Piliero Mazza and Baker Tilly recently gave a helpful webinar on Joint Venture Agreements. Joint ventures (JVs) can be a powerful tool to improve a government contractor’s odds of winning federal contracts. With the SBA’s Mentor Protégé Program facilitating JVs and large multiple award contracts making many firms form JVs, an understanding of how JVs work from a legal and accounting perspective is a must.
Watch the webinar on-demand at: JD Supra
If you are part of a joint venture between a small protege and its large mentor under the SBA’s Mentor-Protege Program, heads up: the SBA recently amended its list of mandatory requirements for joint venture agreements to cover what happens to funds leftover in the joint venture bank account at the end of a project.
Like the revised recordkeeping rules SmallGovCon discussed in an earlier post, the new required provision only applies to mentor-protege joint ventures pursuing small business set-aside contracts–not to JVs seeking 8(a), SDVOSB/VOSB, WOSB/EDWOSB or HUBZone work. Confusingly (and again, like the recordkeeping rules), SBA’s decision to change only the small business set-aside regulation, 13 C.F.R 125.8, means that the same joint venture agreement may not be valid for both small business set-aside contracts and socioeconomic contracts.
Continue reading at: SmallGovCon
It is common for two or more companies to work together to win and successfully perform federal government contracts. The relationship between those companies must be formally documented and agreed to in order to define roles and responsibilities and avoid future issues. The Contracting Officer Podcast recently held a podcast with Koprince Law on teaming agreements, joint ventures, and mentor-protégé arrangements.
You can listen to the podcast for free here:
As we’ve stressed about the mentor-protégé program, the Small Business Administration’s (SBA) primary concern is that the program benefits the small business protégés.
Past performance is a particularly delicate topic for small businesses, presenting something of a what-came-first-the-chicken-or-the-egg question. Past performance is not strictly required in order to win prime federal contracts, and its weighting and restrictions can vary greatly by procurement. For example, FAR 15.305 prohibits an offeror without a record of relevant past performance from being evaluated favorably or unfavorably under past performance. Nonetheless, many small businesses find it exceedingly difficult to break into the federal market without a record of past performance.
Of concern when SBA initially established the All-Small Mentor-Protégé Program was how past performance would be treated for small business joint ventures authorized under 13 C.F.R. § 125.9. SBA initially required procuring agencies to consider not only the past performance and experience of the joint venture but also of the joint venture members. In the recent rulemaking, SBA broadened the regulation to provide for contracting agencies to consider not only past performance and experience but also the capabilities, of the joint venture members.
Continue reading at: Crowell & Moring
As part of the outgoing administration’s effort to eliminate and simplify regulations, the SBA issued a final rule – effective November 16, 2020 – to merge “the 8(a) Business Development (BD) Mentor Protégé Program and the All Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within SBA.” What many small business contractors may not realize is that this rule also eliminated the three-in-two rule for joint ventures, meaning that there is now no limit on the number of contracts a joint venture can enter into during its existence. However, that existence is now limited to two years.
Continue reading at: GovCon Examiner
U.S. Small Business Administration (“SBA”) regulations require that mentor-protégé and socioeconomic joint ventures designate the protégé or socioeconomic member as the “managing venturer” of the joint venture. However, the regulations do not define “managing venturer” or state how much control such a “manager” must maintain over the joint venture. In the context of typical small business operating entities (i.e., notjoint ventures), SBA’s Office of Hearings and Appeals (“OHA”) has offered detailed guidance on what it means to “control” such entities, but this case law has never been applied to joint ventures. This leaves joint venturing firms without any direction on the subject — beyond the general requirement that they designate a “managing venturer.”
As discussed in more detail below, this is a “gap” in SBA regulations and case law that has led to uncertainty in the governance of small business joint ventures. Given the increasing use of joint ventures by contractors pursuing small business set-aside procurements, this uncertainty is increasingly harmful to the business community.
This article surveys the available OHA case law in order to identify the specific limits of the aforementioned “gap,” and then offers predictions and recommendations for the way that SBA should define the term “managing venturer” in order to minimize business uncertainty and thereby promote small business development through joint venture participation.
Continue reading at: Miles and Stockbridge
The Small Business Administration (SBA) began accepting applications for the All Small Mentor-Protégé Program (ASMPP) in 2016 and has seen a surge in applications in each subsequent year.
