Question 1

What is the difference between a teaming agreement and a joint venture?

Accepted Answer

A teaming agreement is a pre-proposal arrangement between a prime and subcontractor(s) for a specific bid, but the prime remains solely responsible for the contract. A joint venture creates a separate legal entity that bids and performs as the prime. JVs are more complex but offer greater flexibility for combining past performance and resources. For SDVOSB set-asides, the prime (or JV managing venturer) must be an SDVOSB — a large business cannot be the prime.

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

Can a large business be a subcontractor to an SDVOSB prime?

Accepted Answer

Yes. An SDVOSB prime can use large business subcontractors, but must comply with the limitations on subcontracting rule. The SDVOSB must perform the primary and vital requirements of the contract and cannot simply pass the majority of work to a large business subcontractor (the ostensible subcontractor rule). A well-structured prime-sub arrangement allows SDVOSBs to leverage large business capabilities while maintaining eligibility.

What is the difference between a teaming agreement and a joint venture?

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