The U.S. Small Business Administration published a final rule on October 16, 2020, removing the three-contract limit for a joint venture under its small-business affiliation rules. The change to section 121.103 takes effect November 16. It leaves a different constraint in place: the venture has two years from its first contract award to submit additional offers without triggering affiliation under that timing rule. A venture planning its next bid will need to watch the calendar, not just count its wins. [S1]

The old rule was more nuanced than a hard stop after three wins. The January 2020 Code of Federal Regulations generally limited a specific joint venture to three awards in two years, but tested compliance when an initial offer including price was submitted. A venture with two or fewer awards could submit several offers and later receive enough awards to exceed three without that fact alone creating general affiliation. Removing the count restriction therefore changes the bidding decision after a third award, rather than making a fourth award possible for the first time. [S1][S2]

Under the amended text, a contract can still be awarded after the two-year period if the joint venture submitted its offer, including price, before the period ended. An offer submitted after that window has a different consequence: SBA will treat the partners as affiliated and combine their receipts or employees when determining the venture’s size for small-business programs. The clock is not simply a deadline for the agency to finish evaluating a bid. [S1]

For a bid team, the practical implication is straightforward: retain the first-award date and the dated, priced offer, rather than relying on a running tally of wins. This is an operational inference from the amended rule, not a guarantee that a particular venture qualifies for an award. The text also includes prime-contract novations in its definition of contracts and illustrates how a novation package submitted within the window can be approved afterward. [S1]

The published rule does contain a drafting inconsistency. Example 2 in the published final rule still refers to receiving “two additional contracts,” even though the revised operative paragraph removes the three-contract ceiling and the preamble explains that change. Contractors should not read that leftover example as a fresh numerical cap. Nor does forming another venture erase every affiliation concern: the revised text allows the same partners to form additional ventures, but warns that a longstanding relationship or contractual dependence can eventually produce a finding of general affiliation. [S1]

Source documents

  1. SBA: Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments, final rulehttps://www.govinfo.gov/content/pkg/FR-2020-10-16/html/2020-19428.htm
  2. 13 CFR 121.103 — January 1, 2020 annual editionhttps://www.govinfo.gov/content/pkg/CFR-2020-title13-vol1/xml/CFR-2020-title13-vol1-sec121-103.xml