Under the ASMPP, any small business – including 8(a) small businesses, Historically Underutilized Business Zone (HUBZone) small businesses, veteran-owned and service-disabled veteran-owned small businesses (VOSB/SDVOSBs), woman-owned and economically disadvantaged woman-owned small businesses (WOSBs/EDWOSBs) – may enter into an agreement with a large business under which the large business will provide mentorship and assistance. In return, the large and small businesses are permitted to joint venture to perform federal small business set-aside contracts.
As of mid-year 2019, below are some fast figures about the ASMPP, as reported by the SBA, that both large and small businesses need to know…
Continue reading at: BuildSmart
“This platform provides a forum where contractors can identify potential teaming partners, and showcase their products, services and capabilities,” said Andrew Smith, Program Manager of GTPAC, he continued, “Clients can also find information related to GTPAC announcements, contracting news of interest, upcoming workshops and events, and other recent developments.”
Clients can access the GTPAC Community by going to:
To get started by joining the community, clients can click here. GTPAC clients will need their GTPAC Client ID to create an account and access the system.
For Frequently Asked Questions, clients can click here.
To view a recent slideshow presentation on the GTPAC Community, click on this document: GTPAC Community Launch Presentation
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.
Continue reading at: SmallGovCon
Five men have been charged in a 71-count indictment with engaging in conspiracies to defraud several federal agencies by paying bribes and fraudulently obtaining at least $15 million in government contracts they were not entitled to though disabled-veteran set asides and other small business programs.
Indicted are: James A. Clark of Chipley, Florida, who owned several businesses, including Enola Contracting Services, Inc.; Eric L. Hogan of Bonaire, Georgia, who owned P&E Construction, LLC; Kenneth A. Latham of Albany, Georgia, who was employed by the U.S. Navy as a civilian engineering technician; James K. Alford, 55, of Bowling Green, Kentucky, who owned K&S Constructors, Inc., and Harvey Daniels, Jr. of Marianna, Florida, who owned HDJ Security, Inc.
The charges include conspiracy to commit honest services wire fraud, conspiracy to commit wire fraud, wire fraud, conspiracy to submit false claims, false claims and major fraud.
Construction projects detailed in the indictment include contracts at the Marine Corps Logistics Base in Albany, Georgia, the VA Medical Center in Louisville, Kentucky, and the NASA Plum Brook Station near Sandusky, Ohio.
According to the indictment:
In one scheme, Latham accepted a series of bribes and kickbacks from Hogan and Clark – including cash, meals, a hunting trip, a fence, and an all-terrain vehicle – in return for Latham using his official position with the Navy to benefit Hogan, Clark and their businesses. These benefits included assistance in finding and securing government contracts, approval of invoices for payments to pass-through companies used by Hogan and Clark to obtain set-aside contracts for which their companies were not otherwise eligible, and concealing Clark and Hogan’s use of pass-through companies to obtain bonding.
Another scheme involved defrauding the VA and the TK by fraudulently representing that P&E and Hogan independently qualified for the service-disabled veteran-owned small business program despite Clark’s involvement in providing bonding for and equity ownership in P&E.
Clark, Hogan, Alford, Daniels and others defrauded the government by using purported service-disabled veteran-owned small businesses and 8(a) businesses as proxies to bid on and obtain set-aside contracts.
Arrow Construction, which was registered in the 8(a) program, was awarded a $2.8 million contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2011. Clark and Arrow officials Kent Reynolds and Jennifer Dillard agreed that about 90 percent of the value of the contract was passed through to Clark and Enola, in violation of the 8(a) program.
HDJ was awarded a contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2012. HDJ was paid approximately $2.6 million. Clark, Hogan and Daniels agreed to pass through approximately 95 percent of the value of the contract to Clark, Hogan, Enola and P&E, in violation of the terms of the 8(a) program.
The VA in June 2011 awarded a contract to P&E Construction for work at the VA Medical Center in Louisville, Kentucky. The VA paid P&E approximately $4.5 million that the company would not have received if the VA knew P&E was acting as a pass-through for K&S and that it was back-bonded by Clark and Enola.
P&E submitted a winning bid in February 2013 for a contract for construction services at the NASA Plum Brook Station near Sandusky, Ohio. NASA paid P&E approximately $5.6 million that the company would not have received if NASA knew it was acting as a pass-through for K&S and that P&E was back-bonded by Clark and Enola.
If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
This case was investigated by National Aeronautics and Space Administration’s Office of Inspector General, the Defense Criminal Investigative Service, Naval Criminal Investigative Service, Department of Veterans Affairs’ Office of Inspector General, Small Business Administration’s Office of Inspector General, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations.
Readers are reminded that an indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
