partnering opportunities for sdvosbs/vosbs presented by sarah schauerte legal meets practical, llc...
Post on 15-Dec-2015
213 Views
Preview:
TRANSCRIPT
Partnering Opportunities for SDVOSBs/VOSBs
Presented by Sarah Schauerte Legal Meets Practical, LLC legalmeetspractical.com
Teaming Generally
• Under FAR 9.601, “contractor team arrangement” means: – Two or more companies form a partnership or
joint venture to act as a potential prime contractor (vertical teaming arrangement); or
– A potential prime contractor agrees with one or more companies to have them act as its subcontractors under a Solicitation/Contract (horizontal teaming arrangement)
What’s the Point?
• FAR 9.602(a) notes that teams may be desirable from the Government’s standpoint because they: – Enable companies to complement each other’s
unique capabilities; and – Enable companies to offer the Government the
best combination of performance, cost, and delivery
Big Picture Differences
• Prime/Sub Team – Prime has sole interest/responsibility – Team controlled by subcontracts and TAs – Prime only has privity of contract – Profits and losses dictated by subcontracts
• Joint Venture – Separate legal entity with “members” with proportionate
“interests” – Serves “special purpose” – Joint and several liability – Profits and losses shared proportionately
So you want to team up…
• Options: – Prime Contractor – Subcontractor – Member of Joint Venture
Prime Contractor Overview
• Generally team as prime contractor when set-aside opportunity – SBA – Must be an SDVOSB as listed in SAM.gov – VA – Must be a verified VOSB/SDVOSB as listed in
the VetBiz registry
Prime Contractor Advantages
• “Interested party” for bid protests• Control over contract management• Control over distribution of labor • Branding • Use SDVOSB/VOSB status (set-asides)
Prime Contractor Disadvantages
• On the hook – Responsible for federal rule violations– Responsible for subcontractor actions
• Remember to flow down FAR clauses • Can’t negotiate terms of prime contract with
government
Forming a Prime Contract Relationship
• Step #1: Vet your partners • Step #2: Execute non-disclosure agreement• Step #3: Execute teaming agreement • Step #4: Prepare proposal • Step #5: Execute Subcontract
Step #1: Vet Your Partners
• The dating rules• Ask for references • Internet research • Prior dealings
Step #2: Execute Non-Disclosure Agreements
• During proposal/negotiation phase, may exchange confidential or proprietary information
• Will protect information for specified period of time
• Internet NDAs usually ok
Step #3: Execute Teaming Agreement
• Topics covered: – Relationship of parties– Procurement activities – Termination of TA/award of subcontract – Confidentiality – Notices – OCI– Disputes (including governing law and venue)
Step #4: Prepare Proposal
• Prime contractor’s responsibility • Scrutinize solicitation requirements (see
Sections L and M in particular) • Timely submission!
Step #5: Execute Subcontract
• After a win • Ensure clear division of responsibilities • Important provisions: – Payment – Disputes – Confidentiality– Termination
Set-Aside Requirements
• Must meet certain requirements if submit offer on set-aside contract (13 CFR §125.15). – Represent is SDVOSB– Represent is small under NAICS code– Represent will meet performance of work reqts.
• Performance of Work Reqts. (13 CFR §125.6)– Services: 50% (with own employees)– Supplies: 50% (cost)– General construction: 15% (cost, own employees)
Subcontractor Overview
• Big primes LIKE to team with SDVOSBs/VOSBs: – Proposal evaluation credit – Credit under subcontracting plan (FAR §52.219-9)
Subcontractor Advantages
• Lower risk (prime bears brunt) • Less responsibility (prime manages) • Evaluation purposes – Bigger company might need to be prime because
government agency does not consider past performance of subs. HK Consulting, Inc., B-408443 (September 18, 2013).
