About HUBZone Joint Ventures

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About HUBZone Joint Venture

Generally a qualified business may enter into a joint venture agreements with one or more other small businesses.  In addition, a business can enter into a Joint Venture with it’s approved mentor.  What do I mean by approved mentor?  Well, SBA has to approve your Mentor Protege Agreement (MPA) either through the All Small Mentor Protege Program or the 8(a) Program.  If your MPA has been approved by SBA then you can enter into a joint venture with your mentor.  Unlike the 8(a) BD Joint Venture, a Joint Venture does not required certification.

Today, we are going to be talking about HUBZone Joint Ventures (JV).  One of the most common questions asked is can a large business receive a HUBZone contract.  The answer is that a large business can be a subcontractor on a HUBZone contract.  However a large business cannot be a prime contractor on a HUBZone contract.  The reason why?  This program is for small businesses only and does not apply to large businesses.  For program requirements visit.

What requirements must a joint venture satisfy to submit an offer on a HUBZone contract?

Generally a qualified business may enter into a joint venture agreements with one or more other small businesses.  In addition, a business can enter into a Joint Venture with it’s approved mentor.  What do I mean by approved mentor?  Well, SBA has to approve your Mentor Protege Agreement (MPA) either through the All Small Mentor Protege Program or the 8(a) Program.  If your MPA has been approved by SBA then you can enter into a joint venture with your mentor.  Unlike the 8(a) BD Joint Venture, a Joint Venture does not required certification.

Let’s Talk Size

A Joint Venture with one or more qualified HUBZone businesses and one or more other businesses may submit an officer on a HUBZone procurement. So long as each business is small for the NAICS code assigned to the procurement. Do you want to perform a joint venture with your SBA-approved Mentor? Then you can do this as long as the protege business is small for the NAICS code assigned to the procurement.

Joint Venture Contents

Every HUBZone Joint Venture Agreement (JVA) must include the following provisions.  This includes joint ventures between a protege and its SBA-approved mentor.

  • Setting forth the purpose of the joint venture;
  • Also, designating a HUBZone business as the managing venturer of the joint venture. And an employee of the HUBZone business managing venturer as the project manager responsible for performance of the contract.
  • At the time you submitted the offer the project manager does not need to be an employee.  However a signed employment letter of intent and statement that once a you win the contract the individual will become the project manager.
  • The mentor cannot provided the project manager for the joint venture;
  • If you elect to form a separate legal entity the HUBZone business must own 51%
  • Stating that the HUBZone business must receive profits from the jv commensurate with the work performed by the HUBZone business;

Special Bank Account

  • Must establishment and administration of a special bank account in the name of the joint venture. This account must require the signature of all parties to the joint venture or designees for withdrawal purposes. All deposits and payments for the jv contract must come from this account.

Equipment, Facilities and Resources

  • Itemizing all major equipment, facilities, and other resources furnished by each party to the joint venture.  This list must include a detailed schedule of cost or value of each, where practical. If a contract is indefinite, or a multiple award contract where the level of effort or scope of work is unknown.  The joint venture must provide a general description of the anticipated major equipment, facilities, and other resources furnished by each party to the joint venture, without a detailed schedule of cost or value of each. Otherwise, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available;

Responsibilities

  • Specifying the responsibilities of the parties with regarding contract negotiation, labor sourcing, and contract performance.  This includes ways that the parties will ensure that the jv and partner(s) will meet the performance of work requirements.  If an indefinite quantity contract or a multiple award contract where the level of effort or scope is unknown. In addition, the jv must provide a description of each parties responsibilities contract negotiation, labor sources, & contract performance.  This does not including the ways that the parties will meet the performance of work requirements. Or in the alternative, specify how the parties will define such responsibilities once a definite scope of work is available;

Obligating Parties

  • Obligating all parties to perform the contract and to complete performance despite the withdrawal of any member;
  • Designating that jv accounting & other administrative records maintained by managing venturer.  Unless your local SBA District Office grants approval.
  • Requiring that the final original records retained by managing venturer upon completion of the contract performed;
  • Stating that quarterly financial statements showing cumulative contract receipts and expenditures (including salaries of the joint venture’s principals) must be sent to SBA NLT 45 days after each operating quarter; and
  • Stating that a project-end profit & loss statement, including a statement of final profit distribution, must submitted to SBA NLT 90 days after contract completion.

Percentage of Work Performance

  • For any contract performed by a jv between a small business and another HUBZone business, the aggregate of the small businesses, not each business separately, must perform the applicable percentage of work;
  • For any HUBZone contract performed by a joint venture between a qualified  SBC and a small business concern or its SBA-approved mentor. The joint venture must perform the applicable percentage of work, and the SBC partner to the joint venture must perform at least 40% of the work performed by the joint venture.
  • The work performed by the SBC partner to a joint venture must be more than administrative or ministerial functions so that it gains substantive experience.
  • The amount of work done by the partners aggregated and the work done by the SBC partner at least 40% of the total done by the partners. In determining the amount of work done by a mentor participating in a joint venture with a qualified protégé, all work done by the mentor and any of its affiliates at any subcontracting tier will counted.

Certification To Contracting Officer

  • Prior to the performance of any HUBZone contract as a joint venture, the SBC partner to the joint venture must submit a written certification to the contracting officer and SBA, signed by an authorized official of each partner to the joint venture, stating as follows:
  • The parties have entered into a joint venture agreement that fully complies with paragraph (c) of this section;
  • The parties will perform the contract in compliance with the joint venture agreement and with the performance of work requirements set forth in paragraph (d) of this section.

Evaluating Past Performance

  • When evaluating past performance and experience of an entity submitting an offer for a jv contract, a procuring activity must consider work done individually by each partner as well as any work done by the joint venture itself previously.
  • The procuring activity will execute a HUBZone contract in the name of the joint venture entity or the  HUBZone business. But in either case will identify the award as one to a joint venture or a HUBZone mentor-protégé joint venture, as appropriate.

SBA Inspection of Records

  • inspection of records.The joint venture partners must allow SBA’s authorized representatives, including representatives authorized by the SBA Inspector General, during normal business hours, access to its files to inspect and copy all records and documents relating to the joint venture.
  • Performance of work reports.The  SBC partner to a joint venture must describe how it is meeting or has met the applicable performance of work requirements for each HUBZone contract it performs as a joint venture.
  • The  SBC partner to the joint venture must annually submit a report to the relevant contracting officer and to the SBA, signed by an authorized official of each partner to the joint venture, explaining how the performance of work requirements are being met for each HUBZone contract performed during the year.
  • At the completion of every contract,  the partners to the JV must submit a report to the CO & SBA.  Each authorized official of each partner must signed the report.  The report will explain how and certifying that the performance of work requirements were met for the contract. Furthermore, the report will certify that the contract performed in accordance with the provisions of the joint venture agreement.

Basis For Suspension Or Debarment.

  • Basis for suspension or debarment.The Government may consider the following as a ground for suspension or debarment.  Or as a willful violation of a regulatory provision or requirement applicable to a public agreement or transaction:
  • Failure to enter a joint venture agreement in compliance with the CFR
  • Inability to perform a contract in accordance with the JVA or performance of work requirements; or
  • Failure to submit the certification
  • Any person with information regarding a jv’s compliance with the performance of work requirements may report that information to SBA.  They may also contact SBA Office of Inspector General.

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