1. Joint Ventures, Mentor-Protégé & SBA Updates
Valerie Coleman Program Manager, Prime Contracts Program U. S. Small Business Administration

2. JOINT VENTURES

3. Policy of the Government
Working together helps small business to compete in unrestricted competition and set-asides The policy is to place a fair proportion of its acquisitions with: Small business Small disadvantaged business [SDB/8(a)] HUBZone small business Women owned small business (WOSB) Veteran owned small business (VOSB) Service disabled veteran owned small business (SDVOSB)

4. What’s a fair proportion?
Small Business 23% SDB [including 8(a)] 5% WOSB 5% HUBZone 3% SDVOSB 3% (there is no statutory goal for VOSB)

5. Contract Teaming Agreement
Only two types:
Two or more companies form a partnership or joint venture to act as a potential prime contractor; or
A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified government contract or acquisition program.
Applies to large and small business

6. Why JV?
JVs maintain competition from small business and it is an investment in the economy through small business participation

7. Benefits of JVs to the Small Business
Gain new capacity and expertise
Combine capabilities and past performance
Increase bidding power and bonding capacity
Share risk
Short time frame

8. Risks Finding the right joint venturers Creating a relationship
Existing relationship
New relationship
Creating a relationship
Imbalance in the level of expertise, investment or assets
Not having the JV agreement in writing
Objectives are not clear

9. SBA Definition of a Joint Venture 13 CFR 121.103(h)
An association of individuals and/or concerns with interests in any degree or proportion by way of contract, and
Consorts to engage in and carry out no more than three specific awards over a two year period,
Who combine efforts, property, money, skill or knowledge, and
Is not on a continuing or permanent basis

10. And,
Consists only of small businesses (exception 8(a) & ASMPP ) Self-certifies that it is “small” Is subject to the regulations as they govern small business – just like any other small business Is reviewed by the contracting officer, not SBA (except for 8(a) JVs).

11. What is a small business?
Small Business Joint Ventures August 7, 2013
What is a small business?
Organized for profit
Place of business in the U.S., operates primarily in the U.S., or makes a significant contribution to the U.S. economy (taxes, use of American products/labor)
Does not exceed the small business revenue OR employee size standard for the procurement
Each North American Industrial Classification System (NAICS) code has a small business size standard (wholesale and retail NAICS are not used in government procurements).
13 CFR
(402)

12. NAICS Codes and Size Standards
Small Business Joint Ventures August 7, 2013
NAICS Codes and Size Standards
NAICS Description Revenue (M) # employees Industrial Building Construction $ Commercial and Institutional Building Construction $ Highway, Street, and Bridge Construction $ Women’s and Girls’ Cut and Sew Blouse and Shirt Mfg Quick Printing Truck Trailer Manufacturing Wood Office Furniture Manufacturing General Freight Trucking, Local $ Couriers and Express Delivery Services General Warehousing and Storage $ Lessors of Residential Buildings and Dwellings $ Custom Computer Programming Services $ Admin Management and General MGMT Consulting Svcs $ Environmental Consulting Services $7.0
(402)

13. Size must include affiliates
Small Business Joint Ventures August 7, 2013
Size must include affiliates
What is an affiliate?
When one controls or has the power to control another
Common ownership
Common control
Common management
Identity of Interest (family members, common investments, dependant through contractual relationships)
A Newly organized concern
Joint Ventures
13 CFR
(402)

14. Average Annual Receipts
Small Business Joint Ventures August 7, 2013
Average Annual Receipts
Use Federal Tax Returns
Cost of Goods Sold plus Total Income
Average of last three completed fiscal years
13 CFR
(402)

15. Small Business Joint Ventures August 7, 2013
Number of Employees
Count all individuals employed on a full- time, part-time, or other basis. This includes employees obtained from a temporary employee agency, professional employee organization or leasing concern.
Numbers of employees for each of the pay periods for the preceding completed 12 calendar months(running average).
Payroll records/IRS Form 941
13 CFR
(402)

