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NDAA FY2016 Section 867 – Joint Venturing and Teaming Changes

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Bill Jaffe
March 16, 2016
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Section 867 of FY 2016 NDAA allows the past performance of the non-lead joint venturers to extend to the whole joint venture.
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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.

Related posts:

  1. H.R.3985: Building Better Business Partnerships Act of 2012
  2. DOD Seeks to End the 25-Year “Pilot” Status of the DoD Mentor-Protégé Program
  3. How Section 1611 of the NDAA Will Help Supply Chain Businesses
  4. How Section 1611 Will Level the Playing Field for Advanced Small Businesses
  5. Mentor-Protégé Joint Venture to Apply to All Small Businesses
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The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills.  • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small.  • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.
Bill Jaffe
August 23, 2017
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