Subcontractor Disadvantages
• Less control over how work completed • (Generally) less control over subcontract terms• Oftentimes no guaranteed workshare/prime
contractor not penalized for not honoring teaming agreement: – Cyberlock Consulting, Inc. v. Information Experts, Inc.,
2013 WL 1395742 (E.D. Va., April 3, 2013), EDVA held that a TA’s terms regarding the parties’ “agreement to agree” to future “good faith” negotiations of a subcontract, did not constitute an enforceable contract.
How the TA Can Protect Subcontractors
To prevent a prime contractor from successfully arguing that a TA is a mere “agreement to agree,” follow these tips (handout):
• Tip #1: Specify that parties “shall” enter into a subcontract
• Tip #2: Include details on pricing • Tip #3: Specify subcontractor’s workshare
TA Tips Continued…
• Tip #4: Include subcontractor’s name in proposal
• Tip #5: Try for exclusivity • Tip #6: Limit termination rights • Tip #7 Include remedies for failing to enter
into subcontract. However, you have to get your prime to agree
to these terms! (Can be difficult).
Joint Venture Overview
• Joint Venture Definition • Why JV? (Advantages and Disadvantages) • Starting a Joint Venture – Step One. Find the right partner – Step Two. Read up on set-aside regulations – Step Three. Paperwork (legal form and registrations)– Step Four. Determine management structure/labor– Step Five. Draft the joint venture agreement
What is a Joint Venture?
• A “joint venture” is:
An association of individuals and/or concerns to combine property, capital, efforts, skills and knowledge to carry out no more than three specific of limited-purpose business ventures for joint profit over a two-year period.” 13 C.F.R. §121.103(h)
*Note – “three in two” rule
Why Form a JV?
• The contracting agency can look to the resources of two (or more) companies to perform the work.
• Alleviation of responsibility – Legal requirements under contract – Partner rather than manager or subordinate
Eligibility/ability to perform larger contract • Ability to stay small for longer
Why Not?
• More difficult to form• Give up control as prime contractor • In informal legal structures (ie, partnership),
jointly and severally liable to third parties • Complications – Government issues with points of contact – Government questions with contract performance
and satisfying subcontract limitations More difficult to terminate
Step #1: Find the Right Partner
• Vet your partner! (references, past dealings, in-person meeting)
• Complementary offerings – Technical capabilities – Positive name recognition
• Know what you both want
Step #2: Ensure the JV Meets Set-Aside Requirements
• Keep in mind the size rules– JV partners as affiliated (with exceptions) – Aggregate rule
• JV must meet applicable performance of work requirements (see 13 CFR 125.15)
• Populated versus Unpopulated
Step #2: Set-Aside Requirements
• SDVOSB must be managing partner • SDVOSB employee must be project manager (and also
named in JV agreement) • SDVOSB must receive 51% of net profits • JV Agreement must specifically describe both parties’
roles in contract performance and how SDVOSB will manage the project
• Unique VA requirements: – The JV must be a separate legal entity – CVE must verify the JV prior to award
Step #3: Choose a Legal Form
• Limited liability company (preferred) • Partnership (informal, joint & several liability) • Corporation (double taxation, rare)
Step #4: Determine Mgmt. Structure & Labor
• How will the parties manage the joint venture? • Which party will be responsible for negotiating
contracts and subcontracts? • How will you communicate with the customer? • What are the sources of labor to be employed? • How do the parties envision the division of
labor on contracts? • Populated or unpopulated?
Step #5: Drafting the JV Agreement
• Common Terms (13 CFR §125.15(b)(2))– Purpose of JV – Designation of SDVOSB as managing partner – 51% of net profits distributed to SDVOSB– Responsibilities of parties – Both parties must ensure performance of the prime contract,
even if the other party withdraws from the JV – Designation that accounting/administrative records are kept by
managing venturer and requirement that managing venturer retain records of contracts completed by JV
– Performance of work requirements – Disputes
Questions?
Thank you for joining me today! If you would like to speak with me further
about teaming arrangements, please reach out:
Sarah Schauerte scs@legalmeetspractical.com
(703) 552-3220
Website and blog at: legalmeetspractical.com
top related