A Joint Venture is a contractual arrangement in which two or more firms combine to pursue and perform a specific federal contract. The JV is established under a written agreement specifying ownership percentages, work share, profit allocation, management structure, and the JV's separate identifying information (UEI, SAM registration, CAGE code). JVs can be populated (the JV directly employs personnel) or unpopulated (each partner provides personnel from its own workforce). The arrangement allows firms to combine capabilities, capacity, and past performance for pursuits that exceed what either partner could win alone.
SBA rules at 13 CFR 121.103(h) and 125.8 create special provisions for small business JVs. Under the general affiliation rule, a JV between two small businesses is treated as a single entity for size purposes; if the combined entity exceeds the size standard, the JV is not eligible as small. The three-and-two rule limits a small business JV to three contract awards over two years before triggering re-evaluation. JV agreements for set-aside competitions must address specific content — division of work, joint control, performance plans — to avoid disqualification. Large/small JVs are barred under default affiliation rules unless a mentor-protégé exception applies.
For small contractors, JV strategy is most powerful when paired with a Mentor-Protégé Agreement exempting the JV from affiliation. This allows a small protégé to JV with a large mentor and bid as small on contracts the protégé could not win alone. Without mentor-protégé protection, affiliation rules sharply constrain the strategic value of teaming with larger firms.