Sba mentor protege joint venture2/9/2024 ![]() This means that calculating compliance with the 40% minimum requires measuring dollars, not labor hours. ![]() 125.6, of course, is where you’ll find SBA’s limitations on subcontracting rules. (Hey, it’s nice to be right sometimes!) In the new rule, SBA writes “SBA has always intended that the same rules as those set forth in § 125.6 should generally apply to the calculation of a protégé firm’s workshare in the context of a joint venture.” 13 C.F.R. Now, SBA has confirmed that this is the correct approach. My response, generally, has been something along the lines of, “I can’t tell you with absolute certainty, but the only thing that makes logical sense to me is to use the same formulas the SBA uses to calculate compliance with the limitations on subcontracting.” In the context of small business joint ventures, the 40 percent rule says that “he amount of work done by the partners will be aggregated and the work done by the small business protege partner must be at least 40% of the total done by the partners.” Similar statements exist in the 8(a), SDVOSB/VOSB, WOSB/EDWOSB and HUBZone joint venture regulations.īut what, exactly, does “work” mean? It it calculated by labor hours? Dollars? If the latter, are certain expenditures excluded from the calculation, like materials from a construction contract? I’ve heard all sorts of theories over the years. Fortunately, in a new rule published on October 16, SBA has provided some much-needed clarity.įirst, SBA clarifies how to calculate compliance with the 40 percent rule. It can be easy to get confused about how the rules work together. Joint ventures operating under the SBA’s regulations are subject to two work share restrictions: the limitations on subcontracting, which governs work share between the joint venture and its subcontractors) and the so-called “ 40 percent rule,” which governs work share between the joint venture partners.
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