Joint Venture
It is my understanding that Joint Ventures are formed after a company has been awarded the project. However, for the NCARB practice question below, they are saying a Joint Venture can be formed and then submit the proposal. I don't believe that is correct. Anything have any insight here?
A school board issues an RFP for a new elementary school. CBA Architects has significant experience in designing elementary schools and is eager to respond to the RFP. They contact Building General Contractors (BGC), who has built several schools for CBA's clients. CBA is organized as a professional corporation and BGC is organized as an S corporation. The RFP contains the following information:
- The proposal should be design-build.
- The construction budget will be $20 million.
- The responding entity should include a complete bond and compliance with prevailing wage regulations.
- The response is due in three weeks along with a complete fee.
Which of the following arrangements should CBA and BGC consider for their response to the RFP? Check the three that apply.
| A. | CBA submits an RFP response and fee and lists BGC as the consulting contractor. |
| B. | CBA and BGC form a new LLC and then submit an RFP response and fee. |
| C. | CBA and BGC form a new C corporation and then submit an RFP response and fee. |
| D. | CBA and BGC form a joint-venture partnership and then submit an RFP response and fee. |
| E. | BGC submits an RFP response and fee and includes CBA as the consulting architect. |
| F. | BGC submits an RFP response and fee and CBA submits a separate response and fee for architectural services. |
CORRECT RESPONSES
CBA and BGC form a new LLC and then submit an RFP response and fee.
An LLC can be used to provide design-build services and can be easily formed.
CBA and BGC form a joint-venture partnership and then submit an RFP response and fee.
The partnership form can be used to provide design-build services and can be easily formed.
BGC submits an RFP response and fee and includes CBA as the consulting architect.
This arrangement represents a standard contractor-led design-build.
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I don't believe a joint venture has to be formed after a project is awarded. I see the confusion because some of the practice questions mention joint ventures after projects have been awarded to firms, and that muddies the clarity of it.
A joint venture can be formed at any point between parties in order to achieve a specific goal, and in this case the goal would be to win the project for both CBA and BGC, therefore a joint venture would be a potential path for them to submit together to win the project. The "company" can perform design-build services as a single entity vs separately as architect and contractor.
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Hi all, please refer to C101. Joint venture is created for the purpose of submitting a bid as a completely separate legal entity. If the bid is successful, JV (=separate legal entity) will sign the contract w/owner for owner's project... If the bid is not successful, the agreement between JV parties expires according to termination provisions... Read about division of assets between parties after the project is completed...
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