Jump to content

Single Award IDIQ to Unpopulated Joint Venture


Recommended Posts

You are awarding an IDIQ to a "shell company"--an populated joint venture (JV) formed by two small businesses. The requirement is for various, non-severable, non-commercial services.

Venturing partner A qualifies as small by the skin of their teeth, whereas venturing partner B is truly an emerging/inexperienced small business.

Based on the JV work share agreement executed between A and B, no less than 55% of aggregate work for the IDIQ is automatically reserved for contractor B.

As a CO, what are some tools you can use to contractually enforce this JV work share agreement?

Link to comment
Share on other sites

Assuming, arguendo, that your facts are correct about the reservation for Contractor B, the contracting officer could send the JV contractor a letter reminding it of the obligation and asking it to describe how the obligation will be met over the life of the contract, and then observing progress.  I might not even do that, for reasons described in the next paragraph, but almost certainly would not do much more than that.

This whole matter is messy.  I suppose the 55% applies to the contract as a whole (and not to any individual orders), so it cannot be finally measured and determined until the last order is completed. 

Maybe it is best to do nothing.  If the JV contractor’s competitor later alleges that the JV is not abiding the rules, that might create a duty to inquire.

Link to comment
Share on other sites

13 hours ago, Sunstrider said:

As a CO, what are some tools you can use to contractually enforce this JV work share agreement?

Why do you want to do this instead of ensuring that the contract is successfully completed regardless of who does the work?

Link to comment
Share on other sites

6 hours ago, Retreadfed said:

Why do you want to do this instead of ensuring that the contract is successfully completed regardless of who does the work?

Retreadfed...If I am reading SBAs template correctly along with CFR references it would seem a JV has some regulatory emphasis to do as they say to make the JV meet their size status?? ???

Link to comment
Share on other sites

23 hours ago, Sunstrider said:

You are awarding an IDIQ to a "shell company"--an populated joint venture (JV) formed by two small businesses. The requirement is for various, non-severable, non-commercial services.

Venturing partner A qualifies as small by the skin of their teeth, whereas venturing partner B is truly an emerging/inexperienced small business.

Based on the JV work share agreement executed between A and B, no less than 55% of aggregate work for the IDIQ is automatically reserved for contractor B.

As a CO, what are some tools you can use to contractually enforce this JV work share agreement?

So, was this awarded as a sole source or set aside for small business?  I’m guessing that it was one of those. Am I correct? 

If so, it was a privileged competition restricted to a specific class of competitors.

10 hours ago, Retreadfed said:

Why do you want to do this instead of ensuring that the contract is successfully completed regardless of who does the work?

If they portrayed themselves as a small business JV under the SBA rules for a JV to enjoy the privilege of competing for a contract set-aside only for SB, then they must meet the relevant criteria in addition to successfully completing the contract

And the government has the responsibility to enforce the terms of the contract - not to stick their head in the sand or look the other way,  “as long as the work gets done”.  They dictated the criteria to compete, so they can’t ignore them after they pick the winner.

I had to cool off before pushing the submit reply button. 

 

Link to comment
Share on other sites

9 hours ago, Retreadfed said:

Why do you want to do this instead of ensuring that the contract is successfully completed regardless of who does the work?

The proposed approach engages the smaller/emerging business on a minimal basis, and in non-meaningful work. While both venturing partners are considered psuedo-primes in this contracting arrangement, the smaller business seems to be a no-value added pass-through. The shell company representing the JV is already a literal "pass-through".

I'm only seeing a "best effort" goal to allocate 55% of the work to the small business. No actual responsibility as part of the contract.

Link to comment
Share on other sites

4 minutes ago, joel hoffman said:

So, was this awarded as a sole source or set aside for small business?  I’m guessing that it was one of those. Am I correct? 

If so, it was a privileged competition reserved for a qualified class of competitors.

Other than full & open competition after exclusion of sources/8(a) sole source set aside to a Native American 8(a) Joint Venture.

