5 Things You Should Know: Size Protests and Appeals

I’m just back from El Paso, where I had a great time discussing small business size and affiliation issues at the Contract Opportunities Center. This presentation got me thinking: “Wouldn’t our loyal SmallGovCon readers want to know 5 Things about size protests and appeals?”

“Of course they would!” I immediately answered my own internal monologue. “After all, who wouldn’t?”

Here are 5 Things You Should Know about size protests and appeals:

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Size Protests: Ignorance Doesn’t Excuse Failure to Respond

If you’ve ever responded to an SBA size protest, you know that the process is quite involved: SBA will require your company to provide a complete response to the protest (including production of corporate, financial, and tax records for all implicated concerns) within only a few business days. The consequences for not providing all of the requested information can be quite severe, as the SBA can presume that the responsive information would demonstrate that the concern is not a small business (through its “adverse inference” rule).

A recent OHA appeal shows the dangers of failing to adequately respond to a size protest. In Size Appeal of Perry Johnson & Associates, SBA No. SIZ-5943 (2018), the OHA affirmed the SBA’s reliance on an adverse inference and, as a result, found the protested company was not an eligible small business.

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SBA OHA Rejects “Chain Affiliation” Theory

Ordinarily, a company isn’t affiliated with the affiliates of its affiliates.

That sentence may sound a little silly, but it encapsulates an important principle about the breadth of the SBA’s affiliation rules.  As demonstrated in a recent SBA Office of Hearings and Appeals decision, the SBA doesn’t apply its rules to create “chain affiliation.”

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No Competitor Size Protests of 8(a) Sole Source Awards, Says SBA OHA

The SBA’s regulations do not allow an 8(a) company to file a size protest challenging the award of an 8(a) sole source contract to a competitor.

In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that size protests relating to 8(a) sole source awards can be filed by contracting officers or the SBA itself–but not by competitors.

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SBA Size Protest Deadlines: What About Corrective Action?

If a prospective contractor wishes to file a size protest, it must act quickly: the protester ordinarily has five business days to initiate its protest. But does the deadline get extended if the agency takes corrective action in response to a bid protest?

Maybe, maybe not.  A recent SBA Office of Hearings and Appeals decision examines that question.

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SBA Size Protests: Subsidiary Couldn’t File for Parent

A subsidiary cannot file an SBA size protest on behalf of its parent company.

Last week, I wrote about an SBA Office of Hearings and Appeals case holding that a parent couldn’t file a size appeal on behalf of its subsidiary.  Unsurprisingly, it turns out that the same principles apply to initial size protests, too.

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Nonprofits Not Exempt From Affiliation Rules, Says SBA OHA

A recent SBA Office of Hearings and Appeals decision confirms that there is no exception for nonprofit organizations when it comes to affiliation issues.

In the case, SBA OHA found affiliation between a self-certified small business and a nonprofit organization based on close family members controlling both the business concern and ​the ​nonprofit.​ Adding in the receipts from the affiliated nonprofit made the business in question ineligible for small business status.

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