Koprince    sdvosb joint venturing & teaming presentation - el paso august 2012
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Koprince sdvosb joint venturing & teaming presentation - el paso august 2012

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    Koprince    sdvosb joint venturing & teaming presentation - el paso august 2012 Koprince sdvosb joint venturing & teaming presentation - el paso august 2012 Presentation Transcript

    • SDVOSB Joint Venturing, Teaming & Subcontracting 7th Annual Veterans Business Conference Government Steven J. Koprince Partner ContractsPetefish, Immel, Heeb & Hird, LLP Solutions for Small Business
    • Overview• Why joint venture or team?• Where can I find teammates?• JV and teaming legal risks• Joint ventures v. prime/subcontractor teams• SDVOSB joint ventures• SDVOSB prime/subcontractor teams• Mentor protégé programs• Question-and-answer
    • Why JV or Team?• Offer more to the government in terms of: Resources Past performance Key personnel Other capabilities• Improve proposal• Pursue larger or more complex contracts• Share risks and liabilities
    • Finding Teammates• Industry days• Procurement conferences• OSDBUs• PTACs & SBDCs• Personal contacts• Online resources (e.g., LinkedIn)
    • Legal Risks• Non-compliance with mandatory JV provisions• JV affiliation/size problems• Violation of ostensible subcontractor rule• Violation of subcontracting limits• Loss of SDVOSB “control” by service-disabled veteran
    • Joint Ventures v. Teams• Joint Ventures • Teams – Both parties perform at – Only one party performs the prime contract level at the prime contract – Parties split profits and level losses – Subcontractor paid on a – Parties may form a new pre-determined basis legal entity – No new legal entity – Subcontracting limits created apply to JV as a whole – Subcontracting limits apply to prime only
    • Joint Ventures v. Teams• Liability • JV: both parties responsible for entire contract • Team: sub responsible only for its own share of work• Control • JV: Both parties exercise some level of control • Team: Prime should control the relationship • Ostensible subcontractor affiliation
    • Joint Ventures v. Teams• Advantages of a JV v. a Team: • Government can rely on two companies to perform entire contract • Minority member may exercise more control • Individual JV members not responsible for as much work • May receive favorable tax treatment • Helps companies stay smaller longer
    • Joint Ventures v. Teams• Disadvantages of a JV v. a Team: • Lead contractor surrenders substantial control • JVs may not be eligible to bid due to size problems • Both parties liable for entire contract • Termination may be more difficult • Government or competitors may raise past performance questions
    • Joint Ventures v. Teams• Size requirements • JV: sizes of joint venturers may be added together to determine small business status • Team: only the size of the prime contractor is considered in determining small business status
    • SDVOSB Joint Ventures• What is a Joint Venture? • Two or more companies • Combine resources, skills, efforts, & knowledge • Share profits and losses • Temporary basis • “Three in two” general affiliation rule
    • SDVOSB Joint Ventures• SDVOSB JV Requirements (13 C.F.R. 125.15): At least one joint venturer must be a SDVOSB Joint venture must qualify as small • Cannot JV with a large business Parties must adopt written JV agreement containing mandatory provisions JV can be informal or formal
    • SDVOSB Joint Ventures• Mandatory SDVOSB JV provisions (13 C.F.R. 125.15(b)): SDVOSB designated as managing venturer Employee of SDVOSB as project manager • Need specific name! At least 51% of net profits to SDVOSB • Regardless of work share Specify responsibilities of parties
    • SDVOSB Joint Ventures• Mandatory SDVOSB JV provisions (13 C.F.R. 125.15(b)): All parties obligated to continue performance Final original records maintained by SDVOSB managing venturer• For VA & FAA procurements: JV itself must be verified by CVE JV must be a separate legal entity• No prior approval required for others
    • JVs and Subcontracting• The JV itself, as prime contractor, is subject to the subcontracting limits• For SDVOSB JVs, no rule regarding work split among JV members Keep in mind management requirement Beware “control” issues.
    • How to Create a Team• A prime/sub team should be formed well in advance of proposal submission by way of a teaming agreement• Teaming agreement: binding agreement to pursue a specific government contract as a prime/sub team
    • Subcontracts• Subcontract supersedes/replaces the teaming agreement• Much more detailed than teaming agreement• Must include mandatory FAR provisions (flow- downs) • Consider an incorporation by reference clause • Consider specific identification of (at minimum) key flow-downs • Provide the sub with a copy of the prime contract, less any confidential information about your company
    • Limits on Subcontracting• Every set-aside contract contains subcontracting limits (FAR 52.219-14)• Limits vary depending on type of contract• Contrary to common perception, limits are not based on the total value of the contract• For SDVOSB prime contracts, self- performance requirements can be met by subbing to other SDVOSBs.
    • Ostensible Subcontractor Affiliation• What is it? • SBA considers a small prime contractor affiliated with its subcontractor for purposes of a set-aside contract where: • The prime is “unusually reliant” upon the sub, and/or • The sub will perform the primary and vital portions of the contract• Why does it matter? • If sizes of prime and sub, combined, exceed size standard, prime is ineligible for award
    • Ostensible Subcontractor Affiliation• SBA evaluates ostensible subcontractor affiliation on a case-by-case basis, looking at “totality” of relationship between the parties• Best practice: reduce/eliminate number and severity of ostensible subcontractor risk factors as identified in regulation and SBA OHA cases
    • Serving as a SDVOSB Sub• For most prime contracts, may self-certify as a SDVOSB subcontractor if meet all qualifications• However, for VA prime contracts containing VAAR 852.219-9, must be listed as verified in VetBiz to qualify as a SDVOSB subcontractor
    • Mentor-Protégé Programs• DoD Mentor-Protégé Program• SDVOSB may participate as protégé• Mentor: must have at least one active DoD subcontracting plan• Recently, DoD has required very thorough and detailed applications
    • Mentor-Protégé Programs• DoD Mentor-Protégé Program• Benefits: • Mentor and protégé not affiliated on basis of assistance provided by mentor to protégé under agreement • Mentor may receive credit against its subcontracting plans for assistance (credit agreement) or reimbursement of funds expended (reimbursement agreement) • BUT, no joint venturing capability
    • Mentor-Protégé Programs• DHS • FAA• State • USAID• Treasury • Energy• NASA • VA• GSA • EPA• HHS • DOT (proposed)
    • Mentor-Protégé Programs• Affiliation risks • March 2011: SBA adopts new size regulations • New regulations provide that exception from affiliation only allowed when mentor-protégé program has been approved by SBA or created by Congress • Currently, only SBA 8(a) and DoD comply • SBA OHA has held that affiliation may exist based on VA M-P assistance
    • Mentor-Protégé Programs• New SBA mentor-protégé programs on the horizon, including SDVOSB• Congressional directive: programs should be similar to 8(a) • May include JV capability
    • Questions?Thank you!Questions?