16. Two Types of Affiliation
Small Business Joint Ventures August 7, 2013
Two Types of Affiliation
General Affiliation
On-going basis
Common ownership, common control, economic dependence, etc.
Applies to the company in all business transactions
For a specific procurement
Joint venture
Applies only to the contract at hand
(402)

17. Affiliation 13 CFR 121.103 Power to control Common managers
Identical business interests
Common stockholders
Ownership of multiple businesses
Contractual relationships
JV arrangements

18. Affiliation Presumption of Affiliation
Firms owned or controlled by:
Married couples or parties to a civil union
Parents, children, and siblings
Conduct business with each other:
Subcontracts
Joint ventures
Share or provide loans, resources, equipment, locations or employees with one another.
Rebut presumption by showing a clear line of fracture between the concerns
Other types of familial relationships are not grounds for affiliation on family relationships

19. Affiliation Identity of Interest – Economic Dependence
70% of receipts over prior 3 fiscal years
Can be rebutted – e.g., only in business for short term
Not applicable if business owned and controlled by an Indian Tribe, Alaskan Native Corporation (ANC), Native Hawaiian Organization (NHO), or Community Development Corporation (CDC) or wholly owned entity of such

20. Joint Venture Exception to Affiliation
Two or more small business concerns
May submit an offer for prime contract or subcontract
Each must be small under the size standard for the NAICS assigned to contract/subcontract

21. Limitations on Subcontracting 52.219-14
Services - Not more than 50%
Note: Rental of an item is a service
Supplies - Not more than 50% (less cost of materials)
Mixed requirements – CO selects NAICS
Determines limitation on subcontracting
Construction
General - Not more than 85% (less cost of materials)
Special Trades - Not more than 75% (less cost of materials)

22. What should be in a JV Agreement?
A provision setting forth the purpose of the JV
Small Business as managing venturer
Employee of Small Business as project manager
Signed letter of intent
Project manager cannot be employed by the mentor and become an employee of the small business for purposes of performance under the joint venture
A provision stating the distribution of profits/losses
A provision providing for the establishment of a special bank account

23. More Parts of a JV
A provision itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value each A provision specifying the responsibilities of parties A provision obligating all parties to the joint venture A provision designating that accounting and other administration records relating to the JV shall be kept in the office of the managing venturer

24. Still More…
A provision requiring the final original records be retained by the managing venturer upon completion of the contract performed by the joint venture. A provision for handling substitution or addition of co-venturers A provision for handling disputes A provision for handling the termination of the JV

25. All Small Mentor Protégé Program (ASMPP)

26. ASMPP Background
Authorized under the 2010 Small Business Jobs Act and the 2013 NDAA
Rather than creating programs for separate constituencies – SDVOB, WOSB, HUBZones - SBA created a single, all-inclusive Mentor-Protégé Program modeled on its 8(a) program.
The ASMPP’s aim is two-fold: develop strong Protégé firms through Mentor-provided business development assistance; and enhance the ability of Protégé firms to successfully compete for government contracts.

27. New Rule Highlights Final Rule Effective Date: August 24, 2016
Creates the ASMPP
Streamlines the rules for the 8(a) Mentor-Protégé Program and made them consistent with the ASMPP
Prescribes content for Joint Venture Agreements under both programs
Authorizes the SBA to evaluate other Federal Agency Mentor-Protégé Programs

28. ASMPP Update The SBA began accepting applications on October 1, 2016.
Applications must be submitted via certify.sba.gov. No paper applications will be accepted.
Website:
Please note that a Mentor-Protégé relationship should be established before starting the application – the ASMPP is not a matching program

29. Program Administration
Centralized in HQ, rather than the distributive 8(a) model
Online Application – certify.sba.gov
Online course tutorial requirement
Annual Review and Evaluation
Template agreements i.e. MPA, joint venture
Incremental staff augmentation at HQ – demand driven

30. ASMPP Highlights
Generally, Protégé may only have one Mentor at a time, and a maximum of two.
Mentors cannot have more than 3 Protégés in the aggregate.
Protégés and Mentors must either be for-profit entities or agricultural cooperatives.
Participants can be both a Protégé and a Mentor if no competition or conflict exists.
Participants self-certify as small in the NAICS in which they’re seeking business development assistance.

