Check the WOSB Joint Venture for Causing Change

Joint ventures operating under the SBA’s All Small Mentor-Protege Program may need to regulate their venture agreements thanks to a little-noticed change to SBA’s venture rules.

In its recent final rule, effective November 16, SBA amended two of the mandatory requirements for mentor-protege wosb joint venture pursuing small business set-aside contracts. SBA didn't make corresponding changes to the venture rules for SBA’s four major socioeconomic programs–meaning that a venture agreement that complies with the small business set-aside rules won't be valid if the venture pursues 8(a), SDVOSB/VOSB, HUBZone or WOSB/EDWOSB contracts (and vice versa).

Under the All Small Mentor-Protege Program, a mentor and protege can form joint ventures to pursue any opportunity that the protege qualifies, by size and socioeconomic status. If the venture wishes to pursue a little business set-aside contract, and thus the mentor could also be an outsized business for purposes of that contract, the mentor and protege of wosb joint venture must execute a venture agreement containing sort of mandatory provisions, which are set forth in 13 C.F.R. 125.8.

Omit even one of the varied mandatory provisions, and thus the venture doesn’t qualify as small. This means that if the venture is understood because of the awardee, but its size is challenged, the venture will lose the contract.

Given the high stakes involved, it’s essential to make sure that every venture agreement contain all of the mandatory requirements which is why it is vital to recollect that two of the mandatory requirements in 13 C.F.R. 125.8 changed on November 16. (The SBA also tweaked a variety of the other mandatory requirements, but in my opinion, these tweaks probably shouldn't affect the validity of wosb joint venture agreements that use the pre-November 16 language).