Guidelines for Establishing a Successful WOSB Joint Venture

 2017 should expect nothing less than great advancements by women-owned businesses creating more opportunities for themselves if the history of women in labor and business is any indication of past entrepreneurial challenges that have been overcome. Government contractors are aware of the advantages of being classified as a small company, and even though it is only the third month of the year, there is already a surge in demand from businesses seeking to register as WOSB.

Businesses must fulfill some standards to receive the WOSB/EDWOSB classification, including being 51% unconditionally and directly owned by women who are U.S. citizens, holding the top officer position, managing day-to-day operations, and making long-term business choices. The SBA takes small business designations extremely seriously, so make sure your organization satisfies the standards; failing to do so could result in serious consequences. You will be qualified to win any contracts set aside or sole-sourced exclusively to WOSBs once your business has registered at SAM.gov as a WOSB/EDWOSB.

More and more small enterprises are creating joint ventures to better position themselves for success in the fiercely competitive federal market. In this context, a WOSB joint venture is a collaboration between two or more enterprises that enables them to compete for government contracts that are specifically designated for small businesses.

Although creating a WOSB joint venture has numerous advantages, it is crucial to take into account the crucial components of a successful joint venture to ensure compliance with SBA criteria. It is crucial to have a strong foundation, have a clear vision for your joint venture, and stay up to current with SBA laws because joint ventures are not exempt from SBA complaints.

What are the initial factors to consider?

Determine the type of WOSB joint venture you are forming before starting one, such as an all-small or 8(a), mentor-pupil, WOSB, HUBZone, etc.

The SBA has been implementing some regulatory and policy revisions over the past few years to standardize the expected acceptable terms of a joint venture agreement across the various types of joint ventures. It's important to understand the designations that apply to each joint venture and each solicitation because even though the differences between a small business joint venture and an 8(a) joint venture are not as significant as they once were, there are still some ostensibly minor variations in reporting requirements that can affect a joint venture's eligibility for its program(s).

Whether to draft a WOSB joint venture agreement or a joint venture and operating agreement is another important first decision.

The specific contract opportunity that your joint venture is pursuing will be covered by a conventional joint venture agreement. There will need to be an amendment created for every new opportunity. Alternately, the rights and obligations of members will typically be outlined in an operational agreement together with bylaws and guidelines. A WOSB joint venture and operating agreement will be more comprehensive but also contain more clauses to form the joint venture in the right way.

What conditions apply to cooperative ventures with SBA?

All joint venture agreements must contain some SBA provisions, even if the SBA requirements for each type of joint venture vary. A complying WOSB joint venture agreement has the following elements, among others:

Describe the joint venture's goals.

Find the managing investor

Find the accountable manager

Specify that the managing member holds at least 51% of the joint venture.

Specify how earnings will be allocated, whether in proportion to the work completed or at a percentage that has been agreed upon by the parties.

What other clauses are specific to the contract?

SBA stipulates additional particular clauses for every contract your joint venture is granted in addition to the aforementioned items that are necessary. These provisions include:

Following the criteria for industry-specific job performance, which in many businesses requires the managing member to execute at least 40% of the work.

Itemization of all significant tools, facilities, and other resources that each partner will provide to carry out the contract

A declaration outlining each entity's responsibilities, which should primarily be discussed by the management member

Key Issues

Joint ventures are not exempt from the opposition. The first thing the SBA would consider in this situation is if any consent terms suggest negative control. A thorough joint venture and/or operating agreement can help establish the managing venturer's control over the day-to-day operations of the joint venture, which is essential.

See the complete list of SBA qualifying requirements for additional details on WOSB/EDWOSB registration. You can contact our team of WOSB joint venture specialists with more inquiries. Get in touch with us right away to find out how we can assist qualified entities in registering as WOSBs or EDWOSBs. And also please get in touch with us if you'd want to know more about what to consider before starting a WOSB joint venture. We'd be happy to hear from you and respond to any inquiries you might have.