Teaming Arrangements
Women Owned Small Business (WOSB) Conference
June 21, 2011
Octavia Turner
U.S. Small Business Administration
Procurement Center Representative
octavia.turner@nasa.gov
What is SBA’s
definition of a SB?
Independently owned and operated
Not dominant in its field of operations
Depending on the industry, size
standard eligibility is based on:


the average number of employees for the preceding
12-months
-oraverage annual receipts for a three-year period.
What are some examples of
teaming arrangements?
Prime/Subcontractor
Joint Venture (JV)
Limited Liability Corporation (LLC)
Mentor-Protégé Agreement
Partnership
What are the advantages
of teaming?
Minimize risks
Gain first hand experience
Increase competitiveness
Enhance capabilities
Diversify
Compete with large firms
Compete for larger more technically complex
contracts
Does the FAR recognize
teaming?
FAR 9.603
“The Government will recognize the integrity and validity of
contractor team arrangements; provided, the arrangements are
identified and company relationships are fully disclosed in an
offer or, for arrangements entered into after submission of an
offer, before the arrangement becomes effective. The
Government will not normally require or encourage the
dissolution of contractor team arrangements.”
What types of teams does FAR
recognize?
FAR 9.601
“Contractor team arrangement,” as used in this subpart,
means an arrangement in which -(1) Two or more companies form a partnership or joint venture to
act as a potential prime contractor; or
(2) 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.
Joint Venture - A formal arrangement between two or
more firms where a new contracting entity is created.
A joint venture is an association of individuals and/or concerns
with interests in any degree or proportion consorting to engage
in and carry out no more than three specific or limitedpurpose 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.
(13 CFR 121.103(h) and Federal Acquisition Regulation 19.101)
This means that a specific joint venture entity generally may not be awarded more than
three contracts over a two year period, starting from the date of the award of the first
contract, without the partners to the joint venture being deemed affiliated for all purposes.
Once a joint venture receives one contract, SBA will determine compliance with the three
awards in two years rule for future awards as of the date of initial offer including price.
As such, an individual joint venture may be awarded more than three contracts without
SBA finding general affiliation between the joint venture partners where the joint venture
had received two or fewer contracts as of the date it submitted one or more additional offers
which thereafter result in one or more additional contract awards.
The same two (or more) entities may create additional joint ventures, and each new joint
venture entity may be awarded up to three contracts in accordance with this section.
For purposes of this provision and in order to facilitate tracking of the number of contract
awards made to a joint venture, a joint venture must be in writing and must do business
under its own name, and it may (but need not) be in the form of a separate legal entity, and if
it is a separate legal entity it may (but need not) be populated ( i.e., have its own separate
employees).
Example 1 -- Joint Venture AB has received two contracts. On
April 2, Joint Venture AB submits an offer for Solicitation 1. On
June 6, Joint Venture AB submits an offer for Solicitation 2. On
July 13, Joint Venture AB submits an offer for Solicitation 3. In
September, Joint Venture AB is found to be the apparent
successful offeror for all three solicitations. Even though the
award of the three contracts would give Joint Venture AB a total
of five contract awards, it could receive those awards without
causing general affiliation between its joint venture partners
because Joint Venture AB had not yet received three contract
awards as of the dates of the offers for each of three solicitations
at issue.
Example 2 to paragraph (h) introductory text. Joint Venture XY
receives a contract on December 19, year 1. It may receive two
additional contracts through December 19, year 3. On August 6,
year 2, XY receives a second contract. It receives no other
contract awards through December 19, year 3 and has submitted
no additional offers prior to December 19, year 3. Because two
years have passed since the date of the first contract award, after
December 19, year 3, XY cannot receive an additional contract
award. The individual parties to XY must form a new joint
venture if they want to seek and be awarded additional contracts
as a joint venture.
How do you determine the size
of a JV?
Joint Venture = Affiliation
The members of a joint venture or team are considered to be
affiliated for size purposes.
The size of each team member contributes to the total size of the
joint venture or team.
The joint venture or team is small only if the combined annual
receipts or employees of all the firms in the JV meet the size
standard for the procurement
What is the “exclusion from
affiliation” rule for JVs?
Apply size standard for the requirement to individual
small business concerns not to the combined assets:
For a procurement having a revenue-based size standard, the procurement
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 procurement
exceeds $10 million or
Bundled procurements
Is this JV considered a
small business entity?
Small Business Set-Aside –
Size Standard for NAICS 237990 is $33.5M
$20M estimated value of contract award
Joint Venture Team:
1. WOSB – average annual receipts of $6M
2. Small Business – average annual receipts of $18M
3. 8(a) – average annual receipts of $11M
Can this JV bid on a
small busines set-aside?
YES!
This JV team can bid on this small business setaside and still be considered small since the dollar
value of the procurement ($20M) exceeds half the
size standard (half of $33.5M) and each team
member is small for the applicable NAICS code.
Is this JV considered a
small business entity?
Small Business Set-Aside –
Size Standard for NAICS 541330 is $4.5M
$20M estimated value of contract award
Joint Venture Team:
1. SDVOSB – average annual receipts of $3M
2. Small Business – average annual receipts of $18M
3. EDWOSB – average annual receipts of $11M
Can this JV bid on a
small business set-aside?
NO!
This JV team cannot bid on small business
set-aside and still be considered small. Two
team members are large for the applicable
NAICS code.
Is this JV considered a
small business entity?
Small Business Set-Aside –
Size Standard for NAICS 541712 is 500 employees
$8M estimated value of contract award
Joint Venture Team:
1. WOSB – 100 employee
2. Small Business – 400 employees
3. 8(a) – 250 employees
Can this JV bid on a
small business set-aside?
NO!
This JV team cannot bid on small business
set-aside and still be considered small. The
size standard for the applicable NAICS
code is based on the number of employees.
The procurement does not exceed $10M.
What is the performance
of work requirement?
Services
Perform 50% of cost incurred for
personnel with its own employees
Supplies
Perform 50% of manufacturing
cost, excluding materials, with it
own employees
General Construction
Perform 15% of cost of contract,
excluding materials, with own
employees
Special Trade Construction
Perform 25% of cost of contract,
excluding materials, with own
employees
NOTE: Does not apply to unrestricted procurements!
How does the performance of work
requirement affect the JV?
Small Business Set-Aside for services:

