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Federal Goverment Contracting Trying to structure a business…

Federal Goverment Contracting Trying to structure...
Federal Goverment Contracting
Trying to structure a business by dove tailing two existing businesses whereas one owner is a Service Disable Veteran Small Business and the other is considered a large business by goverment standards. Are we better served to try and use "teaming agreements" which seem short term minded or do we form a new LLC? The goal is to maintain the SDVSB status while not being disqualified because one of the owners owns what is considered a large business. We have access to another construction company (employee works for the large business) currently not doing business however would be integral to the running of this revenue stream. Please contact me at XXX-XXX-XXXX should you need further clarification.
Thank you.
Michael Priore
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Answered in 17 hours by:
2/18/2010
Jim Reilly
Jim Reilly, Attorney
Category: Business Law
Satisfied Customers: 1,805
Experience: CA Atty since 1976, 10 years as General Counsel CA corps.
Verified
Good morningCustomerand welcome to JustAnswer.

Unfortunately, JA experts cannot contact customers by telephone or any other offsite means (that is why your telephone number shows up as a series of X's in the question). All conversation between JA customers and experts must take place here on the site.

That said, I can give you some basic information here but have to say that what you are asking about probably is going to involve significant detailed legal work for which you really need an attorney experienced in dealing with DVBE issues. I cannot over-emphasize the importance of maintaining your disabled veterans/small business status as far as obtaining government contracts is concerned.

If your intention is to form a new business, you as the disabled veteran should obtain a legitimate majority interest in the new business (at least 51%). This means investing 51% or more of the initial capital for the new business (or otherwise providing assets to the new business which justify a majority ownership interest).

This new business can then sub-contract with any of the current businesses for purposes of performing contracts obtained from the government by the new business. In the alternative, your current SDVOSB could obtain the government contracts and could, as you suggest, use "teaming" or "partnership" agreements with the other companies to perform those contracts. For federal contracts, of course, there are limits to the percentage of various aspects of contract performance that can be subcontracted to non-SDVOSB businesses.

See this federal EPA handout for details about the limits:

http://www.epa.gov/osbp/pdfs/sdvosb_cont_program.pdf


As you probably know, there is no certification program for federal contracting and you need only make the appropriate self-certification when submitting a bid for a federal contract. Therefore, if you either form a new business which qualifies as a SDVOSB for federal contracting purposes, or in the alternative use agreements among the existing business entities to fulfill the contracts, you can continue to provide the appropriate self-certifications for federal contracts, as long as you meet the federal requirements.

Bidding on state agency contracts as a DVBE in California would, on the other hand, require certification of DVBE status through the California Clearinghouse of the California Public Utilities Commission (per General Order No. 156)? Or any of the other California public agencies which provide such certifications?

It might well be worth obtaining such certification, even if you are not currently bidding on state contracts, if there is any possibility that you will do so in the future.

I have represented several MBE, WBE and/or DVBE businesses in obtaining California certifications and can tell you unequivocally that it will be easier for you to do so with the assistance of an attorney familiar with the process.

Thanks for asking your question here on JustAnswer. If you have any other questions, please let me know.
Jim Reilly
Jim Reilly, Attorney
Category: Business Law
Satisfied Customers: 1,805
Experience: CA Atty since 1976, 10 years as General Counsel CA corps.
Verified
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I just noticed that in editing my answer last night, I inadvertently omitted part of one paragraph, which should have read as follows (omitted portion highlighted in bold italics):

Bidding on state agency contracts as a DVBE in California would, on the other hand, require certification of DVBE status through the California Clearinghouse of the California Public Utilities Commission (per General Order No. 156). Are you currently certified by the Clearinghouse? Or any of the other California public local agencies which provide such certifications?

Thank you for accepting the previous answer -- there is no need to "accept" this additional response. Good luck and thank you for your service -- I am a Vietnam Vet myself and my youngest son is a US Army Sergeant recently returned from his second tour of duty in Iraq.
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Jim Reilly
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