SBA OHA: Tribal Companies Entitled to Broad Affiliation Exceptions

Posted on September 11, 2012 by Steven Koprince

Indian tribes, their holding companies, and companies owned by those holding companies are entitled to broad exceptions from the ordinary SBA affiliation rules, according to a recent SBA Office of Hearings and Appeals size appeal decision.

SBA OHA’s decision in Size Appeal of Roundhouse PBN, LLC, SBA No. SIZ-5383 (2012), holds that the SBA cannot use non-applicable affiliation rules to circumvent the regulatory exception from affiliation between tribal companies. In its ruling, SBA OHA also sidestepped an interesting tribal size question: did Congress truly intend for some tribal companies to be “small” for 8(a) program purposes, but “other than small” for all other government contracts?

As you can probably tell, the Roundhouse PBN case is not your run-of-the-mill SBA OHA size appeal decision, meaning a slightly longer-than-normal blog post is in order. Let’s dive right in.

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SBA Affiliation Rules and Family Matters: OHA OK’s Minor Business Dealings

Posted on December 7, 2011 by Steven Koprince

When it comes to the SBA affiliation rules, it’s a good idea to keep Steve Urkel in mind. Why remember this lovable suspender-wearing nerd? Well, because in the SBA affiliation world, “family matters.”

Okay, bad joke. But hold the rotten tomatoes, because I have a point here. In my experience, one of the most common ways small businesses find themselves with an SBA affiliation problem is through family relationships. Many small government contractors are surprised to learn that the SBA presumes that firms controlled by close family members are affiliated due to a supposed “identity of interest” between the family members. For example, if you control Company A and your spouse controls Company B, the two firms are presumed affiliated for SBA size purposes, and you must rebut the presumption (not an easy task) to avoid affiliation.

In some prior size appeal cases, the SBA Office of Hearings and Appeals held that two firms controlled by family members could not rebut the presumption if the companies had any business dealings whatsoever. However, in a commonsense decision—albeit one creating a bit of a gray area—SBA OHA recently held that two companies controlled by family members are not necessarily affiliated just because they have minor business relations.

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SBA Affiliation Rules: SBA OHA Says Control is the Key

Posted on June 10, 2011 by Steven Koprince

The SBA affiliation regulation, 13 C.F.R. § 121.103, states that all affiliation is premised on the notion of control. In other words, two companies are affiliated when the same person or entity controls or has the power to control both.

The size appeal decision of the SBA’s Office of Hearings and Appeals in Size Appeal of Manroy, USA, LLC, SBA No. SIZ-5244 (2011), explains that when there is no overlapping control, there is no affiliation, even if one or more of the indicia of affiliation described in the regulation might arguably be present.

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