Q and A a004.xlsx

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We recommend that a distinction be made between the liability requirements of a “populated” joint venture or partnership and an “unpopulated” joint venture or partnership. Specifically, an unpopulated joint venture (or “shell”) is a partnership of companies that perform work under a defined division of labor among partner companies; however, a “populated” joint venture is an separate and stand alone entity with its own resources and performance, independent of the parent companies. As such, there are typically no personnel or activities performed by the parent companies on behalf of the joint venture, and thus no acts or omissions performed by the partner members.

We suggest that the joint and several liability requirement best applies to an unpopulated joint venture, where any acts or omissions would be performed by partner companies during execution. Conversely, we also suggest that the joint and several liability requirement is inappropriate for a populated joint venture because of its independent and self-performing nature. Indeed, a populated joint venture has its own management and performance structures, develops its own risk management strategies, and possesses its own insurance coverage.

An exception where joint and several liability of members of a populated joint venture could apply includes acts and omissions of other members’ employees while those employees are on loan to or seconded to the populated joint venture.

A legal review suggests that the FAR subpart referenced in the draft RFP does not require the government agency to require a joint venture's members to agree to joint and several liability, i.e., such a requirement is not mandated by law and its application is presumably determined by the contracting agency. The legal review also did not reveal any established track record, guidance or interpretation that would confirm that the clause applies to a populated joint venture. Further, we believe that the government would not be adversely affected if a populated joint venture were not jointly and severally liable for the acts and omissions of its members, but that the liability of the acts and omissions performed by the entity should be with the entity itself.

We seek confirmation from the government either: (a) that the joint and several liability requirement does not apply to the members of a populated joint venture, or (b) that the joint and several liability requirement only applies to the acts and omissions of the other members and their employees on loan to or seconded to the joint venture, not the acts and omissions of the populated joint venture itself.

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