Tag Archives: affiliation

Back to Basics: Affiliation, An Overview

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Affiliation is quite possibly one of the scariest words to small business government contractors. And it is easily one of the most misunderstood concepts in SBA’s small business regulations. Perhaps the widespread fear and misunderstanding are due to the fact that there are so many potential bases for affiliation listed in SBA’s rules–or the fact that you can be found affiliated with another company even if SBA finds that none of the listed bases for affiliation are met. Or maybe its the fact that, while affiliation isn’t always a bad thing, it can lead to severe consequences, like preventing an otherwise responsible and eligible business from competing under set-asides contracts.

Either way, this “Back to Basics” blog will be the first of two blogs that will “unpack” this concept for you, hopefully, removing some of the mystery. This first blog will provide a general overview of affiliation and what it means for government contractors, while the second blog will focus on the different types of affiliation.

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OHA Remands Size Determination Because Area Office Failed to Provide Due Process to Protested Concern

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SBA’s Office of Hearing and Appeals (OHA) recently said that the SBA Area Office should have informed the protested concern of the issues its adverse size determination focused on before ruling against the concern’s size eligibility on that basis. In addition to its lesson on due process, OHA also took this opportunity to distinguish totality of the circumstances affiliation (the basis on which the Area Office found affiliation here) from ostensible subcontractor affiliation (the basis for affiliation alleged in the size protest). OHA vacated and remanded the Area Office’s decision.

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Picking Your Team: Joint Ventures Versus Prime/Subcontractor Teams (Part Three, Relationships)

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Federal contractors often ask: “It is better to team up for government work with a prime-sub arrangement or with a joint venture?” Well, (spoiler alert) the answer is: it depends. But I won’t leave you with just that. This three-part series will provide insight on some of the major differences between these two types of “teams” that offerors should consider when making the decision between a joint venture or prime/subcontractor team in competing for and performing federal contracts. While this series will not provide a comprehensive list of all the differences between these two types of teams, it will cover some of the big ones that seem to come up more frequently in this decision-making process. Our first article focused on workshare, and our second, on past performance. This final article of the three-part series will discuss the parties’ relationship with the government and with each other in both types of teams.

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The CIO-SP4 RFP Allows Broad Past Performance Information–But Does It Go Too Far?

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One of my major concerns with the draft solicitation for the CIO-SP4 GWAC was the limited nature of the past performance NITAAC intended to consider. Under the draft RFP, NITAAC would not have considered the past performance of subcontractors–something I believed violated 13 C.F.R. 125.2(g) in certain cases, and was contrary to the guidance of FAR 15.305(a)(2)(iii), which says that agencies “should” consider the past performance of “subcontractors that will perform major or critical aspects of the requirement.”

The good news is that the final CIO-SP4 RFP fixes this problem. That’s a relief for a lot of potential offerors. But now I’m concerned that NITAAC went too far in the other direction!

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Bye-Bye, “Three-in-Two” Joint Venture Rule

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If you’ve attended one of my presentations on joint ventures over the years, you’ve probably heard me climb up on my soapbox and proclaim that the so-called “three in two” joint venture rule is one of my least favorite rules in government contracting. If you ask me, the rule is both terribly confusing and so easily circumvented as to be largely meaningless.

Perhaps the SBA was listening to me and others who strongly dislike the rule, because the the three-in-two rule is going away. Effective November 16, 2020, the SBA will replace the three-in-two rule with a different and much less confusing requirement–basically, a “two” rule.

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Event: Iowa State University CIRAS PTAC Affiliations Webinar

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Amidst all the uncertainty that FY 2020 has brought, don’t let your understanding of SBA’s affiliation rules add to that list! Instead, join me and my colleague Steven Koprince for an exciting new learning opportunity. We will be presenting “Affiliations,” a virtual event hosted by the Iowa State University Center for Industrial Research and Service (CIRAS) PTAC.

In this webinar, we will demystify the concept of affiliation in government contracts. We will explain (in plain English and using examples for key concepts) SBA’s rules surrounding common ownership and common management, as well as commonly misunderstood affiliation rules like those involving familial relationships and economic dependence.

The event will take place on November 5, 2020, from 9:00 AM – 10:00 AM (CDT). You can find additional information and register for this event here.

Back to Basics: SBA’s OHA Reminds SBA Area Offices How to Apply the Ostensible Subcontractor Rule

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We’ve discussed the “ostensible subcontractor rule” quite a few times on the blog (including most recently here and here) because it is one of the most frequent grounds for size protests. It’s also frequently misunderstood. A recent SBA Office of Hearings and Appeals decision, Contego Environmental, LLC, SBA No. SIZ-6054 (May 19, 2020), demonstrates how even SBA Area Offices can misapply the rule and provides useful reminders to contractor looking to avoid violating it.

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