Within the joint venture, the smaller company is a Native American 8(a); the other is a self-certified small business in the same NAICS.

Link to comment
Share on other sites

25 minutes ago, Sunstrider said:

Other than full & open competition after exclusion of sources/8(a) sole source set aside to a Native American 8(a) Joint Venture.

Within the joint venture, the smaller company is a Native American 8(a); the other is a self-certified small business in the same NAICS.

Thanks, Sunstrider. 

It appears that the SBA is supposed to monitor the terms of the JV agreement from the earlier reference that Carl Culham  provided. So, does SBA coordinate with or otherwise apprise the contracting agency of the contractor’s compliance? Does that relieve the contracting agency of any responsibility to monitor compliance?

Kinda reminds me of the passive management approach to earned value “management” systems for cost reimbursement or fixed price incentive contracts. The government often (generally?) sees prescribed reports submitted weeks AFTER the fact, instead of proactively engaging in real time management oversight or using skilled project controls personnel to coordinate with the contractor and monitor performance,  in real time. 

Proactive project controls efforts beats “oh well, they missed the mark.”

Link to comment
Share on other sites

9 hours ago, Sunstrider said:

Other than full & open competition after exclusion of sources/8(a) sole source set aside to a Native American 8(a) Joint Venture.

 

9 hours ago, joel hoffman said:

It appears that the SBA is supposed to monitor the terms of the JV agreement from the earlier reference that Carl Culham  provided. So, does SBA coordinate with or otherwise apprise the contracting agency of the contractor’s compliance? Does that relieve the contracting agency of any responsibility to monitor compliance?

The applicable reference is 13 CFR 124.513 along with the an agency/8(a) partnership agreement.  

By my read SBA should  (would) have approved the JV.  In the old stubby pencil days SBA would have had an active role in monitoring the 8(a) JV partner to make sure their commitment continued based on the fact that the contract is a 8(a) sole source.   The SBA's view would have been to ensure the 8(a) JV partner is complying with 8(a) program requirements which would include monitoring the % of work to ensure the concept of it being an 8(a) set aside is adhered to.  Example if the 8(a) firms participation in contract work falls below say 50% one could conclude that the JV is not an 8(a) contractor.  Additionally there is the issue of "affiliation" for size determination however one would think that if SBA in fact approved the JV the issue of affiliation was reviewed and considered non existent.    

As to a contracting agency responsibility and considering the question posed @Retreadfed again if SBA approved the JV for an 8(a) sole source the OP's issues of meaningful work are not a concern unless the 8(a) JV fails to meet its obligation of the 55% and at that point would want to raise the issue to SBA and leave to SBA to determine appropriate action.   So in part the OP's agency should be watching to help ensure it just wasn't a pass through contract and the 8(a), by SBA's approval, is getting some meaningful experience.  Otherwise implied response to Retreadfed  is that the OP would otherwise be monitoring to ensure the work is successfully completed noting once again that if SBA did approve the JV, the worry about "nonmeaningful work" is misplaced.  Ensuring the percent of work and actual compliance is where the emphasis should be.  The matter is complicated by the fact that the OP has stated as well that the anticipated contract is an IDIQ.  The applicable reference with regard to performance of work for an IDIQ is 13 CFR 124.510 at paragraph (c) as to concepts that might be applied to determine the 8(a)'s active participation.

I mentioned stubby pencil days on purpose as now, admitting that I have not been a hands on CO for many years, the world has changed where SBA's resources have dwindled so they are more passive in their efforts and while SBA/Agency Partnership Agreements carry caveats regarding 8(a) JV's I have heard many stories where agencies just plow along without active SBA involvement or even the approvals required.

All this leads me to restate a response to the OP's original question.   The tools available are 13 CFR 124 and your agency/SBA partnership agreement and most importantly an active SBA office, if one truly exists these days.

 

Link to comment
Share on other sites

In the stubby pencil days, the SBA never, to my knowledge, oversaw or directly monitored the self-performance or prime contractor management role on our 8(a) construction contracts or any other set aside or SDB sole source construction contracts. At least they didn’t share any results with us, who negotiated, awarded and administered them. 

