The Benefits of Doing Business with a Small Business GovCon

As Small Business Saturday approaches this year, it serves as a great reminder of the many benefits and ways to do business with a small business government contractor.

First, the U.S. Federal Government prefers to contract with small businesses when feasible and establishes formal goals to set aside work for small businesses. Generally, Federal contracts between $10,000 and $250,000 are automatically set aside for small businesses, and contracts of $250,000 or more are set aside if there are two or more small business that can perform the work.

Not only are agencies required to set aside certain work for small businesses, but other than small businesses may also be required to set aside certain percentages of work that they subcontract for small businesses.  For example, if a non-construction Federal contract is over $750,000 and not set aside for small businesses, it must have a subcontracting plan requirement if awarded to an other than small business. This subcontracting plan requirement promotes the use of small businesses as subcontractors and requires the prime contractor to set certain goals for subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. By partnering with a small business, agencies and prime contractors can meet their goals and expand their business opportunities.  

There are several ways to work with a small business government contractor.  Many companies begin at the teaming agreement stage, when the potential prime contractor has identified an opportunity and starts to build its team.  Some solicitations may contain certain small business requirements and putting a teaming agreement in place at the beginning can help bolster the proposal and make negotiations regarding any resulting subcontract go smoother.  After a prime contract award is made, the prime contractor and subcontractor may enter into a subcontract agreement to perform under the prime contract.   

In addition to the more traditional subcontract relationship, companies may wish to form a joint venture with a small business government contractor to compete for certain work.  A joint venture can present a good opportunity for a team to be more competitive. For example, the terms of a solicitation may allow a bidder to count the past performance of each of its joint venture members, but not its subcontractors. However, the parties will want to use caution and avoid any potential affiliation issues if they pursue the joint venture route.

Finally, certain companies can take advantage of the Small Business Administration (“SBA”) Mentor-Protégé Program. Through this program, a mentor and a protégé (typically a large business and small business), enter into a Mentor-Protégé Agreement (“MPA”) approved by SBA and then partner on certain opportunities. The SBA Mentor-Protégé Program allows a small business (protégé) to gain valuable business development assistance from a mentor in a number of areas.  A mentor and protégé can also form a joint venture under the MPA, which would then qualify as small, and the joint venture could then bid on set aside work, provided that the protégé itself qualifies for such set aside status and certain SBA regulations are followed.

The benefits of starting a relationship with a small business government contractor are many, but the process can sometimes be somewhat complex. FH+H offers support on all aspects of government contracts including optimizing development and growth through joint venture agreements, mentor-protégé agreements, teaming agreements, subcontractor agreements, and other contracting opportunities. To learn more about our team visit our website at www.fhhfirm.com.

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