You’ve been certified as a participant in the SBA’s 8(a) Program. Congratulations–it’s not an easy (or quick) process! But now that you’re an official 8(a) Program participant, how do you maximize your chances of winning 8(a) contracts?
For many 8(as), mentoring and joint ventures are a critical piece of the puzzle. In my career as a government contracts attorney focusing on serving small businesses, I have helped many 8(a)s form mentor/protege relationships and joint ventures. Here are three of my keys to success–and to avoiding common mistakes.
Understand That a “Mentor/Protege” is Not a Joint Venture.
In the 8(a) world, the terms “mentor/protege” and “joint venture” are commonly spoken in the same breath. But they aren’t the same thing at all, and understanding the difference is key to effectively using both.
An SBA mentor/protege agreement is a business development program under which a mentor business (often, but not always, a large business) provides targeted business development assistance to a small protege, with the SBA’s blessing. A mentor/protege agreement is not, itself, a vehicle for pursuing contracts–there is no such thing as “mentor/protegeing” for a federal contract opportunity.
A joint venture, on the other hand, is a legal entity owned by two or more contractors. Under the SBA’s rules, a joint venture must register in SAM and (to be awarded 8(a) contracts) must adopt a joint venture agreement meeting the requirements of 13 C.F.R. § 124.513.
So why are mentor/protege agreements and joint ventures so often conflated? Ordinarily, all members of a joint venture must be small businesses for a joint venture to qualify for 8(a) contracts. But an SBA-approved mentor can be part of an 8(a) joint venture even if the mentor is a large business! For many large businesses, this special joint venturing eligibility is the primary reason to participate in the mentor/protege program.
But as a small potential protege, don’t make the mistake of believing that the mentor/protege program is nothing but a precursor to a joint venture. As a protege, you should receive real, valuable mentoring, even if you never win a contract as a joint venture, or never form a JV at all! Finally, as a protege, don’t make the common mistake of assuming that you need a mentor-protege agreement before forming any joint venture. Remember, the only relationship between the SBA’s mentor/protege program and joint venturing is that an SBA-approved mentor can be a joint venture partner even if the mentor is large. If your potential joint venture partner is a small business, a mentor-protege agreement is not required to joint venture for 8(a) contracts.
Be Very Careful About Joint Venture Agreements.
If you decide to pursue an 8(a) contract as a member of a joint venture, be absolutely, 100%, super-duper sure (not the official legalese, but I’m trying to get my point across) that your joint venture agreement complies with the mandatory requirements under 13 C.F.R. § 124.513(c). This regulation sets forth more than a dozen mandatory requirements for an 8(a) joint venture agreement. Omit just one of them, and your joint venture could be found ineligible.
I often see 8(a)s make the mistake of relying on a joint venture agreement template. Sometimes that document comes from a mentor or other joint venture partner, sometimes from the 8(a)s own old files, and sometimes even from the SBA itself. The problem is that templates–yes, even templates written by the SBA–often are non-compliant. In fact, the SBA’s joint venture rules just changed in November 2020, meaning that templates predating November may be outdated.
Yes, it’s okay to start with a template instead of from scratch, but there is no substitute for cross-walking your joint venture agreement against the regulation itself: 13 C.F.R. § 124.513(c). It may not be the most exciting thing you ever do, but it could save your contract award.
Follow the “Two-Year” Rule.
In the SBA’s eyes, a joint venture is a limited-duration entity. The SBA enforces this policy under what I call the “two-year” rule, which you can find in 13 C.F.R. § 121.103(h).
The rule says that when a joint venture wins its first contract, a two-year window opens. During those two years, the joint venture can submit as many proposals as it wants, and can be awarded an unlimited number of contracts stemming from those proposals–even after the two-year window closes.
But once the two-year window closes, the joint venture must stop submitting new proposals. If the joint venture submits a proposal after the two-year mark, the SBA may deem the joint venture members affiliated, which is definitely not a good thing!
Fortunately, the two-year rule is a limit on the joint venture entity, not the joint venture partners. Once two years have elapsed, the same partners can simply form a new joint venture entity and the clock resets to zero. (Savvy 8(a) contractors will mark their calendars a month or so before the two-year window closes, to make sure that they have sufficient time to establish the new JV and get it registered in SAM).
To be clear, I am not a fan of the two-year rule, which I think elevates form over substance and essentially serves as a “gotcha” for people who don’t know about the rule. But don’t make the mistake of continuing to submit new proposals with a joint venture more than two years after the JV’s first award. Just form a new one!
There you have it–three keys to success (and avoiding common mistakes) with respect to mentoring and joint venturing as an 8(a) Program participant. The mentor/protege program and the ability to joint venture are powerful benefits available to 8(a)s, so don’t let these misconceptions trip you up.
About the Author: Steven J. Koprince is Founder of Koprince Law LLC and a Senior Partner at the firm. Steven’s legal practice focuses exclusively on providing comprehensive legal services to federal government contractors.
Steven is the author of The Small-Business Guide to Government Contracts (AMACOM Books, 2012) and three GovCon Handbooks providing in-depth information on discrete government contracting topics. Steven also founded the blog SmallGovCon (smallgovcon.com), where he has written more than 1,100 posts on government contracting legal issues. Steven has been quoted in several national news outlets and has appeared on numerous radio programs and podcasts. A ten-time featured speaker at the national conferences of the Association of Procurement Technical Assistance Centers, Steven was honored as a “Friend of APTAC” at the Spring 2016 APTAC National Conference.
Steven is a graduate of Duke University and the Marshall-Wythe School of Law at the College of William & Mary. An unabashed beach bum, Steven lives in Indian Harbour Beach, Florida, with his wife and two children. He welcomes government contractors to contact him by email at email@example.com and connect with him on LinkedIn.