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.

SDVOSBs: Beware of Loans From Minority Owners

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When I was in fifth grade, I had to go door-to-door selling candy bars to raise money for a class field trip.  I worked up the courage to peddle assorted chocolates to most of the neighbors, but avoided houses with those ominous “BEWARE OF DOG” signs.  I was selling snacks; I didn’t want to become a snack myself for some large canine.

For service-disabled veteran-owned small business owners, the SBA Office of Hearings and Appeals has recently hung up its own ominous sign: “BEWARE OF LOANS,” at least when they come from non-service-disabled minority owners.  In SDVOSB Appeal of Rush-Link One Joint Venture, SBA No. VET-228 (2012), the SBA Office of Hearings and Appeals found that loan arrangements between a service-disabled veteran and the company’s minority owners abrogated the service-disabled veteran owner’s control over the company.

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SDVOSB Joint Ventures: JV Agreement Must Name Program Manager

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In Romeo and Juliet, the heroine famously muses “What’s in a name?”  Juliet’s point, as your junior high English teacher probably emphasized, is that the young lovers’ family names should not define them.  If Juliet had her way, names would be meaningless.

Tell that to the SBA’s Office of Hearings and Appeals.  (How’s that for a segue?)  SBA OHA has held that when it comes to service-disabled veteran-owned small business joint ventures, the parties must include the specific name of the SDVOSB employee who will serve as the project manager.  Without a name, the SDVOSB joint venture is invalid.

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Supermajority Voting and SDVOSBs: Another One Bites the Dust

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Unanimity and supermajority voting requirements are one of the most common ways for a service-disabled veteran-owned small business to find itself on the wrong end of an eligibility protest (or, in the case of the VA, a CVE verification denial). Case in point: the decision of the SBA Office of Hearings and Appeals in SDVOSB Appeal of Rush-Link One Joint Venture, SBA No. VET-228 (2012).

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NAICS Code Appeals: A Quick Timeliness Reminder

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If you Google the simple phrase “10 days,” the top result is the IMDb page for the movie How to Lose a Guy in 10 Days.   I haven’t seen this 2003 Matthew McConaughey/Kate Hudson romantic comedy, and Lord willing, never will (though I recall that my 80-something grandmother thoroughly enjoyed it).

Even though NAICS code appeals didn’t pop up first on the Google rankings, actors with a penchant for the Texas Longhorns aren’t the only thing that can be lost in 10 days.   If you want to file a NAICS code appeal with the SBA Office of Hearings and Appeals, act quickly.  Under the SBA OHA regulations, NAICS code appeals must be filed and served within 10 days after the issuance of the solicitation.  Any later, and you will lose your right to appeal, as one would-be appellant recently learned.

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SBA Affiliation Rules and Control: The Minority Owner Trap

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Does a person who owns a minority share of a company “control” the company under the SBA affiliation rules?  Yes, if the company has no majority owner and the minority share owned by the individual in question is the largest, or is similar in size to, the largest other minority shares.

Get all that?  An example may help.  The decision of the SBA Office of Hearings and Appeals in Size Appeal of Advent Environmental, Inc., SBA No. SIZ-5325 (2012), demonstrates how this rule can be a trap for the unwary.

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SBA Affiliation Rules and the Present Effect Rule: When Does an Agreement Arise?

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Under the SBA affiliation rules, the SBA will apply the so-called “present effect rule” when it examines an agreement for a merger or acquisition, including an agreement in principle.  Under the present effect rule, such an agreement is presently effective with respect to the question of control–which can present a big problem under the SBA affiliation rules.

For example, if Company A has agreed to purchase Company B, the SBA deems Company A to control Company B from the moment the agreement is reached, even if the deal does not close until months later.  This makes Companies A and B affiliates from the date their agreement is reached for purposes of the SBA affiliation rules.

The present effect rule makes sense, but when does an “agreement” arise for purposes of the  rule?  The SBA Office of Hearings and Appeals examined this issue in Size Appeal of Nuclear Fuel Services, Inc., SBA No. SIZ-5324 (2012).   If you are in discussions or negotiations for a merger or acquisition, and are worried about potential affiliation, SBA OHA’s decision will leave you breathing a sigh of relief.

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Subcontractors, NAICS Codes and Small Business Status: The Prime Decides

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George W. Bush famously declared himself to be “the decider.”  Although some comedians had fun with the phrase, it’s hard to argue with Bush’s underlying assessment; as head of the government, the President has a lot of decisions to make.  But when it comes to whether you qualify as “small” for purposes of a federal subcontract, it may surprise you to learn that the government isn’t the decider at all.

For a subcontract, the prime contractor—not the government—decides what NAICS code (and corresponding size standard) applies.  The NAICS code the prime contractor selects for your subcontract need not be the same NAICS code assigned to the prime contract as a whole, and you may have the opportunity to lobby the prime contractor to change the NAICS code to one you believe is better-suited for the procurement–and your small business eligibility.

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