Companies that lack the total expertise to bid on a local or State government contract in California can have the opportunity to bid under certain requests for solicitations and advertisements for bids. Two or more companies can pair up to bid pursuant to a joint venture agreement, or even a teaming arrangement.
Typically the government customer will ask for a joint venture license prior to award of the contract as in this Alameda County bid advertisement. What does a “joint venture license” mean? This is a specific type of license issued by the California State Contractors License Board. The CSLB indicates that, “[a] joint venture license may be issued to any combination of two or more licenses issued to sole proprietors, partnerships, corporations, limited liability companies, or other joint licenses”, and that “[t]he joint venture license may be issued in any classification held by at least one of the entities”.
As of the publication of this article the fee one must include with the application is $480. Go here Applying for a Joint Venture License – Contractors State License Board for more information at the CSLB.
The license is not the only thing needed to make the “joint venture”. Responsible companies will enter into a written joint venture agreement, usually drafted by legal counsel. That agreement will specifically delineate who is responsible for what and how the arrangement will conclude. Note that applying for the license does not mean you are properly set up as a joint venture as between the parties in the venture.
Be careful if one of the joint venturer contractors is suspended. That affects the JV license. California Business and Professions code states, “An active joint venture license shall be automatically suspended by operation of law during any period in which any member of the entity does not hold a current, active license in good standing.” Cal. B&P C. sec. 7029.
This should not be taken as specific legal advice. If you need legal advice specific to your situation or if you need a joint venture agreement drafted, please contact us by any means listed here.