managing venture as project managerproject manager(3) State that not less than 51% of net profits will be distributed to 8(a) participant(s)(3) State that not less than 51% of net profits will be distributed to 8(a) participant(s)(4) Provide for special bank account in name of JV; signatures of all JV participants for withdrawals; (4) Provide for special bank account in name of JV; signatures of all JV participants for withdrawals; used for payments on contract and contract expensesused for payments on contract and contract expenses(5) Include itemized list of equipment, facilities and resources provided by each JV participant, (5) Include itemized list of equipment, facilities and resources provided by each JV participant, with cost and value for eachwith cost and value for each(6) Specify responsibilities of parties regarding contract performance, labor source & contract (6) Specify responsibilities of parties regarding contract performance, labor source & contract negotiationnegotiation(7) State all parties are obligated for performance despite any withdrawal by any JV participant(7) State all parties are obligated for performance despite any withdrawal by any JV participant(8) Designate accounting and administrative records to be maintained by managing venture(8) Designate accounting and administrative records to be maintained by managing venture(9) Require original records to be maintained by managing venturer upon contract completion(9) Require original records to be maintained by managing venturer upon contract completion(10) State that quarterly financial statements will be submitted to SBA within 45 days of each quarter(10) State that quarterly financial statements will be submitted to SBA within 45 days of each quarter(11) State that project – end profit-loss & distribution statements will be submitted to SBA (11) State that project – end profit-loss & distribution statements will be submitted to SBA within 90 days of project completion within 90 days of project completion

Joint Ventures in Government Contracting

Final Thoughts…• Consistent with Teaming AgreementConsistent with Teaming Agreement

• Need to disclose JV to agencyNeed to disclose JV to agency

• Proper Accounting Proper Accounting

…Final Final Thoughts• Be PersistentBe Persistent

• Be CreativeBe Creative

• Choose Partners WiselyChoose Partners Wisely

Thank You !!

Dear Participants,

Thank You for your time & participation!

Pease submit your questions via email & we will answer as we have time.

The webinar is recorded and available at: http://www.JenniferSchaus.com/events

Joint Ventures in Government Contracting

Jennifer Schaus & AssociatesJSchaus@JenniferSchaus.com

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Mark A. Amadeo, Esq.mamade@amadeolaw.comwww.amadeolaw.com+ 1 – 2 0 2 – 6 4 0 – 2 0 9 0+ 1 – 3 0 1 – 7 8 9 – 1 6 2 0