SBA OHA: No “Unfair Competitive Advantage” Appeals

The SBA Office of Hearings and Appeals lacks jurisdiction to consider whether an entity owned by an Indian tribe or Alaska Native Corporation has obtained a substantial unfair competitive advantage within an industry.

In a recent size appeal case, OHA acknowledged that an unfair competitive advantage is an exception to the special affiliation rules that tribally-owned companies ordinarily enjoy–but held that only the SBA Administrator has the power to determine that an Indian tribe or ANC has obtained, or will obtain, such an unfair advantage.

Continue reading

SBA OHA: Joint Ventures Can Be LLCs

Joint ventures can be formally organized as limited liability companies–and that should come as no surprise, given how often joint ventures use the LLC form these days.

In a recent size appeal decision, the SBA Office of Hearings and Appeals rejected the argument that, because a company was formed as an LLC, its size should not be calculated using the special rule for joint ventures.  Instead, OHA held, the LLC in question was clearly intended to be a joint venture, and the fact that it was an LLC didn’t preclude it from being treated as a joint venture.

Continue reading

Interaffiliate Transactions Exception Remains Narrow — For Now

The U.S. Small Business Administration, Office of Hearings and Appeals recently affirmed–for now–its narrow reading of the so-called interaffiliate transactions exception.

In a recent size appeal decision, Newport Materials, LLC, SBA No. SIZ-5733 (Apr. 21, 2016), OHA upheld a 2015 decision in which OHA narrowly applied the exception, holding that interaffiliate transactions count against a challenged firm’s annual receipts unless three factors are met: 1) the concerns are eligible to file a consolidated tax return; 2) the transactions are between the challenged concern and its affiliate; and 3) the transactions are between a parent company and its subsidiary.

Continue reading

Common Investments Affiliation: Shared Real Estate Can Count

So-called “common investments” affiliation under the SBA’s affiliation rules arises most frequently when individuals own common interests in at least two operating companies.  But common investments affiliation can also be based on common interests in real estate.

In a recent decision, the SBA Office of Hearings and Appeals held that the SBA had performed an inadequate size determination because the SBA Area Office asked the protested company about common investments in companies–but didn’t directly ask about common investments in real estate.

Continue reading

SBA OHA Reaffirms 70% Threshold For Economic Dependence Affiliation

Under the SBA’s affiliation rules, one of the many ways a small business can be deemed affiliated with another is through the economic dependence rule: where a small business derives 70% or more of its revenues from another entity, the SBA ordinarily considers it to be economically dependent upon—and thus subject to the control of—that other entity.

So it was in a recent decision from the SBA’s Office of Hearings and Appeals (“OHA”), which confirmed the so-called “70% rule” for economic dependence.

Continue reading

SBA Size Protests: File With Contracting Officer, Not OHA

The SBA Office of Hearings and Appeals is an appellate forum and lacks jurisdiction to hear initial size protests.

As explained in a recent SBA OHA decision, size protests must be filed with the relevant Contracting Officer, who then refers the matter to the appropriate SBA Area Office.  Only after the SBA Area Office issues a size determination does OHA have jurisdiction to consider a size appeal.

Continue reading

8(a) Mentor-Protege JV Didn’t Qualify For SDVOSB Set-Aside, Says SBA OHA

An 8(a) mentor-protege joint venture didn’t qualify for an SDVOSB set-aside because the mentor firm was not a small business.

In a recent decision, the SBA Office of Hearings and Appeals held that a SDVOSB-specific regulation requires all members of an SDVOSB joint venture to be small–notwithstanding language in the SBA’s size regulations and 8(a) Program regulations specifying that an SBA-approved mentor-protege joint venture may bid, as a small business, on any government contractor or subcontract, provided that the protege is small.

Continue reading