Question 1

How is size calculated for a joint venture bidding on a set-aside?

Accepted Answer

For a joint venture (JV) pursuing an SDVOSB set-aside, the JV must qualify as small based on the size standards of all JV members combined. However, for an approved mentor-protégé JV under SBA's program, only the protégé's size is used — the large business mentor's size is excluded. For all other JVs, SBA aggregates revenues or employees of all members to determine size.

Question 2

Can an SDVOSB form a joint venture to pursue set-aside contracts?

Accepted Answer

Yes. SDVOSBs can form joint ventures (JVs) to pursue set-aside contracts. The JV must be controlled by the SDVOSB member — meaning the SDVOSB must be the managing venturer and must perform at least 40% of the work. The SDVOSB must also be responsible for managing the JV on a day-to-day basis. The JV agreement must be in writing and meet SBA regulatory requirements.

Question 3

How does affiliation affect size standard calculations?

Accepted Answer

Affiliated businesses' revenues and employees are combined when determining size. Affiliation exists when one entity controls or has the power to control another, through common ownership, management, stock options, contractual relationships, or economic dependence. SBA's affiliation rules are complex — common triggers include family members owning related businesses, identical or near-identical owners, and the ostensible subcontractor rule for subcontracting relationships.

Question 4

Does a mentor-protégé relationship trigger affiliation?

Accepted Answer

No. Under SBA regulations, a mentor-protégé relationship does not create affiliation between the mentor and protégé for size determination purposes, provided the relationship is approved under SBA's Mentor-Protégé Program and an approved joint venture agreement exists. This exemption is one of the key benefits of the program — the protégé can team with a large business mentor without being affiliated for size purposes.

How is size calculated for a joint venture bidding on a set-aside?

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