McNew & Associates, Inc. Blog


UNPOPULATED JOINT VENTURES – SOLVING WHO IS IN CHARGE
January 13, 2012, 7:26 PM
Filed under: Uncategorized | Tags: , , ,

A recent article in the National Contract Management Magazine highlighted that trends by the Federal Government to bundle many requirements has made the ability to compete at this level very challenging for smaller companies.  As such, many of these companies are now considering joint ventures as a way to pull resources together to meet the larger requirements being solicited.  In many cases, these Joint Ventures are formed as an “unpopulated JV” where a separate Limited Liability Company (LLC) is created. Under this arrangement, the founding companies enter into a subcontract with the LLC to fulfill the prime contract requirements. 

The challenge with an Unpopulated JV/LLC arrangement has always been “who’s in charge” in respect to policies, procedures, cost accounting, contract administration, etc.  The unpopulated JV/LLC, after all, is the entity the government is contracted with.  They will expect the same level of contract administration functions and financial management as from a populated company. So what is a Unpopulated JV to do?

The current trend to solve this issue is to outsource the contract management, performance reporting, cost accounting, compliance responsibilities, etc, to a third party “Business Service Integrator” (BSI). The BSI has many advantages, which include:

1)            Proprietary information is protected and controlled

2)            Ensures “one face” contract administration/financial management to the government

3)            Policies and procedures are established for the LLC

4)            Cost Accounting Standards for the LLC are established and maintained

5)            Cost and schedule information is efficiently captured and reported

6)            EVMS requirements are centralized for efficient and accurate reporting

7)            Contract administration is efficient and DCAA audit compliant

Bottom line, the Unpopulated JV/LLC is held to the same standards as a “populated” entity.  Through the use of a BSI, the founding companies can ensure efficiency while maintaining compliance in the myriad of prime contract, FAR, and DCAA requirements.

 Get the entire article at http://gate6solutions.com/downloads/12-10%20CM%20Magazine%20Article%204.pdf


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