As a general rule, a change in ownership of an 8(a) company, with a few exceptions, requires the prior approval of the SBA. To facilitate minor changes in ownership, the final rule allows for changes in ownership without prior approval from the SBA, provided that the previous owner (i.e. the owner who changes the amount of his ownership interest) held less than 20% of the company before and after the transaction. This effectively increases the threshold for triggering SBA approval from 10% in previous rules to 20%. [10] This is a welcome change, as the BSO`s consent to changes in ownership can take a long time. If you are concerned about applying the three-in-two rule to your joint venture established under the old version of paragraph 121.103(h), your best course of action may be to form a new joint venture for your future proposals. Some of the most notable changes to Program 8(a) relate to joint ventures under paragraph 8(a). First, the final rule implements the long-awaited merger of the Protected Mentor 8(a) program into the All Small Mentor Protected program) and eliminates the Protected Mentor 8(a) program. Mentor-Protected programs allow a protégé and a mentor with a mentor-protégé agreement approved by the SBA to jointly form a joint venture without the joint venture resulting in the connection of both partners. However, under the previous rule, protected mentor agreements could be submitted under both programs, resulting in inefficiencies and differences in the review.
To eliminate this redundancy and confusion, the All Small Mentor Protégé program now governs all Mentor Protégé agreements. All current Protected Mentor 8(a) Agreements will continue to function as a Protected Mentor Agreement approved by the SBA under the terms of the All Small Mentor Protected Program, and they will continue to have the same remaining time in the Program as they would otherwise have in the Protected Mentor 8(a) Program. [1] The SBA`s rules for determining affiliation are set out in 13 CFR § 121.103 – « How does the SBA determine affiliation? » Paragraph 121.103(h) contains the rules governing the affiliation of the joint venture partners. Under the new rules, the parties to the joint venture must continue to make profits equivalent to the work performed by paragraph 8(a) or the small business, but they can now agree on an amount of profit that exceeds the percentage of the work performed by paragraph 8(a) or the small business. In its comment on the development of the final rules, the SBA stated that this improvement was at least in part the result of one commentator who pointed out that some procurement activities required that the protégé of a mentor-protégé joint venture be able to meet the requirements individually. SBA disagrees that this is reasonable. Nevertheless, commenting on its recent regulation, the SBA concluded: « The joint venture should be a tool that allows it to win and execute a contract in an area where it has some experience but could not have won on its own. » Last year, the SBA made the joint venture a little easier by relaxing the so-called « three in two » rule. But the « two-year » part of the rule still exists – and in my opinion, the rule continues to unfairly elevate form above substance.
In short, this is the complete illogical of the two-year rule: the same two companies working together as joint venture partners can win the same contracts of equal value during the same period, and the SBA`s decision on affiliation will affect whether the companies knew that 13 C.F.R. required 121,103 (h) (4) of them, establish a new uninhabited joint venture unit after two years. The Small Business Act requires agencies to evaluate individual partners in a joint venture in certain circumstances and attribute those ratings to the joint venture itself if the joint venture itself does not demonstrate sufficient capabilities or past performance: when evaluating the past performance and experience of a company that makes an offer for a contract that is downgraded as a small business joint venture established under this article. or reserved, a procurement activity must take into account the work carried out individually by each partner in the Joint Undertaking, as well as any work previously carried out by the Joint Undertaking itself ….