A recent OHA decision reminds us that it’s important to show and tell the SBA how a company seeking certification is meeting the SBA’s requirements for control of a socioeconomic company. Like many of these decisions involving SBA’s programs, it comes out of the Service-Disabled Veteran-Owned Small Business (SDVOSB) VetCert program. That’s because the SDVOSB program allows appeals of denials of certifications. The other programs don’t allow such broad reasons for appeals from certifications (or at least have restrictions on them).
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Ostensible Subcontractor Affiliation: Who Manages The Work Matters
So you’ve teamed with an ineligible incumbent contractor to bid on some government work and, to try and maintain continuity, the incumbent would like to retain project management functions. “No big deal,” you think, “I’ll just create a management position to oversee the project manager.”
Actually, it could be a big deal if you’re trying to avoid ostensible subcontractor affiliation. Among the four key factors for determining ostensible subcontractor affiliation is whether the management previously served with the subcontractor under the incumbent contract. And according to a recent SBA Office of Hearings and Appeals decision, creating a figurehead management position to oversee the project manager won’t negate this indicia of ostensible subcontractor affiliation.
Ostensible Subcontractor Rule: Management Alone Wasn’t Enough
The prime contractor’s management of a contract wasn’t enough to avoid ostensible subcontractor affiliation where the subcontractor would provide the labor, equipment, and facilities for performing the work.
In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that, where the subcontractor will provide the goods or services that the agency “actually seeks to acquire,” the subcontractor may be deemed an ostensible subcontractor under the SBA’s affiliation rules.