31. ASMPP Highlights
No reapplication required for 8(a) firms in the last 6 months of the 8(a) program wishing to transfer their existing MPA to the ASMPP.
No financial statements or tax returns required.
Business plan (SBA-approved or other) required for consideration.

32. How Do I Find a Good Mentor?
Research - Make sure the mentor has a good reputation and is willing to provide coaching, as needed.
Verify that the Mentor is not just looking for access to federal small business set-aside contracts  
Verify if the mentor has good supplier relationships
Verify if the mentor has experience working with the federal government
Be clear and concise about the goals and objectives outlined in the agreement
Make certain the goals and objectives align with the business plan to provide growth for the company

33. Approved Forms of Mentor Assistance
Management & Technical Assistance (internal business management systems)
Financial Assistance (in the form of equity investments and/or loans)
Contracting Assistance ( contracting processes, capabilities acquisitions & performance)
Trade Education (learn how to export, IT business plan, finding markets)
Business Development Assistance (strategy, finding contracting and partnership opportunities)
General and/or Administrative Assistance (business processes and support)

34. ASMPP Update As of 7/24/17 Received: 286 apps Approved: 247
Processing Time: 8-10 days

35. ASMPP Joint Ventures
An approved Protégé and Mentor may joint venture as a small business for any government prime contract or subcontract, provided the protégé qualifies as small for the procurement.
The ASMPP does not review, evaluate or approve joint venture entities or joint venture agreements.
In order to receive the exclusion from affiliation, the joint venture must meet the requirements outlined in 13 CFR 125.8(b)(2), (c), and (d).

36. ASMPP Resources SBA webpage : https://www.sba.gov/allsmallmpp
All Small Mentor Protégé Program Tutorial :
center/training/sbas-all-small-mentor- protege-program
For more information on the ASMPP:

37. SBA Mentor Protégé Programs

38. SBA Mentor Protégé Programs
Program change: from “Mentor must have good financial condition” to “Mentor must demonstrate that it can fulfill its mentor protégé obligations”
Generally, a mentor will have no more than one protégé at a time.
SBA may authorize a concern to mentor more than one protégée at a time where it can demonstrate that the additional mentor-protégé relationship will not adversely affect the development of either protégé firm (e.g., the second firm may not be a competitor of the first firm).
Under no circumstances will a mentor be permitted to have more than three protégés at one time in the aggregate
Applies to entire corporation family, all affiliates/divisions

39. SBA Mentor Protégé Programs
Small business may be both a protégé and a mentor at the same time
Protégés must qualify as small for primary NAICS or secondary NAICS – applies to 8(a)
Protégé may have up to 2 mentors in its lifetime in any program

40. SBA Mentor Protégé Programs
8(a) mentor/protégé may notify SBA that it is transferring relationship to the all small MP relationship after graduation
Mentors may own up to 40% of protégé - will not be required to divest at end of relationship
Mentor may transfer relationship to purchaser
Size of an approved 8(a) JV may be protested

41. SBA Mentor Protégé Programs
A protégé firm may generally have only one mentor at a time.
SBA may approve a second mentor for a particular protégé firm where the second relationship will not compete or otherwise conflict with the assistance set forth in the first mentor-protégé relationship and:
(i) The second relationship pertains to an unrelated NAICS code; or
(ii) The protégé firm is seeking to acquire a specific expertise that the first mentor does not possess.

