This is a the second article of two taking you back to the basics of affiliation. The first, giving you a general overview of affiliation, can be found here. This follow-on article goes through the different bases for affiliation, as set forth in SBA’s affiliation regulations. Keep in mind though, this is still affiliation “basics” and does not go into a detailed analysis of each type of affiliation, as that would be a novel–not a blog.
Continue readingTag Archives: affiliation presumptions
Five Things You Should Know: Common Misconceptions About SBA’s Affiliation Rules
Avoiding affiliation with other companies can be critical to qualifying as a small business under the SBA’s rules for government contractors. But not all SBA affiliation rules are intuitive, and in my career as a government contracts attorney I have seen the same misconceptions about the affiliation rules come up time and and time again.
So without further ado, here are five common misconceptions about the SBA’s affiliation rules.
Continue readingSBA Adds Affiliation Questions to Revised All Small Mentor-Protege Template
With little fanfare, the SBA has updated the template for agreements under the All Small Mentor-Protégé Program (ASMPP). The new template adds a series of check box-style questions, mainly about potential affiliation between the mentor and protege.
Be sure to check out the new template if you are working on a mentor-protégé agreement.
Continue readingSBA Affiliation Rules: Owner of One Share (of 120) Controlled Company
The owner of a 1/120th interest was presumed to control a company under the SBA’s affiliation rules.
You read that right. In a recent size appeal decision, the SBA Office of Hearings and Appeals held that where 120 owners each held one share of stock in a company, all 120 were presumed to control the company for size purposes.
SBA OHA Reaffirms 70% Threshold For Economic Dependence Affiliation
Under the SBA’s affiliation rules, one of the many ways a small business can be deemed affiliated with another is through the economic dependence rule: where a small business derives 70% or more of its revenues from another entity, the SBA ordinarily considers it to be economically dependent upon—and thus subject to the control of—that other entity.
So it was in a recent decision from the SBA’s Office of Hearings and Appeals (“OHA”), which confirmed the so-called “70% rule” for economic dependence.
SBA OHA Sets Low Bar For Common Investments Affiliation
As few as two common outside investments can result in a presumption of identity of interest, and therefore likely affiliation, according to a recent decision by the Small Business Administration Office of Hearings and Appeals.
OHA’s decision in W. Harris, Government Services Contractor, Inc., SBA No. SIZ-5717 (Mar. 7, 2016), lends some clarity to the SBA’s identity of interest affiliation rule, which provides that businesses or firms are affiliated when they have identical or substantially identical business interests. Although it brings the rule more into focus, the decision in W. Harris could prove troublesome to some small business owners, who may have assumed that a handful of common outside investments would not result in affiliation.
Family Members’ Joint Involvement In Third Company Created Affiliation, Says SBA OHA
A self-certified small business was found affiliated with a company owned by the business owner’s father, even though the son’s company had no meaningful business relationship with the father’s company.
In a recent size appeal decision, the SBA Office of Hearings and Appeals found that the self-certified small business had not rebutted the presumption of affiliation with the father’s company because the father and son were jointly involved in a third business, and thus could not establish that their personal business interests were separate.