Timing and joint ventures: more than it looks | Obermayer Rebmann Maxwell & Hippel LLP
In today’s competitive market, more and more companies are choosing to seize new contract opportunities as Joint Ventures (or âJVsâ). Joint ventures allow companies to combine their capabilities, which not only allows them to perform better after price, but to be a more attractive competitor during selection of sources. There is no doubt that forming a joint venture can open new doors – and new contracting opportunities – for federal contractors. However, the joint venture is not without its pitfalls. There is a lot of hype about joint ventures, and this often leads entrepreneurs to think that joint ventures are a one-size-fits-all solution, or that they are an easy and loose way to increase income. Not necessarily, if you want to use them correctly and avoid the risks. We have blogged several times before on the various legal requirements related to the correct establishment of a small business JV, and the requirements of the related mentor-protÃ©gÃ© program. Certainly, these legal requirements are of crucial importance when forming a joint venture. But they are not all you need to think about. As if the complicated legal framework weren’t enough, a recent GAO case makes it clear that there are also a number of practical administrative / scheduling considerations that you need to take into account when forming a joint venture and starting a business. use of this joint venture to compete for new work.
In Continuity Global Solutions-Secure Me Security JV, B-419875, the inability of a joint venture to register in SAM cost them the award of a contract. In this case, the State Department issued a request for proposals (RFP) soliciting proposals for local child care at a United States embassy in Bahrain. The RFP expressly informed bidders that to be eligible for award, the company submitting the proposal must be registered in the Award Management System (SAM) prior to award. It incorporated FAR 52.204-7, System for Award Management, (Oct 2013), which provides â[b]When submitting a bid, the Offeror acknowledges the requirement that a potential successful bidder must be registered in the SAM database prior to award, during execution and until final payment of any contract. . . resulting from this solicitation. The RFP further informed the Offerors that â[i]If the Offeror does not register in the SAM database within the time period prescribed by the contracting officer, the contracting officer will proceed with the award to the next otherwise successful registered offeror.
Continuity Global Solutions-Secure Me WLL Security Joint Venture (CGS-SM) submitted their proposal on time on February 15. She was not registered in SAM at the time she submitted her proposal. When, almost two months later, on April 14, the Agency asked CGS-SM to verify that it would be registered in SAM prior to award, the joint venture responded that it had initiated the registration process. SAM and expected the registration to become active within two weeks. However, when nearly six weeks later, on May 27, the CGS-SM was always not SAM registered, the agency informed the JV that it was not going to get the price. Although CGS-SM actually submitted the cheapest and technically acceptable proposal, the fact that the JV was still not registered in SAM excluded it from the competition. The agency determined that CGS-SM was not eligible for the award because it was not yet registered in SAM at the time of the award. The award went to the next online entrepreneur. The JV protested, but in vain; the protest was rejected.
This case is a painful reminder that entrepreneurs must consider practical and administrative factors as well as legal and business issues when forming a joint venture. The timing is not the least. Things like registering in SAM, having to go through mentor-protege approval first, being verified as an SDVOSB in VetBiz, etc. or win prizes. It is extremely important to take all of this into account before starting the JV process. Always think ahead. Don’t assume the timeline or details will work; confirm that you will be able to use your joint venture when and how you hope to maximize your reward opportunities. Otherwise, what is it for?