42. SBA Mentor Protégé Programs
Relationship lasts 3 years, with 3-year extension, but reviewed annually to ensure protégé is receiving identified assistance and contracts are being properly performed by appropriate parties
Past performance and experience of JV members or subcontractors must be considered by the CO
Protégé must identify all other mentor protégé relationships
At the conclusion of a relationship, protégé must report on whether it benefitted

43. SBA Mentor Protégé Programs
Protégé must perform 40% of work performed by JV, and 40% of aggregate performed by members of the JV at any tier
Joint Venture must certify it will comply with performance requirements, and report to SBA and the CO on performance
All Mentors must be for-profit
HUBZone JV rules align with other programs
Applicants may request reconsideration of denial

44. SBA Mentor Protégé Programs
Mentor that fails to provide assistance:
may result in termination of the agreement;
mentor prohibited from acting as mentor for two years;
SBA may request for agency to stop work and/or allow protégé to perform
May be grounds for debarment

45. SBA Mentor Protégé Programs
SBA does not currently certify small, WOSB, or SDVO – but status can be protested in connection with procurement
SBA will not review all small mentor protégé joint ventures – but JV structure can be protested in connection with procurement
Once a protégé qualifies as other than small for the size standard for its primary NAICS code, it will not be eligible for any further contracting benefits from its mentor-protégé relationship

46. SBA Updates

47. HUBZone Expansion Qualified Base Closure Area Qualified Disaster Area
New Maps –

48. Similarly Situated Entity
Same small business program status as prime
Example: For WOSB requirement, WOSB with WOSB subcontractor
Subcontractor must be small for NAICS assigned to subcontract
Effective June 30, 2016
Cannot be used until FAR Council updates FAR ( )

49. Subcontracting Reporting and Use
Contracting officers have discretion to require a subcontracting plan where a small business rerepresents its size as an other than small business.
May require subcontracting plans even for modifications under the subcontracting plan threshold if modifications would cause the contract to exceed the plan threshold
Requires prime contractors to assign North American Industry Classification System (NAICS) codes to subcontracts

50. Subcontracting
Requires prime contracts with subcontracting plans on task and delivery order contracts to report order level subcontracting information after November
On IDIQ contracts, the contracting officer may establish subcontracting goals at the order level (but not a new subcontracting plan).

51. Subcontracting
A prime contractor that identifies a small business by name as a subcontractor in a proposal, offer, bid or subcontracting plan must notify those subcontractors in writing prior to identifying the concern in the proposal, bid, offer or subcontracting plan

52. Subcontracting – False Statements
Anyone who has a reasonable basis to believe that a prime contractor or a subcontractor may have made a false statement to an employee or representative of the Federal Government, or to an employee or representative of the prime contractor, with respect to subcontracting plans must report the matter to the SBA Office of Inspector General. All other concerns as to whether a prime contractor or subcontractor has complied with SBA regulations or otherwise acted in bad faith may be reported to the Government Contracting Area Office where the firm is headquartered

53. Mentor Protégé Programs (MPP)
Agencies (other than DOD) using their own MPPs
Mandated review
Notice sent out two weeks ago
Documentation due by 8/25/17
SBA to determine if duplicate or unique
SBA will approve/disapprove their proposal

54. NAICS New NAICS went into effect 1/1/17
Can’t be used until SBA sets size standards
FAR (a)(2) - NAICS codes are updated by the Office of Management and Budget through its Economic Classification Policy Committee every five years. New NAICS codes are not available for use in Federal contracting until the Small Business Administration publishes corresponding industry size standards
New Size Table: 10/1/17

55. Size Standards Size Standards 5 year review completed for FY 2016
Review of 2017 NAICS underway, publish by 10/1/2017

56. Size Standards
Architect-Engineering, Design-Build or two- step sealed bidding procurements
Firm must qualify as small as of the date it certifies it is small as part of initial bid or proposal
Recertification - Merger, Sale or Acquisition
Novation is not required, within 30 days
Must recertify Small Business size status to procurement office; or,
Inform procurement office it is other than small
If after offer but prior to award, must recertify size to contracting officer prior to award

57. WOSB Set-Aside Program
SBA completed study of industries where WOSBs are underrepresented (January 2017)
Identified digit NAICS where WOSB were underrepresented
80 EDWOSB NAICS; 365 WOSB NAICS
Effective October 1, 2017 (Federal Register Notice should be out soon)
WOSB Certification
Sole Source

58. Questions???
Valerie J. Coleman Program Manager, Prime Contracts Program U. S. Small Business Administration Office of Government Contracting