Question 1

How do limitations on subcontracting apply to JVs?

Accepted Answer

A JV pursuing an SDVOSB set-aside must still comply with the limitations on subcontracting rule. The JV members collectively must perform the required percentage of work — typically 50% of cost of personnel for services. Work performed by JV members (including the large business partner in a mentor-protégé JV) counts toward this threshold. Work given to outside subcontractors counts against the limit.

Question 2

What are the limitations on subcontracting for SDVOSB set-asides?

Accepted Answer

For SDVOSB set-aside contracts, the prime contractor must comply with limitations on subcontracting in FAR 52.219-14. For service contracts: the SDVOSB must perform at least 50% of the cost of personnel. For supply contracts: at least 50% of the cost of manufacturing. For construction: at least 15% of the cost of the contract. Similarly situated subcontractors (also SDVOSBs) count toward these requirements.

Question 3

How much work must the SDVOSB perform in a joint venture?

Accepted Answer

For SDVOSB set-aside JVs, the limitations on subcontracting rules apply to the JV as a whole. The SDVOSB managing venturer must perform at least 40% of the work performed by the JV. However, the JV must still comply with the overall limitations on subcontracting — at least 50% of the cost of personnel for services must be performed by the JV members (not outside subcontractors).

Question 4

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.

How do limitations on subcontracting apply to JVs?

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