Joint Ventures in Government Contracting Strategies & Legal Considerations

1. Joint Ventures in Government Contracting Strategies & Legal Considerations

2. Joint Ventures in Government Contracting • Agenda • Introductions • Presentation • Q & A

3. Joint Venturesin Government Contracting • Introductions: • Fed Bid Speed • Fierce Government • Mark A. Amadeo – Amadeo Law Firm, PLLC • Jennifer Schaus – JS & Associates

4. Joint Venturesin Government Contracting • Fed Bid Speed * Software program to manage B2G Opps * Single click integration with FBO.gov * Share notes & project manage RFP’s

5. Joint Venturesin Government Contracting Fierce Government * Free Govt IT Newsletter * IT in Govt Agencies / Defense / Cloud / Cyber * White Papers / Events / Analysis * In-depth & Quality = Differentiator

6. Joint Venturesin Government Contracting Amadeo Law Firm, PLLC * Local and Federal Contracting * Employee Benefits * Employment

7. Joint Venturesin Government Contracting • Jennifer Schaus & Associates • B2G Services and Events GSA Schedules Federal Sales / Marketing

8. Joint Ventures in Government Contracting

9. Joint Venturesin Government Contracting Two Types of Teaming Arrangements Under FAR (9.601) Vertical (Prime-Sub) “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.” Horizontal (JV) “Two or more companies form a partnership or joint venture to act as a potential prime contractor.” TEAMING

10. Joint Venturesin Government Contracting Why Government Approves of Teaming Arrangements FAR 9.602 (a) Contractor team arrangements may be desirable from both a Government and industry standpoint in order to enable the companies involved to — (1) Complement each other’s unique capabilities; and (2) Offer the Government the best combination of performance, cost, and delivery for the system or product being acquired. TEAMING

11. Joint Venturesin Government Contracting Competitive Benefits – Small Businesses Tension: Small Business Goals vs. Cost Savings Small Business Set-Asides • 8(a) Companies • Women-owned small businesses (WOSB) • Service-disabled veteran-owned small businesses (SDVOSB) • Small businesses Cost-Saving Trends That Reduce Small Business Participation • Contract consolidation • Consolidation across agencies • Massive IDIQ’s & task orders

12. Joint Venturesin Government Contracting Competitive Benefits – Small Businesses Joint Venture Rules Ease Tension General Rules of Affiliation • Revenues and # employees are combined for small biz size standard • Joint venture parties are deemed affiliated Relaxed JV Rules • Exceptions to affiliation: Considered small even if combined size > size standard • Businesses participate in contracts don’t typically qualify for alone

13. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesExceptions to Affiliation – 8(a) & Small Businesses Small Business Joint Ventures Competing for Larger Contracts Applies To: bundled contracts, contracts over $10 million (when size standard is based on # employees), or contracts that are greater than ½ the size standard (when size standard is based on revenue) Requirement: Each JV participant must be small under the size standard for the contract

14. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesExceptions to Affiliation – 8(a) & Small Businesses 8(a) Joint Ventures Competing For Larger 8(a) Contracts Applies To: Contracts set aside for 8(a) businesses as long as contract is either greater than $10M (when size standard is based on # employees) or greater than ½ the size standard (when size standard is based on revenue) Requirements: • Each JV company must be small under the size standard for the contract • At least one JV company must be an 8(a) business • At least one 8(a) business must be very small (i.e., less than half the size standard)

15. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesExceptions to Affiliation – 8(a) & Small Businesses 8(a) Mentor-Protégé Joint Ventures Applies To: Any contract with a small business requirement, including 8(a) contract Requirements: • Mentor and protégé approved by SBA under the mentor-protégé program • 8(a) Protégé meets the size standard for the contract **Mentor can be any size

16. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesExceptions to Affiliation – Other Joint Ventures HUBZone Joint Ventures SDVOSB Joint Ventures

17. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesLimits To Relaxed Rules On Affiliation 3 in 2 Rule: Joint venture can engage in and carry out no more than three specific or limited-purpose business ventures for profit over a two year period But . . . No limit on number of JV’s that same JV participants can form

18. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesEven if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For Alone 8(a) Joint Ventures Competing For Smaller 8(a) Contracts Applies To: 8 (a) set-aside contracts that are too small to qualify for affiliation exception Requirements: • Each JV company must be small under the size standard for the contract • At least one JV company must be an 8(a) business • At least one 8(a) business must be very small (i.e., less than half the size standard)

19. Joint Venturesin Government Contracting Competitive Benefits – Small BusinessesEven if Affiliation Applies - Businesses Participate In Contracts Don’t Qualify For Alone EDWOSB /WOSB Joint Ventures Competing For Smaller Contracts SDVOSB Joint Ventures Competing For Smaller Contracts

20. Joint Venturesin Government Contracting Competitive Benefits – Small Businesses Additional Requirements On Any Joint Venture Competing For An 8(a) Contract • SBA approval of JV agreement before award • Unpopulated: 8(a) partner(s) must do at least 40% of the work JV may subcontract to non 8(a) partner(s), if subcontracts 40% work to 8(a) • Populated: 8(a) partner(s) must show what it gains + business development Non-8(a) partners cannot be subcontractors to the JV

21. Joint Venturesin Government Contracting Joint Venture Agreement Requirements Example: Joint Venture Agreement to Perform 8(a) Contracts (1) State purpose of JV (2) Designate 8(a) participant as managing venture and an employee of managing venture as project manager (3) State that not less than 51% of net profits will be distributed to 8(a) participant(s) (4) Provide for special bank account in name of JV; signatures of all JV participants for withdrawals; used for payments on contract and contract expenses (5) Include itemized list of equipment, facilities and resources provided by each JV participant, with cost and value for each (6) Specify responsibilities of parties regarding contract performance, labor source & contract negotiation (7) State all parties are obligated for performance despite any withdrawal by any JV participant (8) Designate accounting and administrative records to be maintained by managing venture (9) Require original records to be maintained by managing venturer upon contract completion (10) State that quarterly financial statements will be submitted to SBA within 45 days of each quarter (11) State that project – end profit-loss & distribution statements will be submitted to SBA within 90 days of project completion

22. Joint Ventures in Government Contracting Final Thoughts… • Consistent with Teaming Agreement • Need to disclose JV to agency • Proper Accounting …Final Final Thoughts • Be Persistent • Be Creative • Choose Partners Wisely

23. Thank You !! Dear Participants, Thank You for your time & participation! Pease submit your questions via email & we will answer as we have time. The webinar is recorded and available at: http://www.JenniferSchaus.com/events

24. Joint Ventures in Government Contracting Mark A. Amadeo, Esq. mamade@amadeolaw.com www.amadeolaw.com + 1 – 2 0 2 – 6 4 0 – 2 0 9 0 + 1 – 3 0 1 – 7 8 9 – 1 6 2 0 Jennifer Schaus & Associates JSchaus@JenniferSchaus.com www.JenniferSchaus.com + 1 – 2 0 2 – 3 6 5 – 0 5 9 8