NDAA FY2016 Section 867 – Joint Venturing and Teaming Changes

Group of young executives holding a meeting in a conference room

© UBER IMAGES – Fotolia.com

As Tonya Saunders explained in a previous guest post, the National Defense Authorization Act (NDAA) for FY 2016 contains many new clauses that affect federal contractors and the Department of Defense (DoD).

Today we’re looking at Section 867 about joint venturing and teaming, which allows small business teams and joint ventures to rely upon the past performance and qualifications of the team members and joint venturers when pursuing large contracts. This expands the number of contracts where small businesses will be able to successfully compete for federal contracts.

While it may seem somewhat archaic, currently when a group of small companies create a joint venture, the government usually requests past performance – that is to say, experience – from the joint venture company as a whole, rather than from the individual members of the joint venture.

As a result, a joint venture is often started as an essentially blank slate. As it wins contracts it will accumulate new past performance, but at the start it doesn’t have any past performance. The lead partner may have some relevant experience, but the other members of the joint venture do not count towards the prime contractor past performance requirements. This can lead to the government giving a higher risk rating to that bid.

Essentially this practice has always discouraged joint venture bidding except in some very rare circumstances in the 8(a) small business program, which has a special joint venture program under the mentor-protégé program.

You’ll recall that the FY 2013 NDAA asked the SBA to rewrite the FAR sections to expand these mentor-protégé joint ventures to other types of set-aside businesses such as woman-owned businesses and service-disabled veteran-owned businesses. However, that set of changes has not yet occurred, although the draft regulations have been published for comment.

Section 867 of the FY 2016 NDAA goes even further and expands the ability to use the past performance of the non-lead joint venturers and extends that past performance being allowed in a proposal for the lead/prime, or the JV as a whole will now spill over to the whole joint venture membership.

This is actually a big deal, because it means that a small business joint venture – a group of small businesses that meet the size standards for the RFP being responded to – can count all of their cumulative past performance, not just the past performance of the joint venture company as a whole.


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