OHA and the Ostensible Subcontractor Rule: A Two-Prong Test You Can’t Fix After the Fact

In a recent decision, OHA ruled that the ostensible subcontractor rule requires a two-prong evaluation before SBA can find affiliation. The SBA Area Office took a look at only one prong, which resulted in a remand from OHA. Ultimately, OHA found affiliation, reversed the SBA Area Office and found the concern ineligible. As OHA made clear, entities can’t fix deficiencies after the fact.

Think of the ostensible subcontractor rule like the preferred go-to move (other than line dancing) at a Country/Western Dance Hall, it is the ostensible subcontractor two-step. Follow along as I lead you through the dance you need to get right to avoid stepping on the toes of your proposal.

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YouTube Tuesday: What is Affiliation? An Overview

Affiliation is a broad and often confusing concept that commonly arises in the context of government contracting. In this YouTube video, I walk you through the basics of affiliation, including the main types of affiliation and the implications of being found affiliated.

Stay tuned to our blog for additional overviews of important government contracting concepts. And if you need more personalized assistance or advice regarding affiliation or any of your government contracting needs, please call us at Koprince Law. We are always here to help.

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New Avenue for SBA Protests: Ostensible Subcontractor Status Protests

SBA has issued a final rule, effective December 30, that will now provide an avenue to protest situations where the prime contractor on a SDVOSB, HUBZone, or WOSB set-aside contract is subcontracting most or all of the work to a non-similarly situated—but still small business—concern.

It will also allow SBA to review eligibility for 8(a) Program contracts on this ground as well.

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SBA Proposes to Remove the “Three” from the “Three-In-Two” Rule for Joint Ventures

The SBA recently proposed a rule that would amend the infamous three-in-two (AKA 3-in-2) rule for joint ventures. SBA’s current regulations provide that a joint venture can be awarded no more than three contracts over a two-year period.

While SBA plans to keep the two-year lifespan for joint venture awards, it plans to get rid of the three contract maximum.

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SBA’s Oversight of ANC-Owned 8(a) Firms Has Come a Long Way, But Still Has a Long Journey Ahead, GAO Says

In its report published last week, GAO both commends and criticizes SBA for its handling of tribally affiliated 8(a) business development firms—particularly Alaska Native Corporations (ANCs) and ANC-owned businesses participating in the 8(a) program.

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SBA 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.

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SBA OHA: Common Investment Affiliation Analysis Not Tied to Entity Treatment on Tax Returns

Common investment affiliation can arise when SBA believes that two individuals’ common investments in multiple entities may make the individuals in question act with a common purpose. As few as two common investments can form the basis for affiliation.

A recent SBA Office of Hearings and Appeals opinion examines the argument that the number of common investments should be counted the same way the number of entities is treated for tax purposes. OHA’s answer: Nope.

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