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SDVOSB Joint Venture - three party


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Will government accept a SDVOSB joint venture, where the SDVOSB is the 51% owner and the other firms are simply small and not SDVOSB? The VA website says: Q: Are joint ventures allowed under the SDVOSB program? A: Yes. In accordance with 13 C.F.R. 125.15(B), SDVO SBCs may enter into a joint venture agreement with one or more other SBCs for the purpose of performing an SDVO contract. A joint venture of at least one SDVO SBC and one or more other business concerns may submit an offer as a small business for a competitive SDVO SBC procurement so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract

The parties contemplate entering into subcontracts with the JV. In such case, FAR 52.219-14(B)(3) requires that the prime contractor (which is the SDVOSB JV) perform at least 15% of the cost of construction with its own employees. However, if the parties are also subcontracting work to each JV partner, is their an additional requirement that the service disabled firm also perform an additional percentage of work under a subcontract?

The other scenerio is that the SDVOSB JV only issues subcontracts to the other two small businesses. Any insight or suggestions would be helpful.

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Guest carl r culham

mlf - Is the solicitation a SDVOSB set-aside? If so you may want to read further in FAR Subpart 19.14 and FAR Clause 52.219-27. If the references donot answer your question you may want to reframe it on a re-post.

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No comprendo. Are you saying that Firm A (a SDVOSB) wants to form a joint venture with Firms B and C (both SB concerns) and then the JV (consisting of Firms A, B, and C) will subcontract part of the work to Firms D, E, F, etc.?

Thank you for your reply, I am saying that the Firm A (a SDVOSB) wants to form a joint venture with Firms B and C (both SB concerns) and then the JV (consisting of Firms A, B, and C) will subcontract part of the work to Firms A,B, and C

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Guest carl r culham

mlf - So you still have not stated whether the solicitation is a SDVOSB set aside or not. Whether it is or is not is an important link to your question as well. If it is a set aside then FAR 52.219-14 does not apply and FAR 52.219-27 does.

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Guest carl r culham

Further there is much more contained in 13 CFR 125.15 that relates to yoru question as well. I am providing it here for your read as the VA reference you have provided is not comprehensive. For me there are too many facts not provided by your posts to provide any help with your question.

Title 13: Business Credit and Assistance

PART 125?GOVERNMENT CONTRACTING PROGRAMS

Subpart C?Contracting with SDVO SBCs

Browse Previous | Browse Next

? 125.15 What requirements must an SDVO SBC meet to submit an offer on a contract?

(a) Representation of SDVO SBC status. An SDVO SBC must submit the following representations with its initial offer (which includes price) on a specific contract:

(1) It is an SDVO SBC;

(2) It is small under the NAICS code assigned to the procurement;

(3) It will meet the percentage of work requirements set forth in ?125.6;

(4) If applicable, it is an eligible joint venture; and

(5) If applicable, it is an eligible nonmanufacturer.

(B) Joint ventures. An SDVO SBC may enter into a joint venture agreement with one or more other SBCs for the purpose of performing an SDVO contract.

(1) Size of concerns to an SDVO SBC joint venture.

(i) A joint venture of at least one SDVO SBC and one or more other business concerns may submit an offer as a small business for a competitive SDVO SBC procurement so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract, provided:

(A) For a procurement having a revenue-based size standard, the procurement exceeds half the size standard corresponding to the NAICS code assigned to the contract; or

(B) For a procurement having an employee-based size standard, the procurement exceeds $10 million;

(ii) For sole source and competitive SDVO SBC procurements that do not exceed the dollar levels identified in paragraphs (B)(1)(i)(A) and (B) of this section, an SDVO SBC entering into a joint venture agreement with another concern is considered to be affiliated for size purposes with the other concern with respect to performance of the SDVO contract. The combined annual receipts or employees of the concerns entering into the joint venture must meet the size standard for the NAICS code assigned to the SDVO contract.

(2) Contents of joint venture agreement. Every joint venture agreement to perform an SDVO contract must contain a provision:

(i) Setting forth the purpose of the joint venture;

(ii) Designating an SDVO SBC as the managing venturer of the joint venture, and an employee of the managing venturer as the project manager responsible for performance of the SDVO contract;

(iii) Stating that not less than 51% of the net profits earned by the joint venture will be distributed to the SDVO SBC(s);

(iv) Specifying the responsibilities of the parties with regard to contract performance, source of labor and negotiation of the SDVO contract;

(v) Obligating all parties to the joint venture to ensure performance of the SDVO contract and to complete performance despite the withdrawal of any member;

(vi) Requiring the final original records be retained by the managing venturer upon completion of the SDVO contract performed by the joint venture;

(3) Performance of work. For any SDVO contract, the joint venture must perform the applicable percentage of work required by ?124.510 of this chapter.

(4) Contract execution. The procuring activity will execute an SDVO contract in the name of the joint venture entity or SDVO SBC.

(5) Inspection of records. SBA may inspect the records of the joint venture without notice at any time deemed necessary.

© Non-manufacturers. An SDVO SBC which is a non-manufacturer may submit an offer on an SDVO contract for supplies if it meets the requirements of the non-manufacturer rule set forth at ?121.406(B)(1) of this chapter.

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Guest Vern Edwards
Any insight or suggestions would be helpful.

Here is an insight and a suggestion:

Insight: It is not smart to seek business advice about complicated matters with potentially serious legal implications from people at a website whose expertise you know nothing about. In fact, it would be stupid to do so.

Suggestion: Put such questions to an attorney in a reputable law firm who conducts a practice in such matters.

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  • 2 weeks later...
Here is an insight and a suggestion:

Insight: It is not smart to seek business advice about complicated matters with potentially serious legal implications from people at a website whose expertise you know nothing about. In fact, it would be stupid to do so.

Suggestion: Put such questions to an attorney in a reputable law firm who conducts a practice in such matters.

I am one of the authors of VA's guidance on joint ventures under VA's unique procurement authority as granted to us by Public Law 109-461 this law amended Title 38, which governs VA and applies to no other agency. When a joint venture is formed, it creates a separate legal entity. The joint venture then becomes the prime, with the prime being required to perform X amount of the work under a set-aside. Now that VA is requiring verification prior to award of any contract to a SDVOSB or VOSB, the joint venture must be a verified entity.

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  • 2 weeks later...

Something that should also be noted - If you're forming a Joint Venture with other Small Businesses, it's unlikely that there's a mentor prot?g? program in place; meaning you'll be affiliated and thus the revenue of all three companies will be considered and may be collectively over the NAICS code revenue requiements.

Also, to your point about Subcontracting. There's also guildelines for populated and unpopulated joint ventures. 13 C.F.R. ? 124.513(d)(2)(i).

Unpopulated JVs: the 8(a) partner must perform at least 40% of all of the work done by JV

partners (including all work done by the non-8(a) partner and any of its affiliates at any

subcontracting tier).

Populated JVs: the 8(a) partner must demonstrate how it will benefit or otherwise develop

its business from the JV relationship.

If this is your first shot at doing this (guessing it is), you better see a pro as the rules are complex have recently changed a bit (early this year).

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