Most people are familiar with the concept of Joint Ventures (JVs); however there are many companies who might enjoy success by becoming part of a joint venture, but are not aware of the particulars and benefits. JVs consist of two or more parties who team up in order to create a new entity for the purpose of executing a particular business undertaking, such as pursuing a federal government contract. This enables them to pool their assets and resources such as patents and products.
Small and newer government contractors should consider JVs because it will increase the potential for a contract award. They also allow the pursuit of larger contracts (revenue and/or staff.) One benefit of the JV is to utilize a stronger past performance metric because both JV parties experience counts collectively as the Contractor, as opposed to a situation when only a subcontractor has the experience (skills/people/capabilities) or past performance. This can give the JV team a much stronger position when considered for evaluation.
JVs can be extremely beneficial for 8(a) certified firms that have the skills necessary to perform on a contract, but not enough past performance or experience supporting a specific agency. New rules relating to 8(a) JVs took effect on February 11, 2011 revising the regulations pertaining to the 8(a) Business Development Program. One of the significant changes allows the JV to be awarded up to 3 contracts over a 2-year period without a finding of general affiliation. Previously the rules stated that the JV could only bid on 3 contracts.
If you are considering creating a 8(a) JV, you should contact the SBA before starting the paperwork and before the proposal is submitted. The SBA has specific guidelines and forms that must be used in order for a JV Agreement (JVA) to be approved. You can find the joint venture application and procedures on the SBA website. If their format is not used, your JVA will probably be rejected, and as a result, the agency cannot award the contract to the JV.
Creating a JV is not necessarily complicated, but it helps to engage with a qualified consultant who knows the government regulations and can streamline the process. It’s important going in, that all the interested parties considering a JV be of the same mindset, offers Diana Dibble Kurcfeld, co-founder of Design To Delivery Inc, while the JV might offer valuable entre to the government sector, making sure that the team is coming together for the right reasons will help avoid complications down the road. Also make sure to have a strong legal advisor with a background in putting together JV’s continues Ms. Kurcfeld, this will make the setup easier and the possibility of securing financing more probable.
So in this case the maxim two is better than one, works when seeking to find and win contract awards. The SBA joint venture program is set up to give early stage contractors a leg up into the world of government contracting.