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SBA joint venture program allows small firm to get into the big leagues

By BECKY GILLETTE

The Small Business Administration has a program to mentor small businesses though the 8(a) Business Development Program that provides assistance to firms that are owned and controlled at least 51 percent by socially and economically disadvantaged individuals. In addition to the 8(a) Business Development Mentor-Protégée Program (MPP), the SBA also has a joint venture program which may be used by 8(a) firms and their SBA-approved mentor to work together on government contracts that have set asides for 8(a) businesses. In addition, the 8(a) MPP also allows these firms to jointly seek out contract opportunities outside of the 8(a) arena.

One 8(a) MPP example in Mississippi is a joint venture between Orocon Construction, LLC, a general construction contractor in Biloxi and Carothers Construction, Inc., a large construction company based in Oxford. Orocon has completed two projects with Carothers Construction and is working on several more.

The completed projects are the Tactical Equipment Maintenance Facility in Millington, Tenn., and the Battalion Headquarters Project at Fort Campbell, Kentucky, said John Oropesa, president and managing member of Orocon.

“Three other projects are currently under way including the Communications Facility in New Cumberland, Penn., the Historic Building Renovations at Fort Leavenworth, Ken., and Building 603 Renovations at Naval Air Station Pensacola,” Oropesa said. “The joint venture was recently awarded the Air Crew Life Support Facility at Patrick Air Force Base and a Helicopter Pad Conversion project at Fort Rucker, Ala. All of these projects together total over $100 million.”

Oropesa said their joint venture under an SBA approved mentor-protégé agreement has allowed their growing small business to partner with a more experienced company to help Orocon compete on larger projects that they could not have otherwise pursued on their own.

“Government solicitations normally require past performance similar to the subject project,” Oropesa said. “Though our team has a wealth of experience on very large projects, Orocon’s previous contracts were all under $5 million. Prior to the joint venture, Orocon had no contracts that compared in size or dollar value to the $10-million-plus projects that we knew we were capable of managing. Being able to lean on our partner’s experience on larger projects allowed us the advantage we needed to compete for those larger contracts.”

The joint venture program has allowed Orocon to grow in strength. Oropesa said the larger projects have allowed them to add several key employees, improving the depth of their experience and capabilities, and strengthening their chance of securing future work.

“These projects also helped us build capital in the company, expanding our bonding capacity, and allowing us to pursue larger projects on our own,” he said. “Orocon was recently awarded a $32-million contract to construct a new aircraft hangar in Gulfport. Not only has the joint venture allowed us to pursue larger contracts, we were also able to pursue design-build projects and historic renovation projects that we previously had limited experience on.  Carothers not only had that experience, but they gave us a comfort level to pursue those out-of-state opportunities that we would not have pursued without them.”

Orocon’s management and supervision team has grown from six to more than twenty people.

“That, of course, presents a whole new set of challenges, but that’s a whole other story,” Oropesa said.

Oropesa said being in the SBA’s 8(a) program also helped in the learning curve required to do government contracting.

“Though meeting government requirements is very cumbersome and can be difficult at times, the SBA has always supported us,” Oropesa said. “Ms. Alice Doss and Ms. Joyce Conner of the SBA’s Mississippi District are great to work with. I really hope that we’ve made them proud.”

The answer to that is a resounding “yes,” according to SBA Mississippi District Director Janita R. Stewart. She said this is exactly the way the 8(a) MPP is supposed to work.

Stewart said the purpose of the 8(a) MPP relationship is to enhance the capabilities of the protégé, assist the protégé with meeting the goals established in its SBA-approved business plan, and improve the protégé’s ability to successfully compete for contracts. Benefits of 8(a) BD Mentor-Protégé program include technical and management assistance, and financial assistance in the form of equity and/or loans. Mentors can own up to 40 percent in of the protégé to help it raise capital.

“It was introduced by SBA to help in the growth and development of firms that are in our 8(a) business development program,” she said. “They can learn from a mentor which can be a large business. Both parties have to bring something to the table.”

Stewart said the program is available for many different types of businesses, not just construction firms.

“Both companies benefit, but the SBA’s main concern is to make sure that the 8(a) business is benefitting,” she said.

The program has proven so successful that the SBA has now expanded the MPP to all small businesses. The program is brand new; it just became effective Oct. 1. Stewart said it will help other all types of small businesses grow and develop. That includes small businesses in general, as well as women-owned, Veteran-owned, HUBZone certified firms, etc.

“The SBA is starting to get applications online,” she said.

For more information including an online tutorial, go to www.certify.sba.gov.

About Becky Gillette

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