No matter a company’s actual size, the company will be deemed an ineligible large business if it fails to timely respond to a SBA size protest.
Just ask American Blanching Company, which was recently found ineligible for a small business set-aside contract because it did not respond to a SBA size protest within the short size protest response window.
You would think a company as large as Northrop Grumman would know how to avoid ostensible subcontractor affiliation with a small prime, wouldn’t you?
You’d be wrong. In a recent SBA Office of Hearings and Appeals decision, a Northrop Grumman entity entered into a teaming arrangement with a small prime, in which all three key employees identified in the proposal were employed by the large subcontractor. The result: ostensible subcontractor affiliation.
Affiliation based on family relationships is perhaps one of the least understood SBA affiliation rules, and continues to trip up many small government contractors. Case in point: a recent SBA Office of Hearings and Appeals decision finding a small business affiliated with a company controlled by the mother of the small business’s owner, based on the family relationship and subcontracts between the companies.
The SBA Office of Hearings and Appeals will reject a contractor’s attempt to submit new evidence in a SBA size appeal unless the contractor shows “good cause” to admit the new evidence.
And, as demonstrated by a recent SBA OHA size appeal decision, when the evidence was publicly available at the time the size protest was filed, but was not submitted with the size protest, it will be very difficult to convince SBA OHA to review the new evidence.
The SBA Office of Hearings and Appeals has held that the SBA Area Office did not err by refusing to find affiliation between a tribally-owned company and its sister companies.
SBA OHA’s recent decision in Size Appeal of Bosco Contractors, Inc., SBA No. SIZ-5412 (2012), follows on the heels of Size Appeal of Roundhouse PBN, LLC, SBA No. SIZ-5383 (2012), in which SBA OHA found that the SBA had erred by adopting a too-narrow view of the tribal exception from affiliation.
Dividing key contract work among several subcontractors will not necessarily allow a small business to avoid affiliation under the SBA’s ostensible subcontractor rule, according to a recent decision issued by the SBA Office of Hearings and Appeals. In that case, the prime contractor divided the primary and vital contract work among four subcontractors–and according to SBA OHA, was affiliated under the ostensible subcontractor rule with all four subs.
The SBA’s newly organized concern affiliation rule is designed to prevent former officers, directors, principal stockholders or “key employees” of a large business from evading the SBA size rules by spinning off a new company.
But who is a “key employee” for purposes of the newly organized concern affiliation rule? As demonstrated in a recent SBA Office of Hearings and Appeals decision, the mere fact that an employee has the word “manager” in his or her title does not necessarily make that person a key employee under the newly organized concern rule.