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.

SBA OHA: For Calculating Receipts, Look to Tax Returns

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To calculate a company’s size under a receipts-based NAICS code, the SBA will add the company’s total income to its costs of goods sold, as those amounts are reported on its tax returns. In fact, the SBA’s regulations are clear that it must use these reported amounts to determine a company’s size status.

What happens, then, when a company’s taxes show “income” that might not really reflect money in the company’s accounts? The SBA’s Office of Hearings and Appeals recently considered this question, and affirmed a company’s ineligibility based on the income reported in its tax returns.

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OHA: Owners Did Not Have Enough Managerial Experience to Qualify Concern as a WOSB

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SBA’s socio-economic set-aside programs mandate compliance with multiple control requirements. An important one stipulates that a woman owner of a WOSB (or a veteran for a SDVOSB or a disadvantaged owner for an 8(a) business) must have the “managerial experience of the extent and complexity to run the concern.”

But what, exactly, does this requirement entail? A recent OHA case provides some important guidance.

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SBA OHA: Joint Venture Agreement Must Explain Venturers’ Responsibilities

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Joint venture agreements continue to be a hot topic among small business federal contractors. For good reason: if the agreement is properly prepared, a joint venture allows two companies (including, in the case of an approved mentor and protégé, a large business) to augment their capabilities and jointly bid on a federal project.

But to avail themselves of this benefit, the venturers must first prepare a joint venture agreement that complies with the SBA’s requirements. Sometimes, this task can be quite tricky. And as a recent decision of the SBA’s Office of Hearings and Appeals shows, the failure to have a compliant joint venture agreement can cost the joint venture an award.

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SBA OHA: Common Investment Affiliation Analysis Not Tied to Entity Treatment on Tax Returns

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Common investment affiliation can arise when SBA believes that two individuals’ common investments in multiple entities may make the individuals in question act with a common purpose. As few as two common investments can form the basis for affiliation.

A recent SBA Office of Hearings and Appeals opinion examines the argument that the number of common investments should be counted the same way the number of entities is treated for tax purposes. OHA’s answer: Nope.

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OHA Rules that Size Protest Wasn’t Five Years Too Late

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As we’ve discussed in previous posts, if you want to initiate a size protest, you generally must do so within 5 business days after the contracting officer notifies you of the prospective awardee’s identity.

But what happens if, after learning that you did not receive the award, the agency does something that suggests its award decision wasn’t final–e.g., reopens discussions with offerors and seeks revised proposals? Would your size protest still be late if didn’t file within the 5-day time frame?

Take a guess. And keep reading to find out the answer!

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Unpopulated Joint Venture Can Be “Manufacturer” For SBA Size Purposes

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When a small business sells products to the government under a contract designated with a manufacturing NAICS code, the small business either must be the “manufacturer” of the products, or separately qualify under the nonmanufacturer rule. The nonmanufacturer rule, in turn, requires the prime contractor to have no more than 500 employees, whereas manufacturers may fall under larger size standards–some as big as 1,500 employees.

But what about an unpopulated joint venture that doesn’t itself manufacture any products, relying on the individual venturers to manufacture the solicited goods? Does it also have to comply with the 500-employee size standard under the nonmanufacturer rule? Or can the joint venture be deemed the “manufacturer” of the products in question?

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