Tag Archives: SBA affiliation rules

Congress Authorizes SBA Mentor-Protege Program For All Small Businesses, Centralizes Oversight

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Congress has authorized the SBA to create a mentor-protege program for all small businesses, not just socioeconomically disadvantaged companies.

This major change was included in the 2013 National Defense Authorization Act and signed into law by President Obama on January 3.  The 2013 NDAA also addresses the recent proliferation of agency mentor-protege programs (and, by extension, the SBA’s refusal to acknowledge an exception from affiliation for participants in most other agencies’ mentor-protege programs) by requiring most procuring agencies to obtain SBA approval for their mentor-protege programs.

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SBA OHA: 21.2% Minority Owner Controlled Contractor

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A minority owner with a mere 21.2% stake in a government contractor controlled that contractor for SBA size and affiliation purposes, according to a recent SBA Office of Hearings and Appeals decision.

SBA OHA’s decision in Size Appeal of Civitas Group, LLC, SBA No. SIZ-5424 (2012) is an important reminder that a contractor’s single largest minority shareholder may be deemed to control the company under the SBA size and affiliation rules–even if the contractor’s governing documents do not grant that shareholder actual legal control.

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HUBZone Fraud: Contractors Agree To $6.25 Million Settlement

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Two Kentucky-based government contractors and their owners have agreed to pay $6.25 million to settle HUBZone fraud claims, according to a U.S. Department of Justice press release.

The costly settlement puts an end to a saga involving DOJ claims of a vacant “principal” office, undisclosed affiliation, and fraudulent statements made to the SBA and and the U.S. Army.

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Don’t Subcontract to Mom? SBA OHA Finds Mother-Son Companies Affiliated

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Affiliation based on family relationships is perhaps one of the least understood SBA affiliation rules, and continues to trip up many small government contractors.  Case in point: a recent SBA Office of Hearings and Appeals decision finding a small business affiliated with a company controlled by the mother of the small business’s owner, based on the family relationship and subcontracts between the companies.

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SBA Size Appeals: New Evidence Often Not Allowed

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The SBA Office of Hearings and Appeals will reject a contractor’s attempt to submit new evidence in a SBA size appeal unless the contractor shows “good cause” to admit the new evidence.

And, as demonstrated by a recent SBA OHA size appeal decision, when the evidence was publicly available at the time the size protest was filed, but was not submitted with the size protest, it will be very difficult to convince SBA OHA to review the new evidence.

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SBA OHA Confirms Broad Affiliation Exception for Tribal Companies

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The SBA Office of Hearings and Appeals has held that the SBA Area Office did not err by refusing to find affiliation between a tribally-owned company and its sister companies.

SBA OHA’s recent decision in Size Appeal of Bosco Contractors, Inc., SBA No. SIZ-5412 (2012), follows on the heels of Size Appeal of Roundhouse PBN, LLC, SBA No. SIZ-5383 (2012), in which SBA OHA found that the SBA had erred by adopting a too-narrow view of the tribal exception from affiliation.

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SBA OHA: Small Business Affiliated With Four Ostensible Subcontractors

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Dividing key contract work among several subcontractors will not necessarily allow a small business to avoid affiliation under the SBA’s ostensible subcontractor rule, according to a recent decision issued by the SBA Office of Hearings and Appeals.  In that case, the prime contractor divided the primary and vital contract work among four subcontractors–and according to SBA OHA, was affiliated under the ostensible subcontractor rule with all four subs.

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