SBA Size Appeals: Parent Cannot File for Subsidiary

An SBA size appeal must be filed by someone “adversely affected by a size determination.”  Because parent and subsidiary companies are not directly affected by contracts bid upon by their corporate affiliates, those entities cannot file SBA size appeals on behalf of one another.

In a recent size appeal decisions, OHA confirmed that a parent company cannot file a size appeal on behalf of a subsidiary.

OHA’s decision in Size Appeal of Cliffdale Manufacturing, LLC, SBA No. SIZ-5879 (2018) involved two Army solicitations, which were set aside for small businesses under NAICS code 336413 (Other Aircraft Parts and Auxiliary Equipment Manufacturing) and NAICS code 332912 (Fluid Power Valve and Hose Fitting Manufacturing).

Cliffdale Manufacturing, LLC submitted offers on the Army solicitations.  Cliffdale was announced as the awardee of both Army contracts, but its size was successfully protested by a competitor.  RTC Aerospace LLC, Cliffdale’s parent company, filed size appeals with the SBA Office of Hearings and Appeals, challenging the SBA’s size determinations.

OHA wrote that SBA’s regulations “dictate ‘any person adversely affected by a size determination’ has standing to appeal a size determination to OHA.”  In its prior cases, “OHA has refrained from extending standing to alleged affiliates, proposed subcontractors, and even ostensible subcontractors to appeal the size determination of a challenged firm because the size determination has no impact on their size or status.”

Applying these rules, OHA said that “Cliffdale submitted the proposals for the subject procurements, was awarded the two subject contracts, and would be the firm contracting with the Government, not RTC.”  Because “[t]he size determination has no impact or consequence on RTC’s status,” OHA concluded, “RTC lacks standing to file the instant appeals on behalf of its wholly-owned subsidiary, Cliffdale.”

OHA dismissed RTC’s size appeal.

In practice, parent and subsidiary companies often downplay or largely ignore the legal distinctions between them.  But when it comes to SBA size appeals, the rule is clear–the appellant must be the entity that submitted the proposal, not a parent company.