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.

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

Posted on by

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.

Continue reading →

SBA Size Protests and the Ostensible Subcontractor Rule: The Task Order Loophole

Posted on by

The tax code is famous (or infamous) for perceived loopholes, but the IRS isn’t the only regulatory agency with a loophole in its regulations.   The SBA’s affiliation rules contain—or at least used to contain (more on that later)—a gaping loophole when it comes to Multiple Award Task Order Contracts, or MATOCs, and the ostensible subcontractor rule.

Continue reading →

SBA OHA: Inter-Affiliate Transactions Exception Does Not Apply to a Division

Posted on by

SBA Office of Hearings and Appeals cases frequently involve contractors trying to argue that they are not affiliated with other entities.  But in Size Appeal of The Associated Construction Co., SBA No. SIZ-5314 (2011), the contractor at issue attempted to argue the opposite—that it was affiliated with another entity, namely, a division of itself.

This strange case came about because the contractor hoped to take advantage of the so-called “inter-affiliate transaction exception” under 13 C.F.R. § 121.104(a), which allows contractors to deduct “proceeds between a concern and its domestic or foreign affiliates” from its average annual receipts for size purposes.  Unfortunately for the contractor, SBA OHA held that a company cannot be affiliated with its own division—meaning that the exception did not apply.

Continue reading →

Technically Unacceptable? No SBA Size Protest for You!

Posted on by

Remember the famous “Soup Nazi” episode of Seinfeld?  The mustachioed title character, brilliantly played by Larry Thomas, will forever be known for barking, “no soup for you!” to anyone who dared break his many rules.  In the SBA size protest arena, as in the Soup Nazia’s restaurant, technical rules abound.  For instance, if your proposal was technically unacceptable, “no SBA size protest for you!”

Continue reading →

The Ostensible Subcontractor Rule and Key Personnel

Posted on by

According to Executive Order 13,495, follow-on contractors must offer a “right of first refusal” to certain incumbent personnel.  Based on the Executive Order, the SBA Office of Hearings and Appeals has previously held that hiring non-management personnel from a subcontractor is no longer evidence of unusual reliance under the ostensible subcontractor rule.

I emphasize “non-management” for a reason: the Executive Order does not apply to non-management personnel.  According to SBA OHA, hiring a subcontractor’s management team—particularly when the subcontractor is an ineligible incumbent—continues to be strong evidence of a violation of the ostensible subcontractor rule.

Continue reading →

Debriefings and SBA Size Protests: Sorry, No Extension

Posted on by

Today’s public service announcement comes to us courtesy of the SBA Office of Hearings and Appeals.  Here it is: asking for and receiving a debriefing does not extend the deadline to file a SBA size protest.  Asking for a debriefing may extend the time frame for filing a GAO bid protest but does not extend the five-business-day period for filing a SBA size protest.

Case in point: the decision of SBA OHA in Size Appeal of Garco Construction, Inc., SBA No. SIZ-5308 (2011).  In that case, a small business learned of award to a competitor on September 26, but waited until after it received its debriefing on October 21 to file its SBA size protest.  The small business argued that its size protest should be considered timely, because it has no knowledge of the grounds of protest until after the debriefing.

Nice try.  SBA OHA made short work of this argument, stating “that a protester did not learn of the grounds for its protest until the debriefing is no basis for extending the deadline for filing a protest.”  SBA OHA held that the SBA Area Office had properly dismissed the size protest as untimely.

And that concludes today’s public service announcement for small government contractors.  As they say on NBC, “The More You Know.”

SBA Affiliation Rules and Family Matters: OHA OK’s Minor Business Dealings

Posted on by

When it comes to the SBA affiliation rules, it’s a good idea to keep Steve Urkel in mind.  Why remember this lovable suspender-wearing nerd?  Well, because in the SBA affiliation world, “family matters.”

Okay, bad joke.  But hold the rotten tomatoes, because I have a point here.  In my experience, one of the most common ways small businesses find themselves with an SBA affiliation problem is through family relationships.  Many small government contractors are surprised to learn that the SBA presumes that firms controlled by close family members are affiliated due to a supposed “identity of interest” between the family members.  For example, if you control Company A and your spouse controls Company B, the two firms are presumed affiliated for SBA size purposes, and you must rebut the presumption (not an easy task) to avoid affiliation.

In some prior size appeal cases, the SBA Office of Hearings and Appeals held that two firms controlled by family members could not rebut the presumption if the companies had any business dealings whatsoever.  However, in a commonsense decision—albeit one creating a bit of a gray area—SBA OHA recently held that two companies controlled by family members are not necessarily affiliated just because they have minor business relations.

Continue reading →