Legal news and notes for small government contractors
Published by Koprince Law LLC | Edited by Shane J. McCall
Category Archives: SBA OHA Decisions
Includes decisions of the SBA Office of Hearings and Appeals, including size appeal decisions, service-disabled veteran-owned small business appeal decisions, NAICS code appeal decisions, and women-owned small business appeal decisions.
Did you remember to staple the cover sheet to your TPS report? And, more importantly, if you recently filed a CVE Appeal with the Small Business Administration’s Office of Hearings and Appeals, did you remember to attach a copy of your CVE denial or cancellation?
Ownership of a Service-Disabled Veteran-Owned Business has to be unconditional. As the owner of an SDVOSB recently found out, unconditional ownership generally means there can be no restrictions on the service-disabled veteran owner’s ability to sell the ownership interest. Let’s explore the details.
Fans of the blog know that we’re wild about joint ventures: they allow small business contractors to use their size status while, at the same time, leveraging their joint venture partner’s experience and capabilities.
But joint ventures—particularly joint ventures under one of the SBA’s socioeconomic programs—can be tricky to create. For joint ventures between a small and a large company, the venturers first need an approved mentor-protégé agreement. And regardless, for the joint venture to qualify under a socioeconomic designation, that joint venture must have a compliant agreement.
But that’s still not enough to create a compliant joint venture. As a recent SBA Office of Hearings and Appeals decision explains, the small business venturer must unequivocally control the joint venture.
We’ve discussed the “ostensible subcontractor rule” quite a few times on the blog (including most recently here and here) because it is one of the most frequent grounds for size protests. It’s also frequently misunderstood. A recent SBA Office of Hearings and Appeals decision, Contego Environmental, LLC, SBA No. SIZ-6054 (May 19, 2020), demonstrates how even SBA Area Offices can misapply the rule and provides useful reminders to contractor looking to avoid violating it.
Under the SBA’s regulations, affiliation between two companies might exist where one company derives 70% or more of its receipts from the other over the preceding three fiscal years. See13 C.F.R. § 121.103(f)(2).
This economic dependence affiliation, as it is called, can be tricky to identify in practice—it is, after all, a rebuttable presumption of affiliation. That is, a company might be able to demonstrate that economic dependence doesn’t exist if, for example, it has only been in business for a limited amount of time and has only been awarded a limited number of contracts.
Recently, the SBA’s Office of Hearings and Appeals considered the bounds of the economic dependence affiliation rule and interpreted the three-year look-back period.
It’s no secret that federal contract opportunities are becoming more and more competitive. But as we’ve previously gushed, small businesses enjoy a tremendous tool for enhancing their competitiveness: participating in a joint venture with another company.
Properly formed, a joint venture allows its participants to augment their capabilities and experiences in the quest to win (and successfully perform) a particular opportunity. But there’s the trick—to enjoy the benefits of a joint venture, that joint venture must meet various regulatory requirements. One misstep and the joint venture might not be eligible for the award.
A recent SBA Office of Hearings and Appeals decision shows the importance of making sure these regulatory requirements are met.