Unique Considerations for Joint Venture Multiple Award Schedule Contracts

At a glance

• The Main Takeaway: Companies who hold Multiple Award Schedule (MAS) contracts as individual entities and as members of a Joint Venture (JV) must implement proper contract administration procedures to help mitigate compliance risk for all parties.
• The impact on your business: Pricing disclosures and terms negotiated in the JV’s MAS contract can create unexpected compliance risks for the JV and its member companies.
• Next steps: Review your individual and JV MAS contracts to ensure the disclosures and negotiated terms minimize compliance risk.

The Full Story:

The Small Business Administration (SBA)’s joint venture program “allow[s] certain businesses to compete together for government contracts reserved for small businesses.” These joint ventures are frequently established through the SBA Mentor-Protégé Program (MPP). Under a Mentor-Protégé Joint Venture (MPJV), a JV can leverage the mentor’s past performance and the protégé’s size and socioeconomic status to pursue set-aside opportunities neither member could qualify for alone. JVs can win contracts for two years without triggering affiliation rules, but orders against multiple award contracts are not subject to this limitation.

As a result, the General Services Administration (GSA) Multiple Award Schedule (MAS) is an attractive contract vehicle for joint ventures. Since the expansion of the Startup Springboard and the incorporation of formal guidelines for joint ventures, an influx of JVs have submitted offers for MAS contracts. GSA allows companies to hold their own MAS contract and be a member in up to three JV MAS contracts, as long as each JV has different member companies. The complexity of the JV MAS offer requirements adds another layer of compliance risk, especially for JV partners holding their own individual MAS contracts. Unique considerations for companies holding individual and JV MAS contracts are discussed below.

Small Business Administration (SBA) Regulations

Many JVs holding MAS contracts are part of an MPJV or socioeconomic joint venture. All small business JVs must have a written agreement in place that is submitted to GSA with its MAS offer. SBA requirements may differ depending on the type of business; consult with your government contracts counsel. MPJVs must have a mentor-protégé agreement approved by SBA and included on SBA’s active mentor-protégé agreement list. Any modifications to the JV agreement must be submitted to GSA. MPJVs also need to consider SBA regulations (13 CFR 125.8) requiring the protégé firm to perform at least 40% of the work when determining which Special Item Numbers (SINs), products, and services to propose.

Price Reductions Clause

GSA requires Commercial Sales Practices (CSP) disclosures for MAS contracts not covered by the Transactional Data Reporting (TDR) program. The JV itself and each JV partner must provide CSP disclosures for JV MAS contracts. The CSP disclosures can be complicated if a JV partner also holds an individual MAS contract. Contractors must ensure that CSP disclosures are current, accurate, and complete across all MAS contracts. Any changes to the JV partner’s CSP may impact both the JV MAS contract and the partner’s individual MAS contract.

Based on the CSP disclosures, GSA negotiates a Basis of Award (BOA) and price-discount relationship. Depending on the BOA, pricing offered by the JV itself or a JV partner can trigger the Price Reductions Clause (PRC). This impact creates additional risk for companies holding both a JV MAS contract and an individual MAS contract.

Pricing Considerations

GSA requires the JV to identify which member provides each proposed product or service on the MAS contract. The products and services are tied to the company providing the pricing support and cannot be shared among the members. Additionally, there must be a meaningful difference among labor categories, so if both JV members have a similar Project Manager position, only one can offer it. This unique limitation can create issues ensuring adequate workshare among the JV members.  

When one or more JV members hold their own MAS contract, the JV often duplicates those products and services on its offer. The evaluation of the JV MAS offers or contract modifications is independent of any member’s MAS contracts; however, GSA may negotiate different pricing between the JV and individual MAS contracts.

A Note on Proposed Rule Changes

In a recent notice in the Federal Register, the SBA requested comments on “the perception that mentor-protégé joint ventures are winning an inordinate number of orders under small business multiple award contracts.” Small businesses have raised concerns that agencies are establishing such stringent requirements for small business contract vehicles that only joint ventures can compete. One option the SBA suggests in the notice is “eliminating the exception to affiliation…for multiple award contracts”, which would “make joint ventures ineligible for multiple award contracts.” A proposed rule on this topic is expected later in the year. Interested parties should follow this topic closely.

Aprio can help your team understand the complexities of administering your JV and individual MAS contracts. To learn more, watch for an upcoming Aprio webinar this fall discussing Joint Ventures. Contact Aprio to discuss strategies for success on both your JV and individual MAS contracts.

Related Resources:

Accounting for Mentor-Protégé Joint Ventures

Unlocking Opportunities: Joint Ventures and the GSA Multiple Award Schedule

Webinar – GSA 101: Navigating the GSA Multiple Award Schedule (MAS)