Veteran Controls Both 8(a) Company and SDVOSB—By Working 95 Hours Per Week

In the legal profession, some firms are known to encourage a workaholic culture.  I have heard tales of associates spending multiple nights sleeping (a couple hours) on office couches, being called away from the Thanksgiving dinner table to work, or awoken by the proverbial “3 a.m. phone call” by a partner demanding immediate attendance at the office.  The funny thing is that most of these stories come from the associates themselves—bragging about how much they work!

I work hard for my clients, but with a wonderful wife and daughter in my life, I am of the mind that some of the most important things are found outside the office.  However, one small business owner, who was the subject of a recent SBA Office of Hearings and Appeals decision, might feel right at home in one of those workaholic law firms.  This business owner was able to convince SBA OHA that he worked full time both for his 8(a) company and his separate service-disabled veteran-owned small business—by putting in a whopping 95 hours per week.
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SBA Affiliation Rules and Economic Dependence: SBA OHA Backs off “70% Rule” (A Little)

When I was young, my parents gave me my first weekly allowance.  Grand total: twenty-five cents.  It doesn’t sound like much now (and it wasn’t then, either—I’m not that old!) but it was still 100% of my income.  I was economically dependent on my parents.

When it comes to the SBA affiliation rules, a small business need not receive 100% of its revenues from another company in order to be considered an affiliate by virtue of economic dependence.  For several years, the SBA followed a hard-and-fast rule: if a small business earned 70% or more of its revenues from another company, the two businesses were automatically affiliated.

But in Size Appeal of Argus & Black, Inc., SBA No. SIZ-5204 (2011), the SBA’s Office of Hearings and Appeals backed off the bright-line 70% rule, at least a little.  In a commonsense decision, SBA OHA held that in limited circumstances, applying the 70% rule would be unfair.

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Applying for 8(a) Certification? Address Potential SBA Affiliation Problems First

Affiliation under the SBA’s rules typically becomes a problem when a small business submits an offer on a set-aside procurement, and a competitor files an SBA size protest, challenging eligibility.  But the SBA will examine affiliation issues in other contexts, including when a small business submits an application for the SBA’s 8(a) Business Development Program.

As one unfortunate contractor recently learned, if you do not solve any affiliation problems before you submit your 8(a) application, the SBA may not only reject your 8(a) Program application, but deem you a large business, ineligible to obtain small business set-aside contracts in your primary NAICS code.

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No Sick Notes at the SBA: Illness Doesn’t Extend SBA Filing Deadlines

Like many others who went to school in the 1980s, Ferris Bueller was one of my personal heroes.  Ferris took the idea of faking sick from school and turned it into an art form, complete with a moving mannequin in the bed, canned messages playing when the doorbell rang, and even a before-its-time hacking of the school computers to change his attendance records.  And of course, Ferris spent his day off tooling around in a Ferrari, attending a Chicago Cubs game (nice taste, Ferris!), and bringing The Beatles back into style.  What kid wouldn’t want to skip school for that?

Sick days–whether real or not–are a time-honored part of school.  Unfortunately, as one contractor learned the hard way, sick notes may not work at the SBA.

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SBA OHA: Ostensible Subcontractor Rule Shouldn’t “Close the Door” to New Businesses

A small business’s relative inexperience should not be the primary basis for a determination that the small business is affiliated with its subcontractor under the “ostensible subcontractor” rule, according to the SBA’s Office of Hearings and Appeals.  SBA OHA’s decision in Size Appeal of Fischer Business Solutions, LLC, SBA No. SIZ-5075 (2009), held that the SBA’s Area Office improperly relied upon a small business’s lack of experience in a particular field to find it affiliated with its subcontractor.

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