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Small Business A: can only do 25% of job with his
own people
Small Business B: can only do 25% of job with his
own people
Neither A nor B can bid the job alone.
However, if they form a Joint Venture, they can
combine their efforts, doing 50% with their own
people, and can bid the job.
What is required in a WOSB/
EDWOSB JV?
13 CFR § 127.506
A joint venture may submit an offer on an EDWOSB or WOSB contract if the joint venture
meets all of the following requirements:
(a) Except as provided in §121.103(h)(3) of this chapter, the combined annual receipts or
employees of the concerns entering into the joint venture must meet the applicable size
standard corresponding to the NAICS code assigned to the contract;
(b) The EDWOSB or WOSB participant of the joint venture must be designated on the CCR
and the ORCA as an EDWOSB or WOSB;
(c) The parties to the joint venture must enter into a written joint venture agreement. The joint
venture agreement must contain a provision:
(1) Setting forth the purpose of the joint venture.
(2) Designating an EDWOSB or WOSB as the managing venturer of the joint venture, and an employee of the managing venturer as
the project manager responsible for the performance of the contract;
What is required in a WOSB/
EDWOSB JV?
13 CFR § 127.506 (Continued)
(c)
(3) Stating that not less than 51 percent of the net profits earned by the joint venture will be distributed to the EDWOSB or WOSB;
(4) Specifying the responsibilities of the parties with regard to contract performance, sources of labor, and negotiation of the EDWOSB or
WOSB contract; and
(5) Requiring the final original records be retained by the managing venturer upon completion of the EDWOSB or WOSB contract
performed by the joint venture.
(d) The joint venture must perform the applicable percentage of work required of the
EDWOSB or WOSB offerors in accordance with §125.6 of this chapter (limitations on
subcontracting rule);
(e) The procuring activity will execute the contract in the name of the EDWOSB or WOSB or
joint venture.
(f) The WOSB or EDWOSB must provide a copy of the joint venture agreement to the
contracting officer.
Remember!
 Generally may not be awarded more than three contracts over a
two year period
 The performance of work requirements apply to the cooperative
effort of the joint venture partners, not its individual members
unless the JV falls under one of the exclusions.
 Contract is executed in joint venture’s name
 A large business cannot be a JV participant on a small business
set-aside
-- One exception: 8(a) Mentor-Protégé
What is a prime/subcontract team
arrangement?
FAR 9.601
“Contractor team arrangement,” as used in this
subpart, means an arrangement in which—
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.
What are the responsibilities of the
prime contractor?
Prime Contractor:
 Agrees to furnish supplies or services and




