Some of the most frequent public contracting questions I receive are about the permissible activities for joint ventures between a minority contractor and a larger contractor. In February 2011, the Small Business Administration made some significant changes to its Section 8(a) business development program, which helped me answer many of those questions.
One major category of the February 2011 changes involved joint ventures between SBA firms and larger companies. Under the former SBA rules, a joint venture had a limited duration of existence and could not submit more than three offers as a joint venture over a two-year period. Here are some key points about the new rules:
- The rules apply to all applications for the 8(a) business development program pending before SBA and all 8(a) procurement requirements accepted by SBA on or after March 14, 2011.
- A specific joint venture can be awarded three contracts within a two year period. Additionally, the JV partners could form multiple joint venture entities, each of which could be awarded up to three contracts.
- The 8(a) partner to the JV must perform at least 40% of the work performed by the JV, which replaces the “significant portion” language of the previous regulations. The rule differentiates between populated and unpopulated joint ventures and applies different requirements.
Additionally, as part of the annual review process, the Section 8(a) participant must demonstrate how it is meeting the "performance of work’ requirements for each contract that is performing as a joint venture. Finally, at the completion of every 8(a) contract awarded to a JV, the participant must explain how "performance of work" requirements were met.
The new rules also included changes to the mentor/protege program. To see the full overview of the rules, see the SBA’s website on the changes.