# Presentation: 209558

## Partnering for Contracting Success

- Vincent Mazzotta
- Small Business Administration
- Size Determination Specialist

## Why Partner?

***  ***1)  Increase Competitive Edge
-   2)  Enhance Capabilities
-   3)  Diversify
-   4)  Compete with Large Firms
***    ***

## 	A joint venture is...an association of individuals and/or concerns with interests in any degree or proportion by way of contract, express or implied, consorting to engage in and carry out no more than three specific or limited-purpose business ventures for joint profit over a two-year period, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. 	

- 	A** joint venture** is...an association of individuals and/or concerns with interests in any degree or proportion by way of contract, express or implied, consorting to engage in and carry out no more than three specific or limited-purpose business ventures for joint profit over a two-year period, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. **	**

## This means that...
 The joint venture entity cannot submit more than three offers over a two-year period, starting from the date of the submission 	of the first offer. 
A joint venture may or may not be in the form of a separate
	legal entity. 
The joint venture is viewed as a business entity in 
	 determining power to control its management. 
SBA may also determine that the relationship between a prime contractor and its subcontractor is a joint venture, and that affiliation between the two exists.

- This means that...
-  The joint venture entity cannot submit more than three offers over a two-year period, starting from the date of the submission 	of the first offer.
- A joint venture may or may not be in the form of a separate
- 	legal entity.
- The joint venture is viewed as a business entity in
- 	 determining power to control its management.
- SBA may also determine that the relationship between a prime contractor and its subcontractor is a joint venture, and that affiliation between the two exists.

## Some General Principles of Affiliation 
(13 CFR 121.103)

**Some General Principles of Affiliation **
**(13 CFR 121.103)**

** **Power to Control
-  Common Managers
-  Common Stockholders
-  Identical Business Interests
-  Contractual Relationships
-  Joint Venture Arrangements

## Affiliation

**Parties to a Joint Venture **are considered to be affiliates if submitting offers on a particular procurement.

## Affiliation

- There is an Exception to Every Rule!

## Affiliation

-   Know how to form a Joint Venture without becoming affiliated with your partner!

- Affiliation with another partner could result in a finding that you are no longer a small business.

## Exclusion from Affiliation

**A joint venture arrangement of two or more business concerns** may submit an offer as a small business for a Federal procurement without regard to affiliation provided...

## Exclusions

- 1)**  **Each concern is small under the size standard corresponding to the NAICS code assigned to the contract, provided:
- 	A) The procurement qualifies as a “bundled” requirement, at any dollar value; or...

##   		B) The procurement is other than a “bundled” requirement and:
	For a procurement having a revenue-based size standard, the dollar value or the procurement, including options, exceeds half the Size standard corresponding to the NAICS code assigned to the contract...or...

-   		B) The procurement is other than a “bundled” requirement and:
- 	For a procurement having a revenue-based size standard, the dollar value or the procurement, including options, exceeds half the Size standard corresponding to the NAICS code assigned to the contract...or...

## 	For a procurement having an employee-based size standard, the Dollar value of the procurement, including options, exceeds $10 million.

- 	For a procurement having an employee-based size standard, the Dollar value of the procurement, including options, exceeds $10 million.

## What is a Bundled Requirement?

- 	**Bundled requirement or bundling**** **refers to the consolidation of two or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business.

***What is a Bundled ******Requirement?***

## Mentor - Protégé

- Two firms approved by SBA to be a mentor and protégé under 13 CFR 124.520 may joint venture as a small business for any Federal Government procurement, provided...
- ...the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement,
- ...and, for purposes of 8(a) sole source requirements, has not reached the dollar limit set forth in 13 CFR 124.519.

## 8(a) BD Participants

***	***A joint venture or teaming arrangement of **at least one 8(a) Participant and one or more other business concerns** may submit an offer for a competitive 8(a) procurement without regard to affiliation under so long as the requirements of 13 CFR 124.513(b)(1) are met.

## Requirements of 

***13 CFR 124.513(b)(1)***

**The requirements of 13 CFR 124.513(b)(1)    include the following:**
- A joint venture of at least one 8(a) Participant and one or more other business concerns may submit an offer as a small business for a competitive 8(a) procurement so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract, provided...

## 	1)  The size of at least one 8(a) Participant to the joint venture is less than one half the size standard corresponding to the NAICS assigned to the contract; or
    2)  For a procurement having an employee-based size standard, the procurement exceeds $10 million;

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

***Requirements of ***
***13 CFR 124.513(b)(1)***

## Affiliation

- SBA may also determine that the relationship between a prime contractor and its subcontractor is a joint venture, and that affiliation between the two exists.

## What is Ostensible Subcontracting?

- A contractor and subcontractor are treated as joint ventures if **the ostensible subcontractor** will perform primary and vital requirements of a contract or if the prime contractor is unusually reliant upon the ostensible subcontractor.
- All requirements of the contract are considered in reviewing such relationship, including contract management, technical responsibilities, and the percentage of subcontracted work.
**Ostensible Subcontracting: 13 CFR 121.103 (h)(4)**

***What is Ostensible ******Subcontracting?***

## Seven-Factors Test

- Which party chased the contract?
- What degree of collaboration was there between the prime contractor and subcontractor on the proposal?
- Which party possesses the requisite background and expertise to carry out the contract?
- Who will manage the contract?

***Seven-Factors Test***

## Seven-Factors Test

- Are there discrete tasks to be performed by each party, or is there commingling of personnel and materials?
- What is the amount of work to be performed by each party?
- Which party performs the more complex and costly contract functions?

***Seven-Factors Test***

## Seven-Factors Test

**The “seven factors” test** is only one tool used by SBA to evaluate whether the relationship is a true prime/subcontractor relationship or a joint venture under the ostensible subcontractor regulations.
- It is not the exclusive test of the presence of unusual reliance.  Ultimately, **a finding of unusual reliance, which rises to the level of a joint venture affiliation, must be a reasonable conclusion based on the totality of the circumstances**.

***Seven-Factors Test***

## To learn more

- Decisions made by the Office of Hearings and Appeals (OHA) in Washington can provide insight on “ostensible subcontracting” if you’re concerned.          Go to:  www.sba.gov/oha and then “search decisions.”
- Search using key words such as “ostensible subcontracting” or “totality of the circumstances” or “joint venture.”

***To learn more***

## Vincent J. Mazzotta

**Vincent J. Mazzotta**
- Small Business Administration
- Office of Government Contracting
- 900 Market Street, 5th floor
- Philadelphia, PA  19406
- Phone (215) 580-2809		FAX (215) 580-2776
- Email: vincent.mazzotta@sba.gov