Author Archives: Steven Koprince

VA CVE Reverses Course on Ownership Transfers, Offers Expedited Reconsideration

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Reacting to a February federal court decision, the VA’s Center for Veterans Enterprise has reversed its position on provisions restricting the rights of service-disabled veterans to transfer their ownership interests in their service-disabled veteran-owned small businesses.

Previously, the VA CVE had taken the position that any restriction on a service-disabled veteran’s right to transfer his or her interest in the company was improper.  Because such transfer restrictions are commonplace, many otherwise-eligible SDVOSBs had their verification applications denied.

No more.  In a newsletter to SDVOSBs issued yesterday, the VA CVE stated that it would no longer deny verification based on certain ownership transfer restrictions–and offered an expedited reconsideration process to companies previously denied on this basis.

The VA CVE’s position is welcome news, but doesn’t mean that most SDVOSBs should rush to include transfer restrictions in their bylaws or operating agreements, because the SBA may not agree with the VA CVE’s change of heart.

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SBA OHA: Historic Ties Do Not Equal Affiliation

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A history of close ties between companies does not mean that the companies are presently affiliated, according to a recent size appeal decision of the SBA Office of Hearings and Appeals.

In Size Appeal of A&H Contractors, Inc., SBA No. SIZ-5459 (2013), SBA OHA overturned a finding of affiliation because most of the ties relied upon by the SBA Area Office had been severed before the applicable date for determining size.

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SDVOSB’s Operating Agreement Caused Affiliation

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In a recent SBA Office of Hearings and Appeals size decision, a service-disabled veteran-owned small business’s operating agreement caused affiliation under the SBA’s affiliation rules, despite the fact that the majority owner was also labeled as the 51% manager.

SBA OHA’s decision in Size Appeal of Washington Patriot Construction, LLC, SBA No. SIZ-5447 (2013) shows the importance of carefully drafting a small business’s corporate operating agreements or bylaws to prevent affiliation with other companies controlled by the small business’s minority owners.

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After Successful 8(a) Appeal, Company Gains 8(a) Certification

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Last month, I wrote about the successful 8(a) program appeal filed by Gearhart Construction Services.  In its decision, SBA OHA held that the SBA had misevaluated Gearhart on the “social disadvantage” factor, including by holding Gearhart to a too-high standard of proof.  SBA OHA ordered the SBA to correct its errors and take another look at Gearhart’s application.

Now I can report that Gearhart’s story has a happy ending.  On April 11, the SBA notified Gearhart that it had been admitted to the 8(a) program.  SBA OHA then dismissed Gearhart’s appeal as moot, because Gearhart and achieved its goal.

Sometimes, gaining admission to the 8(a) program requires tenacity and a continued belief in one’s case, even when the SBA’s 8(a) office has repeatedly denied the application.  Gearhart’s perseverance paid off, and the company now has nine years to reap the rewards.

Price Reasonableness vs. Price Realism: The GAO Explains The Difference

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Price reasonableness and price realism are both benchmarks against which a procuring agency may evaluate an offeror’s price, but price reasonableness and price realism–though they are often confused for one another–are not the same thing.

As the GAO explained in a recent bid protest decision, one of the terms involves consideration of whether an offeror’s price is too low, whereas the other evaluates whether the price is too high.  The distinction is particularly important for fixed-price procurements, in which the question of whether pricing is too low is not one the procuring agency is always required to ask.

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Economic Dependence and the SBA 8(a) Program

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A contractor’s economic dependence on another company can cause affiliation under the SBA affiliation rules, but economic dependence can also be a major problem when a company applies for 8(a) program certification.

As demonstrated in a recent decision of the SBA Office of Hearings and Appeals, if an 8(a) program applicant has received most of its revenues from another company, the SBA may find that the applicant is economically dependent on the other company–and therefore, ineligible for admission to the 8(a) program.

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Event: Joint Ventures vs. Teaming Agreements

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Do you want to know more about joint ventures and teaming agreements?  Do you want to spend a Friday in November enjoying the warmth of sunny Southern California?

If you answered “yes,” I am pleased to announce that I will be presenting a seminar on “Joint Ventures vs. Teaming Agreements” on November 8, 2013 in Riverside, California.  The seminar will offer a “bird’s eye” overview of the key differences between joint ventures and teaming agreements.  Attendees will learn “do’s” and “don’ts” when setting up a joint venture or team, common pitfalls, and strategies for success.

The seminar is part of the 10th Annual Veterans Economic and Business Summit.  For more information, contact the Riverside Community College District Procurement Assistance Center.  Hope to see you there!