Ostensible Subcontractor Rule: More Than Subcontract Value

Posted on June 27, 2012 by Steven Koprince

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.

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

Posted on June 26, 2012 by Steven Koprince

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.

A Note About Links to SBA OHA Decisions

Posted on June 25, 2012 by Steven Koprince

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

Posted on June 25, 2012 by Steven Koprince

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.

GAO Protests: Unfair “Pop Quiz” Leads to Sustain Decision

Posted on June 22, 2012 by Steven Koprince

My least favorite college class was a physics course, supposedly for non-majors, which I took only to meet my graduation requirements. One week, we spent a great deal of class time going over some rather complex material in the main textbook. The following week, the professor gave a pop quiz–on completely different material, which I (along with many of my classmates) had not read very closely. Needless to say, I thought the whole thing was rather unfair.

A recent GAO bid protest decision brought back those unpleasant memories. In Rocamar Engineering Services, Inc., B-406514 (June 20, 2012), an agency gave an extra test to an unprepared contractor–and only that contractor. Fortunately, unlike my grade in that physics course, the result of this unfair pop quiz was overturned, by way of a sustained GAO protest.

WOSB Control Requirements: More Than Meets the Eye

Posted on June 21, 2012 by Steven Koprince

Back in the ’80s, I spent many a weekday afternoon watching The Transformers (the cheesy original cartoons, not the abysmal movies that followed much more recently). The tagline of the show, which was about a bunch of robots that can transform into vehicles, was “more than meets the eye.”

“More than meets the eye” is also a good way to think about the requirements for the still relatively young women-owned small business program. Google the phrase “women-owned small business program requirements” and you’ll come up with any number of articles stating that a viable women-owned small business must be “at least 51% unconditionally owned and controlled” by women.

While this is certainly true, these articles rarely explain exactly what the SBA has in mind when it comes to “unconditional” ownership and control. Under the WOSB regulations, the truth, especially on the “control” front, may surprise you.

Book Signing and Networking Sponsored by The American Small Business Coalition

Posted on June 20, 2012 by Steven Koprince

If you will be in the DC metro area next Wednesday afternoon, you are invited to a networking and book signing event sponsored by The American Small Business Coalition.

I will be on hand to answer your questions about government contracting rules and regulations, and sign copies of my book, The Small-Business Guide to Government Contracts. If you already have a copy, please bring it and I will apply my John Hancock; if not, you can purchase a copy when you register for the event.

A big thank you to Guy Timberlake and the ASBC for sponsoring what should be a wonderful event. See you there!