Newly organized concern affiliation under the SBA’s affiliation rules did not exist when the alleged former key employee of the affiliate did not exercise influence over the entire company.
In a recent decision, the SBA Office of Hearings and Appeals held that no matter the size of the alleged affiliate, a former “key employee” must have had the ability to influence the entire company in order for the newly organized concern affiliation rule to apply.
Now here’s one you don’t see every day. In a recent size appeal decision, the SBA Office of Hearings and Appeals upheld the SBA’s determination that the contractor was affiliated with the government of Puerto Rico.
In Size Appeal of Industria Lechera de Puerto Rico, Inc., SBA No. SIZ-5533 (2014), SBA OHA held that the contractor’s relationship with the Puerto Rican government rendered the contractor, in essence, a quasi-governmental entity, not an independent small business.
The SBA 8(a) mentor-protege joint venture exception from affiliation applies to non-8(a) contracts, so long as the joint venture meets the 8(a) regulatory requirements.
In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the SBA Area Office erred by deeming a mentor and its protege affiliated for purposes of a non-8(a) contract, without considering whether the joint venture qualified for the mentor-protege exception to the ordinary SBA affiliation rules.
A prime contractor was not economically dependent on its subcontractor for purposes of the SBA affiliation rules because a prime contractor “has the power to choose whatever subcontractor it desires.”
In a recent size appeal decision, the SBA Office of Hearings and Appeals stopped short of holding that a prime contractor could never be economically dependent on a subcontractor, but SBA OHA’s decision indicates that if such dependence ever existed, it would be in an unusual case.
“Common investments” affiliation under the SBA affiliation rules can occur when the SBA believes that two individuals’ common investments in multiple companies will cause the individuals in question to act with a common purpose.
A recent SBA OHA size appeal decision shows how the common investments rule can work in practice–in this case, resulting in the business in question being deemed affiliated with several other companies.
When it comes to the SBA’s ostensible subcontractor rule, managing a contract, by itself, is not enough to avoid affiliation.
As demonstrated in a recent decision of the SBA Office of Hearings and Appeals, a small business and its subcontractor violate the ostensible subcontractor rule whenever the subcontractor will perform the primary and vital work required under the prime contract–even if the small business will perform the management function.
In today’s segment of our BlogTalk radio show, Position to Win, Guy Timberlake, Larry Allen and I discuss:
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