joint venture agreement lawyersWatson & Associates, LLC government contract joint venture agreement  (JV). lawyers help clients with the various nuances and legal pitfalls that arise when drafting joint venture agreements.  When the competition challenges your business relationships under SBA rules, we bring decades of experience litigating the complex issues involved when small businesses enter into a JV.

When the SBA or federal law enforcement agencies (IG or DOJ) question your business relationships, our procurement professionals can bring meaningful insight to your case. Many of our joint venture lawyers are former government contract agency personnel and understand the relevant regulations.

When drafting a JV agreement, it must be specific to the contract award and the parties’ capabilities. When there is a Mentor Protégé relationship involved, the JV contract is specifically important. This is where our JV contracting lawyers and federal contract attorneys can help.

Nationwide SBA Joint Venture Attorneys Services

As federal small business joint venture consultants and  JV lawyers, we help to:

  • Draft a template JV agreement tailored for your specific business;
  • Help with SBA application procedures
  • Compliance with SBA JV definition and applicable JV rules and regulations;
  • Breach of joint venture agreement and Legal Counsel
  • Draft a JV template that focuses on avoiding SBA affiliation;
  • Assess the risks of JV relationships;
  • Analyze the new rules for substantive adjustments to the business entity structure;
  • Interpret SBA regulations and provide sound legal direction to participating companies;
  • Help with SBA JV regulations and contribution to the JV
  • SBA OHA Appeals involving teaming and JV relationships
  • Terminations for default
  • Assess the JV contracting structure for unpopulated relationships
  • Government contract fraud with JV arrangements
  • Draft and review your memorandum of understanding
  • Due diligence and JV partners agreement and accounting matters
  • Litigate disputes and allegations of affiliation, violation of the Ostensible Subcontractor Rule; and
  • Government Contracts Procedure and Appeal of adverse SBA decisions. See SBA Size Protests & Small Business Size Standard Appeals

Speak in Confidence With Watson & Associates, LLC Joint Venture Consultants at 1-866-601-5518 for a Free Initial Consultation.

Rules for joint ventures

The following rules apply to joint ventures. Companies must be mindful that failure to comply with the regulations can cause civil and criminal penalties of the SBA OIG or some other law enforcement officials to investigate the relationship. The small business limitations on subcontracting suggest that as the joint venture prime of either a full or partial set-aside contract, the small business firm must agree to the following limitations on subcontracting rules 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.

Performance of Work

The protégé must perform at least 40% of the work done by the joint venture. Assuming the joint venture and the protégé perform the minimum work share requirements, the protégé will perform 20% of the contract. However, for purposes of determining the protégé’s size, 40% of the revenues under the contract must be appropriated to the protégé. With regards to joint venture receipts,  the JV entity must submit annual evaluation reports, annual performance-of-work statements, and project-end performance-of-work to the SBA and the contracting agencies explaining how the work is being performed for each contract.  Annual evaluations are due 30 days from the anniversary date on the initial JV welcome letter. Respective, annual reports and project-end reports are due 45 days after each operating year and 90 days after completion of the contract. Under the mentor-protege JVs, the protégé is the responsible party for reporting the evaluation under its DUNS number. Government contracting regulations governing joint ventures formed under SBA MPP are explained in detail in 13 CFR 125.8 and 13 CFR 125.9.

Contents of Your Joint Venture Agreement

This is a very important aspect of developing JV agreements. Most government contractors simply copy the SBA mentor-protege joint venture agreement templates. However, you are still responsible for the contents of the agreement.

There are severe consequences for not following the statutory guidelines:

In accordance with 13 CFR 125.8 each joint venture must contain certain key points. If not, your company can suffer severe consequences including losing the contract or being found affiliated under SBA rules. For example in the case of Size Appeal of DSC-EMI Maintenance Solutions, LLC, Native Energy and Technology, Inc., SBA No. SIZ-6096 (2021) (the SBA Office of Hearings and Appeals upheld the Area Office’s decision that the mentor-protégé agreement did not comply with requirements for such agreements because it did not identify the responsibilities of the parties for providing an important component of the work on the contract resulting from the solicitation.

In another case, Size Appeal of KTS Solutions, Inc., SBA No. SIZ-6049 (2020)  SBA OHA ruled that the mentor-protégé agreement failed to meet the requirements of 13 CFR 125.18(b)(2)(vi) and (vii) because it did not:

(i) itemize the equipment to be used in the performance of the contract;

(ii) specify the responsibilities of the parties with respect to the negotiation of the contract, source of labor, and contract performance; and

(iii) indicate the tasks that each member of the JV would perform on the contract, or which employees of each member would perform the functions) .