Hats off to them if they do that now. But I wouldn’t bet on that. 

I would suggest that you be proactive and stay in contact with SBA to “encourage” and help them monitor the compliance.  

Link to comment
Share on other sites

 

 

14 hours ago, joel hoffman said:

It appears that the SBA is supposed to monitor the terms of the JV agreement from the earlier reference that Carl Culham  provided. So, does SBA coordinate with or otherwise apprise the contracting agency of the contractor’s compliance? Does that relieve the contracting agency of any responsibility to monitor compliance?

The JV is to contain the provisions described in 13 CFR 124.513(c)(11) and (12).  Also, the 8(a) member of the JV is to file the reports and certifications called for by 13 CFR 124.513(e) and  (j)-(k) with the SBA.    In accordance with 13 CFR 124.513(l), the 8(a) participant may be suspended or debarred for failure to comply with certain requirements in .513.  Compliance with these requirements is left to the SBA as the agency responsible for implementation of the Small Business Act.  The contracting agency has no duty to monitor compliance with these requirements of the SBA's rules by the Participant.  However, if the agency has knowledge or information indication non-compliance, it should provide that information to the SBA.

Link to comment
Share on other sites

9 hours ago, joel hoffman said:

In the stubby pencil days, the SBA never, to my knowledge, oversaw or directly monitored the self-performance or prime contractor management role on our 8(a) construction contracts or any other set aside or SDB sole source construction contracts. At least they didn’t share any results with us, who negotiated, awarded and administered them. 

Hats off to them if they do that now. But I wouldn’t bet on that. 

I would suggest that you be proactive and stay in contact with SBA to “encourage” and help them monitor the compliance.  

Joel...15 years as a CO for the SBA 8(a) program.  You must not have been in the Portland District of COE, just say'n.

Link to comment
Share on other sites

6 hours ago, Retreadfed said:

 

 

The JV is to contain the provisions described in 13 CFR 124.513(c)(11) and (12).  Also, the 8(a) member of the JV is to file the reports and certifications called for by 13 CFR 124.513(e) and  (j)-(k) with the SBA.    In accordance with 13 CFR 124.513(l), the 8(a) participant may be suspended or debarred for failure to comply with certain requirements in .513.  Compliance with these requirements is left to the SBA as the agency responsible for implementation of the Small Business Act.  The contracting agency has no duty to monitor compliance with these requirements of the SBA's rules by the Participant.  However, if the agency has knowledge or information indication non-compliance, it should provide that information to the SBA.

Agree.

Link to comment
Share on other sites

3 hours ago, C Culham said:

Joel...15 years as a CO for the SBA 8(a) program.  You must not have been in the Portland District of COE, just say'n.

Nope,  Mobile District. 1990’s.  SBA regional office was in Atlanta, as I recollect.

I’m not saying that they weren’t helpful or that they didn’t review and approve JV agreements.  Most of our contracts were 8(a) or HubZone “prime” - sub teaming arrangements.

We just never knew of them enforcing the self performed work rules after award. I don’t remember any SBA generated feedback after award, unless there was a default. 

My employees and I negotiated all the sole source contracts and handled the set-asides (6 1/2 years). Before award, the SBA would always back us up when we rejected firms for obvious front type work arrangements in the proposals. But we were the ones who had to object to and expose sham proposed teaming arrangements. Not saying it was the majority of firms, either. But a fair percentage. 

Link to comment
Share on other sites

Guest PepeTheFrog
12 hours ago, joel hoffman said:

My employees and I negotiated all the sole source contracts and handled the set-asides (6 1/2 years). Before award, the SBA would always back us up when we rejected firms for obvious front type work arrangements in the proposals. But we were the ones who had to object to and expose sham proposed teaming arrangements. Not saying it was the majority of firms, either. But a fair percentage. 

Are you saying there was gambling in those casinos? RIBBIT

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...