Service Disabled Veteran Government Contracts sdvosb teaming arrangements

When to Use a Teaming Agreement?

Whether you are contemplating getting into a subcontractor relationship via a SDVOSB teaming arrangement for an upcoming project, small businesses use teaming agreements for many reasons. Each contractor’s goal is different. However, the ultimate concern of all interested parties should be whether the planned team relationship is legal or whether it violates any SBA affiliation rules. 

  • If your company is deemed other than small as a result of a small business size protest, you can be barred from bidding government contracts as a small business under the targeted NAICS code.

Why Have a Teaming Contract?

As a federal contractor, you can develop a teaming contract relationship with another company to win government contracts. FAR Subpart 9.6 allows companies to do this. However, the approach is carefully scrutinized when small business size protests are filed after award.

  • Teaming arrangements allow the two companies to effectively utilize resources to bid on larger contracts
  • The approach to using a contractor teaming arrangement gets strict scrutiny from the Small Business Administration (SBA) if your competition files a size protest.

Some companies may not have a choice but to enter into teaming relationship with another company. This can be for substandard past performance and experience. This also can be tricky because a company cannot simply rely on a subcontractor’s past performance to get a contract. However, the source selection team will consider the teaming partner’s past performance in addition to the prime’s experience.

 

When considering whether or not to enter into SDVOSB teaming arrangements, understand that if you are service disabled veteran owned small business (SDVOSB), the government has now advanced by providing specific set asides and sole source opportunities.. However, like the 8a certification and HUBzone categories of the FAR, you are not guaranteed a federal contract.

  • Before venturing into the litigation field, remember that the the Department of Veterans Affairs (VA) oversees the VA SDVOSB Programs and not the SBA. However, when it comes to small business status, the SBA controls that outcome.

The approach to better position yourself for a federal contract is to learn about the service disabled veteran owned small business joint venture or teaming arrangement approach. This solves two problems. First, the agency can still meet its SDVOSB goals. Second, by venturing with another company that is also similarly situated, you can still avoid SBA affiliation violations.

  • Many large businesses are actively seeking out SDVOSB teaming arrangements and SDVOSB joint ventures in hope of landing revenues in a government contract. 
  • Understanding the rules and having the best guidance with government contractor teaming and joint venture regulations and the best way to avoid affiliation can benefit the company’s bottom line.

Service Disabled Veteran Owned Small businesses often have concerns about the Veteran Affairs eligibility requirements. As a result,  many SDVOSB small businesses find themselves at a loss, and not enough questions answered. This can get favorable results. However, there can be still problems with affiliation and the Ostensible Subcontractor Rule

A solution to these problems is for companies to develop a more robust road-map for seeking out future projects and making sure that the right SDVOSB teaming arrangements and SDVOSB Joint Venture relationships are in place.

Mistakes to Avoid When Engaged in SDVOSB Teaming Arrangement?

If you have submitted a proposal for an SDVOSB set aside, and you you have also submitted a named company as a teaming partner, you may want to watch out for the common mistakes when companies set up an SDVOSB arrangement.

  • The teaming agreement does not show that the prime contractor (SDVOSB) is in total control of the contract
  • The teaming arrangement violates the ostensible subcontractor rule because of undue reliance or the subcontractor performing the primary and vital parts of the contract
  • The arrangement violates the limitations on subcontracting rules because the teaming subcontractor is not a similarly situated small business.

SDVOSB Teaming Arrangement With Only Other SDVOSB Companies?

When conducting your pr-teaming agreement due diligence, one of the questions CEOs have is whether they have to only enter into SVOSB teaming agreements with other service disabled companies. There is nothing in the regulations requiring this.

  • There are pros and cons of developing SDVOSB arrangements with other small businesses that are service disabled.
  • A teaming arrangement with other disabled companies could minimize the risk of SBA affiliation violations.

Should You Use a Service Disabled Veteran Owned Small Business Joint Venture or SDVOSB Teaming Arrangements?

Teaming agreements are encouraged. However, they can be abused and small service disabled veteran owned small businesses must be wary of cold calls from large businesses seeking quick teaming arrangements. When you contemplate building a business relationship to bid on a federal contract, there is no doubt that SDVOSB teaming agreements can benefit your company. However, you must  go about it the right way.

SDVOSB Joint Venture Vs SDVOSB Teaming Agreements

The bottom line is that small businesses are still moving forward with teaming agreements. Under this relationship, there can be a presumption that the awarded company, the SDVOSB is in control of the contract.  Whereas joint ventures tend to act as a third company, is presumed to be the offeror and then has to verify the percentage of work being completed by the joint venture entity.  See SBA Joint Venture Agreement Contract Rules & SBA Approval and Difference Between Teaming Agreement vs Joint Ventures.

There are more layers of legal inquiry when you are operating under a SDVOSB joint venture such as:

  • Whether the venture is unlawfully using populated or unpopulated approaches
  • When employees assigned to the joint venture are actually performing administrative functions or not

Be Proactive and Avoid Legal Traps

  • There are many landmines and legal traps when it comes to forming teaming arrangements
  • Understand the difference and the impact of both SDVOSB teaming arrangements and joint venture relationships.
  • When you decide that you wan to enter into a teaming agreement, you also want to be mindful of the limitation on subcontracting rules and laws governing similarly situated small businesses.
  • Be mindful that having a teaming agreement alone does not by itself give you legal rights in court

In addition, You must still meet the control and contract performance thresholds set forth in the small business program and federal procurement rules. 

Get Sound Legal Advice About Service Disabled Veteran Government Contracts

If you are a disabled veteran now seeking to acquire Service Disabled Veteran Government Contracts, you must also know the affiliation rules that could cost you a large contract.

  • Don’t fall to the temptation of drafting a quick service disabled veteran-owned small business joint venture or teaming contract for the simple sake of just presentment to the government.
  • Remember, anyone can pretty much protest a contract award if they meet the GAO or FAR requirements.
  • Although you are a service-disabled veteran, you are still subject to very strict procurement and bidding rules by the contracting officer.

If you are a veteran business and have questions or need help with Service Disabled Veteran Government Contracts, call our SDVOSB and government small business lawyers at 1-866-601-5518.

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