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.

Ostensible Subcontractor Rule: More Than Subcontract Value

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I travel with some frequency, but will readily admit that I hate flying (I trace it largely to an unpleasant incident several years ago involving a rapid cabin depressurization and emergency landing).  I’ve been known to pay a few dollars more to take a direct flight rather than a less expensive option involving a connection.  For me, while price is an important factor, other factors, like convenience–and fewer takeoffs and landings–matter, too.

A recent size appeal decision issued by the SBA Office of Hearings and Appeals demonstrates that, like my flying arrangements, price is not the only factor when it comes to determining whether a prime/subcontractor team has violated the ostensible subcontractor rule.  As this size appeal decision shows, in some cases, there may be no ostensible subcontractor affiliation even if the subcontractor will perform the bulk of the overall contract value.

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8(a) Joint Ventures and SBA Size Protests: SBA OHA Narrows The Scope of Review

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When the SBA Area Office reviews a SBA size protest against a SBA-approved 8(a) joint venture, the SBA Area Office must confine itself strictly to size issues.  According to a recent decision of the SBA Office of Hearings and Appeals, in conducting its review of a SBA size protest, the SBA Area Office cannot examine whether the joint venture complies with the 8(a) program’s regulations.

Although the distinction between size and 8(a) issues may sound like a technicality, it can make the difference between a sustained SBA size protest and an unsuccessful one.  As a result, this SBA OHA decision provides an extra layer of protection to SBA-approved 8(a) joint ventures–any makes filing a successful SBA size protest against an approved 8(a) joint venture that much more difficult.

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A Note About Links to SBA OHA Decisions

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Have you clicked on a link in one of my recent posts about a SBA Office of Hearings and Appeals case, only to be taken to the SBA OHA decision search page, rather than the decision itself?  No, it’s not because I am too lazy to find a direct link for you, but because the way in which SBA OHA publishes its decisions no longer allows for direct links.

I am not a fan of SBA OHA’s new publishing policy, but it obviously was not developed with bloggers in mind.  Oftentimes, the search page is as close as I can get you to a particular SBA OHA decision.  To find the decision, just enter the case name in the search box, or, if the decision was issued in the last few months, click on the “Most Recent Decisions” link on the right side of your screen.

Sometimes, I link to a full-text version of the SBA OHA decision published by Stan Hinton on his excellent website, stanhinton.com.  However, you should be aware–as Mr. Hinton mentions–that these versions of the SBA OHA decisions are unofficial, and may have been edited (usually to correct typos or other problems) before they were posted.  For the official version of any SBA OHA decision,  you should use the SBA OHA decision page.

The SBA Affiliation Rules, Trustees, and Negative Control: A Cautionary Tale

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Small government contractors ask me, with some frequency, whether placing a company’s stock in a trust will protect the company from affiliation under the SBA affiliation rules.

I typically answer this question with one of my own: “who will control the trust?”  I tell them that if the same people who currently control the company will continue to control it once the stock is placed in trust, the mere act of placing the company’s stock in the trust is unlikely to shield the company from affiliation with other companies controlled by those same people.

A recent size appeal decision of the SBA Office of Hearings and Appeals confirms that the ordinary SBA affiliation rules typically still apply when a company’s ownership is placed in trust.  In fact, in this size appeal decision, the company in question lost out on a contract because one of the trustees had so-called “negative control” over the company–essentially, the ability to veto the decisions of the other trustee.

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SBA Size Protests and the Brooks Act

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The so-called “Exception Paradox” is one of those un-winnable logic games.  It goes something like this, “if every rule has an exception, then doesn’t the rule that every rule has an exception have an exception, too?”

These are the sorts of brain teasers that sometimes kept me busy in grade school (what can I say, I wasn’t a very cool fourth grader).  Fortunately, when it comes to SBA size protests, the SBA Office of Hearings and Appeals has made it easy to understand an exception to one common rule.  In a recent decision, SBA OHA held that the ordinary rule governing when an offeror is deemed “small” for a particular federal procurement does not apply to a SBA size protest filed in connection with an architect-engineer competition conducted under the federal Brooks Act and FAR 36.6.

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SBA OHA: Subcontractor Costs Cannot Be Excluded From Receipts

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I’m a government contracts lawyer these days, but when I was much younger, I was a would-be prime contractor.  During my senior year of high school, I took a part-time job at the Grand Forks Herald, my hometown newspaper in North Dakota.  Flush with cash (at least compared to where I’d been before), I then attempted to subcontract my household chores—things like taking out the trash and feeding the dog—to my younger brother.

My parents put the kibosh on that one, explaining that as a member of the family, I needed to personally contribute some labor to it (as a dad now, I can see where they were coming from).  But imagine I had been successful, paying Pete, say, $20 weekly to toil on my behalf for the Koprince household.  Could I have told the IRS, come tax season, that the money I paid Pete didn’t count toward my income, because I passed it through to him?

“Of course not,” you’re probably saying, and you are right.  And, on a much larger scale, the same is true when it comes to a small government contractor’s subcontract costs.  As the SBA Office of Hearings and Appeals has held, all of a company’s receipts—with very limited exclusions—count toward its size under a revenue-based SBA size standard.  Just because you subcontract a portion of a government contract to another company does not mean that the money you pay your subcontractor doesn’t count toward your own receipts.

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8(a) Mentor-Protege Joint Ventures: SBA OHA Confirms Broad Exception from Affiliation

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I find Google Trends, which catalogs “hot searches” on any given day, rather fascinating.  Half of the hot searches seem related to one celebrity or another, but others reveal that many folks are spending their time Googling such things as “zombie apocalypse” and “national doughnut day.”  Does anyone remember what office workers actually did all day before the Internet?

If Google Trends had a government contracts subsection, “joint ventures” would be one of the trendiest of search terms.  Joint ventures are a hot topic these days, for small and large government contractors alike.  8(a) joint ventures are perhaps the trendiest of all, thanks to a special exception from the ordinary SBA affiliation rules.  In a recent SBA size appeal decision, SBA OHA confirmed that this exception from the affiliation rules is broad, even allowing an 8(a) mentor-protege joint venture–potentially–to violate the so-called “three in two” rule.

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