government agrees to pay
Responsible for adhering to terms and conditions
of contract
Manages and controls the contract
Government has privity of contract only with the
prime contractor
Relationships identified before offer is submitted
What are the responsibilities of the
subcontractor?
Subcontractor:
 Agrees to furnish supplies or services and prime





contractor agrees to pay
Responsible for adhering to terms and conditions of
subcontract
Does not perform vital or primary parts of contract
Conveys terms and conditions to second-tier
subcontractors
Subcontractor has privity of contract only with the prime
contractor
Relationships can be defined before or after award
What is an ostensible subcontractor?
13 CFR 121.103(h)(4)
A contractor and its ostensible subcontractor are
treated as joint venturers, and therefore affiliates, for
size determination purposes. An ostensible
subcontractor is a subcontractor that performs
primary and vital requirements of a contract, or
of an order under a multiple award schedule
contract, or a subcontractor upon which the
prime contractor is unusually reliant…
What are indications of an ostensible
subcontractor?
All aspects of the prime/sub relationship are
considered:
Joint bank accounts with joint signature requirements
Joint approvals on invoices
Joint authority required for most actions
Unusual reliance upon teaming partner (performance,
financial, bonding, management)
The relationship must be presented as a joint
venture and subject to affiliation rules
JV partners must meet performance of work
requirements
JV and prime/subcontractorWrap Up
Joint Venture
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Entered into prior to award
Contract written in joint venture name
Temporary arrangement – 3 contracts in a 2 year period
Considered as new entity for federal contracting purposes
Prime/Subcontractor
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Entered into before or after award
Prime is responsible for completing the contract
Prime/subcontract relationship established for a specific
contract
Teaming Tips

Selecting Teaming Partners – consider:
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capabilities, financial, credit history, other resources
past performance
debarment/suspension
management styles, corporate cultures, strategic visions
past and current teaming history
Successful Teaming Qualities


compatible contractors
good teaming agreements in place
Where can I find
teaming opportunities?
1.
2.
3.
4.
5.
Federal Business Opportunity –
https://www.fbo.gov
SUBNet -http://web.sba.gov/subnet
Dynamic Small Business Search –
Subcontracting – click on http://www.sba.gov
“Contracting”
Networking – conferences, workshops,
training sessions
References
1.
Code of Federal Regulations - http://www.access.gpo.gov/nara/cfr
13 CFR 121 – SBA Size Regulation
13 CFR 127 – Women Owned Small Business Federal Contract
Program
2.
Federal Acquisition Regulation NAICS - farsite.hill.af.mil
3.
DoD Handbook for Facilitating Small Business Teaming
Arrangements http://www.acq.osd.mil/osbp/resources/teaming.pdf