Small Business Joint Venture Eligibility Changes Coming


June 6, 2016

SBA Expands Small Business Joint Venture Eligibility

Source: SmallGovCon, Steven Koprince, May 31, 2016

As part of a recent major rulemaking, the SBA will allow two or more small businesses to joint venture for any procurement without being affiliated with regard to the performance of that requirement.

Under the current regulation, two or more small businesses may be affiliated with one another if they joint venture for a particular procurement, depending on that procurement’s value.  In fact, the underlying rule provides that joint venture partners are affiliated for purposes of that procurement.  However, an exception states that the businesses can avoid affiliation if the procurement exceeds half of the size standard corresponding to the NAICS code assigned to the contract (for revenue-based size standards) or $10 million (for employee-based size standards).

That’s a mouthful, so here is a quick example.  Let’s say Company A is a $5 million dollar business, and Company B is a $6 million dollar business.  Companies A and B want to joint venture for a contract carrying a $7 million size standard.  Can they do so?  It depends on the value of the procurement.  If the value of the procurement exceeds $3.5 million (half of $7 million), then the joint venture would be eligible, because both companies are smaller than $7 million.  But if the value of the procurement is less than $3.5 million, Companies A and B cannot joint venture, because they are considered affiliates–and their aggregated revenues exceed $7 million.  READ MORE….

Joint venture rules for small businesses are changing.  Contact your nearest PTAC for more information.


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