Teaming and Joint Venture Agreements - A Brief Guide on Using Teaming to Win Government Contracts

David Allen Rose

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Government Contract Attorney

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Posted about 2 years ago. 2 helpful votes

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Summary of Guide This is a guide to teaming agreements and pitfalls associated with them. There are some guidelines for joint venture agreements as well. There are many rules to watch out for including affiliation and ostensible subcontractor addressed here. A brief guide on these rules is included but is included in this article but is not all inclusive.

Why is everyone Else Getting Work?

Have you ever wondered why some small businesses are successful and others are not? As you walk around the construction, A&E and Environmental worlds we work in everyday, do you wonder, why does Company X do so well when I know my firm is just as capable as theirs but we just cannot seem to land the work like them? Perhaps this short article can suggest one approach you can add to your arsenal of tools that may assist you in creating a force multiplier to give you a competitive edge you may have been lacking that your competition already knows about.

How Much Work is There for Small Business?

The Government contracts out approximately $50 Billion dollars a year in services and supply contracts every year. Yes, that's Billion with a "B". Of that, 23% is mandatorily set-aside for Small Business. Now that we have your attention, you may ask, how can I position myself to competitively propose on some of those contracts?

How is the 23% of Small Business Work Broken Out?

Of those contracts, many are set-aside for competitive competition to small business. These can be single award contracts or multiple award contracts. Regardless of the type, you must pick and choose which to pursue based on (1) your NAICS code and (2) your capabilities and capacity. Pursuing these by yourself is probably the most difficult way to attack these contracts. Your first step on the path to success, in my lowly opinion, is by joining SAME. There are literally thousands of members here who genuinely wish to help you succeed.

Does all of the Work Require Competitive Bidding?

There are also sole source procurements but these are primarily restricted to certain classifications of small businesses, those being 8(a) or minority owned, Service Disabled Veteran Owned Small Businesses and HUBZone Firms. These are also limited to $4 Million for service contracts. HNOs, ANCs, etc. are exempt from this threshold.

Are there Limited Competitions for Work or Do I have to Compete with the Walmarts of the World?

Competitive set aside procurements are available for any small business category at any monetary level including Small Businesses (SBs) (determined based on NAICS codes and employee number or annual receipts), SDVOSB, 8(A), SDB, HUBZone, WOSB, and VOSBs.

What about Getting my Feet Wet Subcontracting to an Established Government Contractor?

There are also opportunities to be a subcontractor to large businesses. These opportunities present themselves in the form of mandatory subcontracting plans (See Far SubPart 19.7), Teaming on a large IDIQ contract with a major Federal Agency or simply just having a niche capability for which a major firm does not have the capability (e.g. EOD).

Can I Team with a Large Company to Use Their Experience and Capabilities for My Resume?

Sometimes, a small business must pursue a large set-aside as the prime but finds itself lacking some capability. In this case, it not only requires some excess capability but perhaps some additional past performance to be truly competitive. Under a GAO case, Roca Management Education & Training, Inc., GAO, B-293067, January 15, 2004, Agencies may consider an offeror's subcontractor's capabilities and experience under relevant evaluation factors if the RFP does not prohibit consideration of a subcontractor's experience in the evaluation of proposals.

This Sounds Easy - What are the Cons to all This? Shouldn't I just Team us with a Big Contractor?

These arrangements must be carefully drafted to avoid a finding of affiliation due to the ostensible subcontractor rule. If it is found that the large subcontractor is performing primary and vital requirements, or the prime (small) is unusually reliant on the large subcontractor, they may be found to be a joint venture instead of a team, and therefore affiliates pursuant to 13 CFR 121.103(h)(4). In that case they will be determined to be large and excluded from the competition. If it is found to have been intentional there can even be severe penalties.

Can I Joint Venture with Other Small Businesses - What About Mentor/Protege?

Joint Ventures can also be formed among small business. Generally, any joint venture (JV) to pursue a Government contract is affiliated and therefore one will have to combine the annual receipts (or employees) to determine the size of the JV and its eligibility to pursue a set-aside contract. There are exceptions to the affiliation rule that pertain to when small businesses can joint venture for procurements without becoming affiliated, and the Mentor Protege program. For a detailed chart listing these go to http://roseconsultingllc.org/Rules_for_JV_handout_DoD_SB_Conference_Dec10.pdf

Additional Resources

Call us if you have any questions about teaming to win Government contracts, or for that matter any questions about Federal or state contract issues. Our team of contract and procurement specialists and attorneys has decades of experience and stand ready to assist you with your contract issue. Email the Senior Partner at drose@roseconsultinglawfirm.com Always consult with an attorney before embarking on any serious legal or business matter.

Link to Mentor Protege and Teaming Website

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