If your company is qualified as a HUBZone, you can enter into a joint venture agreement with one or more other small businesses or with an SBA approved mentor authorized 13 CFR 125.9. Therefore, when two HUBZone small business concerns form a JV (in accordance with 13 CFR 126.616), the SAM profile does not list its HUBZone status. Tip:The SBA HUBZone regulations do not provide for approvals of HUBZone Joint Ventures. Do You Meet the Basic Joint VentureHUBZone Requirements to Avoid Contract Forfeiture All joint ventures must comply with the FAR limitations on subcontracting regulations and still must not violate the Ostensible contractor rules. What else does this mean? Large DOD contractors and non-certified small businesses would not be encouraged to participate in mentor-protégé relationships. The goal is to make sure that only HUBZones get the federal dollars. For example, the SBA wants to make sure that only HUBZone companies can participate in a joint venture contract. The new SBA joint venture rules change the statutory framework for joint venture companies that submit an offer on a HUBZone set aside to the government that are SBA HUBZone participants. SIZ-5083 (2009) (firm violates ostensible subcontractor rule when its only contribution to the project is HUBZone status and the contract is essentially a pass-through). In one case, a small business ended up losing its contract simply because it misapplied the governing regulations. However, there are some tricky legal nuances that can cause a government contractor to face serious consequences. The new rules have what appear to be simple compliance terms. Failure to follow them can lead a small business down a serious path that harms the company’s future. The Small Business Administration ( SBA) has initiated some new twists to the joint venture regulations that your company should be aware of. Historically Underutilized Business Zones / HUBZone joint venture rules are very specific and can be complex.
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