Family Members’ Joint Involvement In Third Company Created Affiliation, Says SBA OHA

A self-certified small business was found affiliated with a company owned by the business owner’s father, even though the son’s company had no meaningful business relationship with the father’s company.

In a recent size appeal decision, the SBA Office of Hearings and Appeals found that the self-certified small business had not rebutted the presumption of affiliation with the father’s company because the father and son were jointly involved in a third business, and thus could not establish that their personal business interests were separate.

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SBA Size Protests: SBA Need Not Seek “Outside Sources” Of Information

When the SBA evaluates a size protest, it need not obtain and consider “outside sources” of information–that is, information that is not provided by the protester or the protested business.

A recent decision of the SBA Office of Hearings and Appeals highlights the need for a size protest to include specific, detailed information about why the protested firm is alleged to be “other than small.”  If the protester does not include information from outside sources, the SBA is not required to seek out such information on its own.

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SBA OHA Clarifies the ‘Kit Assembler’ Exception to the Non-Manufacturer Rule

Assembling components into a commercial item does not make a contractor a “kit assembler” for the purposes of the non-manufacturer rule, according to the SBA Office of Hearings and Appeals.

A recent size appeal required OHA to delve in to what is meant by “kit.” In B GSE Group, LLC, SBA No. SIZ-5679 (Sept. 17, 2015), OHA stated that a kit is not a commercial item that has been purchased in parts and assembled, rather, it is a collection of manufactured items packaged together, like a tool kit.

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SBA Size Protests: FAR Part 33 Doesn’t Affect Timeliness

A SBA size protest related to a sealed bid must be filed within five business days of bid opening–and the bid protest rules under FAR Part 33 do not provide for a longer protest window.

In a recent decision, the SBA Office of Hearings and Appeals confirmed that, when it comes to size protests, the timeliness rules for bid protests (which allow many protests to be filed within 10 days after the basis of protest was known or should have been known) simply do not apply.

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SBA OHA Reaffirms (Some) Leniency to Start-Ups in Size Determinations

Under the SBA’s small business affiliation regulations, an otherwise small business can be deemed affiliated with a larger business when the firms share “substantially identical business or other interests.” Under this rule, affiliation will be typically be found, as a matter of law, when a small business concern derives 70% or more of its revenue from another firm.

Because most new businesses don’t start up with numerous clients or contracts, a mechanical application of the 70% rule could be disastrous for a new small business faced with an SBA size determination. Thus, the “start-up” exception to the SBA’s affiliation rules—which applies to relatively new businesses whose revenues from its alleged affiliate are insufficient to sustain business operations—can be the saving grace for a small business trying to earn business from the government.

So it was in a recent case decided by the SBA Office of Hearings and Appeals.

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VA CVE Verification Does Not Provide Affiliation Shield, Says SBA OHA

Even if the VA Center for Verification and Evaluation has found that a service-disabled veteran “unconditionally” controls a SDVOSB, the SBA may nonetheless determine that other individuals or entities also control the company within the meaning of the SBA’s affiliation rules.

As demonstrated by a recent decision of the SBA’s Office of Hearings and Appeals, VA CVE verification does not shield a SDVOSB from an adverse SBA affiliation determination, even if that determination is based on a finding that non-veterans control the company.

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SBA OHA: Providing Specifications & Funding Is Not “Manufacturing”

A business was not engaged in “manufacturing” within the meaning of the SBA’s regulations where the firm provided another entity with specifications and financing, and the second entity produced the end item being acquired by the government.

As demonstrated in a recent SBA Office of Hearings and Appeals decision, being a “manufacturer” means engaging in the primary activities of transforming substances into an end item.  Merely providing specifications and financing doesn’t do the trick.

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