Having the right government contracts lawyer to assist with your compliance requirements can save you a substantial amount of time and money.

JV Contracting Performance of Work  Requirements

Despite having the contents in place, other small businesses find themselves involved in government investigations from the IG or DOJ because they do not perform that proper amount of work in the JV relationship. As a result, there can be allegations and penalties for not having a legal JV agreement.

(1) For any contract set aside or reserved for a small business that is to be performed by a joint venture between a small business protégé and its SBA-approved mentor authorized by § 125.9, the  venture must perform the applicable percentage of work required by § 125.6, and the small business partner to the JVmust perform at least 40% of the work performed by the joint venture. Except as set forth in paragraph (c)(4) of this section, the 40% calculation for protégé workshare follows the same rules as those set forth in § 125.6 concerning supplies, construction, and mixed contracts, including the exclusion of the same costs from the limitation on subcontracting calculation (e.g., cost of materials excluded from the calculation in construction contracts).

(2) The work performed by the small business partner to a joint venture must be more than administrative or ministerial functions so that it gains substantive experience.

(3) The amount of work done by the partners will be aggregated and the work done by the small business protégé partner must be at least 40% of the total done by the partners. In determining the amount of work done by a mentor participating in a JV with a small business protégé, all work done by the mentor and any of its affiliates at any subcontracting tier will be counted.

(4) Work performed by a similarly situated entity will not count toward the requirement that a protégé must perform at least 40% of the work performed by a joint venture.

Breach of Joint Venture Agreement Lawyers

When small businesses enter into a joint venture relationship, breaches can sometimes occur. When there is an SBA-approved joint venture or mentor-protege relationship, the SBA can sometimes be involved. At Watson & Associates, our Joint venture lawyers can help you to resolve breach of joint venture agreement disputes.

Help With Joint Venture Mentor-Protégé Agreements

Watson & Associates’ SBA JV lawyers also represent clients involved in a mentor-protege relationship. Specifically, we help with compliance with the legal requirements of Title 13 of the Code of Federal Regulations. They include 13 CFR 124.513, 13 CFR 125.8, 13 CFR 125.9, 13 CFR 125.18, 126.616, and 13 CFR 127.506.

Under SBA rules a mentor and protégé can joint venture as a  single small business for any small business contract, provided the protégé individually qualifies as small. The joint venture may also pursue any type of  set-aside contract  for which the protégé qualifies, including contracts set aside for 8(a), service-disabled veteran-owned, woman-owned, and HUBZone businesses.  In order for your joint venture to be able to bid on contracts reserved for small businesses, you must follow the requirements for receiving an exclusion of affiliation for contracting purposes.

Currently, the SBA no longer approves joint venture agreements formed to pursue competitive 8(a) contracts. However, the SBA will continue to review and approve all joint venture agreements formed to pursue sole-source 8(a) contracts.

As joint venture attorneys, we help the venturing parties to comply with the guidance provided by the U.S. Small Business Administration (“SBA”). Small businesses seeking to draft JV Contract Agreements and bid on Federal Government contracts must understand the requirements for JV agreement. When the parties are found to have violated procurement laws, then they stand to be found affiliated and may forfeit the contract due to non-compliance with the NAICS Code size standards. 

SDVOSB Joint Venture Agreements

38 CFR § 74.1 states that an. SSVOSB  “[j]oint venture is an association of two or more small business concerns to engage in and carry out a single, specific business venture for joint profit, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. For VA contracts, a joint venture must be in the form of a separate legal entity.” This is different than other agencies. When small businesses decide to engage in SDVOSB joint venture relationships, CEO’s must be extremely careful in forming the relationships and drafting and the contractual contents.

When it comes to meeting the government’s requirements for joint venture contracts, common legal issues arise when your SDVOSB joint venture agreements do not have the requisite language. One clause that is critical is the fact that the entity must receive profits from the venturing which matches the required amount of work done by the SDVOSB. See also 13 CFR 125.18(b)(2)(iv).

Call Our SBA Joint Venture Lawyers

If your company is seeking to avoid liability when involved in JV and strategic alliances, needs help with joint venture due diligence and compliance with SBA JV contracting rules, or needs legal advice on building strategic alliances to acquire and perform government contracts, call our SBA joint venture lawyers at Watson & Associates, LLC. Call 1-866-601-5518 for a free initial consultation.