Government Contracts Rule Would Update FAR Joint Venture Policy
Tuesday, June 30, 2020

Rule Would Update FAR Joint Venture Policy

By Government Contracts Editorial Staff

A rule proposes to amend the Federal Acquisition Regulation to implement statutory and regulatory changes regarding joint ventures. These changes allow a JV comprised of a protégé and its mentor to qualify as a small business or under a socioeconomic program for which the protégé qualifies. These changes also provide updated requirements for other JVs to qualify as a small business or under a socioeconomic program. A 2016 final rule (¶70,425.575) amended the Small Business Administration’s regulations to implement these changes. Under SBA’s rules, a JV qualifies as a small business concern when each of the parties to the JV qualifies as small for the size standard associated with the North American Industry Classification System code in the solicitation. A JV may qualify under a socioeconomic program when at least one member qualifies under a socioeconomic program and the JV meets the applicable JV requirements in SBA’s regulations. SBA’s rule also revised JV regulations for 8(a) program participants, service-disabled veteran-owned small businesses, HUBZone small business concerns, women-owned small businesses, and economically disadvantaged WOSBs, to require agencies to consider past performance of each party to a small business JV in addition to any work performed by the JV itself.

Past Performance. The proposed rule would amend FAR 9.104-3 and FAR 15.305 to require contracting officers to consider the past performance of the JV, and to consider the past performance of each party if the JV does not demonstrate past performance. For consistency and fairness, the requirement would apply to JVs regardless of size status. Further, the rule would clarify that 8(a) JVs are not certified into the 8(a) program and that 8(a) JV agreements need only be approved by SBA prior to contract award. This change is being proposed in response to the Government Accountability Office’s ruling in BGI-Fiore JV, LLC (29 CGEN ¶114,404). The decision sustained a protest of an agency’s rejection of an 8(a) JV’s proposal on the basis that SBA had not certified the 8(a) JV prior to submission of proposals. Accordingly, the rule would amend language in FAR 52.219-18, Notification of Competition Limited to Eligible 8(a) Concerns, that could be interpreted to mean that 8(a) JVs that submit an offer for an 8(a) contract need to be “certified” by the SBA and their JV agreement needs to be approved by the SBA by “the time of submission of offer.” A listing of all the FAR regulations impacted by the rule appears in the table below. Submit comments on the rule referencing FAR Case 2017-019 by August 4, 2020. For the text of this proposed rule, see ¶70,006.355.

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