SBA Official: 8(a) Joint Venture Rules Provide Clarity New rules for 8(a) joint ventures are designed to eliminate some problem areas and clarify the roles of the 8(a) and non-8(a) partners, according to John Klein, SBA’s director of contracting and a principal author of the regulations. The changes are part of the first overhaul of regulations governing the 8(a) program in more than a decade. (SAA, 2/18) One change prohibits the non-8(a) partner from serving as a subcontractor to the JV. “That’s an area where we’ve seen a lot of problems,” he said. SBA has said some Alaska Native firms had subcontracted a large part of the work to their larger partners. Another change requires the 8(a) firm to do at least 40% of the work performed by the JV. The old rule said the 8(a) partner should do a “significant portion” of the work. The 8(a) firm must file an annual report describing how it met the work requirement. The rule says the 8(a) partner will be entitled to share the JV’s profits in proportion to the amount of work it performed. The old rule gave the 8(a) partner 51% of the profits, but SBA said that was unfair to the non-8(a) partner. Joint ventures will be allowed to win three 8(a) contracts over any two-year period. The old rule limited the JV to bidding on three contracts. The JV partners may form more than one joint venture at the same time. But Klein warned, “If the only thing you’re doing is to form joint ventures with one firm, we may find affiliation over time.” He said SBA intends JVs to be short-term partnerships. SBA also clarified rules regarding 8(a) mentor-protégé arrangements. In order to qualify for the exemption from affiliation rules, the mentor-protégé agreement must be approved by SBA even if the companies are participating in a mentor-protégé program run by another agency. The 8(a) rule changes are effective March 14. For a full description of the changes, see the insert enclosed with this issue of Set-Aside Alert. SBA will soon publish proposed rules establishing mentor-protégé programs for HUBZone, service-disabled veteran and woman-owned companies, which were authorized by the 2010 Small Business Jobs Act. Klein said he expects those rules will be substantially the same as the rules governing 8(a) mentor-protégé agreements. Klein spoke at a Feb. 28 forum in Washington sponsored by the law firm PilieroMazza.