A joint venture is one way to team: two or more companies form a partnership or joint venture to act as potential prime contractor 1. The government will recognize team arrangements, provided they are identified and company relationships are fully disclosed in an offer 2.
When a joint venture is small
The default answer: a joint venture qualifies as a small business concern if each party to it qualifies as small under the size standard for the solicitation 3.
The mentor-protégé route is the exception that matters most. A joint venture also qualifies when the protégé is small under the solicitation's size standard, in a joint venture of a mentor and protégé with an approved mentor-protégé agreement under an SBA mentor-protégé program 4.
Programs can add their own tests. A joint venture qualifies as a HUBZone small business concern if it complies with the requirements in 13 CFR 126.616(a) through (c) 5.
What the mentor-protégé program is for
SBA's small business mentor-protégé program is designed to enhance the capabilities of protégé firms by requiring approved mentors to provide business development assistance to them 6. Mentors can include other than small businesses 7.
The protégé must carry real weight. In a mentor-protégé joint venture, the work done by the small business protégé partner must be at least 40% of the total done by the partners 8.
When that share is measured, all work done by the mentor and any of its affiliates at any subcontracting tier is counted 9.
Worked example. Contractor M, a small protégé, and Contractor N, its approved large mentor, plan a joint venture for a services set-aside. Their first work split gives Contractor M $700,000 of $2,000,000 of partner work. That is 35%, below 40%, so they move a task area to Contractor M before they submit.
Teaming without a joint venture
A prime-and-subcontractor team carries its own risk. An offeror is ineligible as a small business, 8(a), HUBZone, WOSB/EDWOSB or VOSB/SDVOSB concern where SBA determines there to be an ostensible subcontractor 10.
An ostensible subcontractor is a subcontractor that is not a similarly situated entity 11 and that performs primary and vital requirements of a contract or order, or one upon which the prime contractor is unusually reliant 12.
There is a safe harbour. On a contract or order set aside or reserved for small business for services, specialty trade construction or supplies, SBA will find that a small prime is performing the primary and vital requirements 13 and is not unduly reliant on subcontractors that are not small, where it can show that it, together with any small subcontractors, will meet the limitations on subcontracting provisions 14.
Bids2Bank checks each teaming partner you add to a bid against SAM.gov and flags one that is excluded or not registered 15.
Add teaming partners to a bid and check them →
Indented paragraphs are invented worked examples. Tool links open Bids2Bank and need a free account.