You may have noticed that SBA issued a final rule last week that created sweeping changes to the SBA’s 8(a) Program regulations, but along with that, SBA made sure to slip in a change to the ostensible subcontractor rule that has been a sticking point for many contractors when facing affiliation concerns. With this final rule, SBA will update the regulations to provide contractors certain ways to defend against potential ostensible subcontractor rule affiliation, depending on the type of contract at issue. This represents a shift in thinking, related to how to combat allegations brought under this affiliation rule and could present some new wrinkles for contractors to consider when setting up subcontracting arrangements.
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Back to Basics: Types of Affiliation
This is a the second article of two taking you back to the basics of affiliation. The first, giving you a general overview of affiliation, can be found here. This follow-on article goes through the different bases for affiliation, as set forth in SBA’s affiliation regulations. Keep in mind though, this is still affiliation “basics” and does not go into a detailed analysis of each type of affiliation, as that would be a novel–not a blog.
Continue readingBack to Basics: Affiliation, An Overview
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.
Continue readingOHA Remands Size Determination Because Area Office Failed to Provide Due Process to Protested Concern
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.
Continue readingSBA’s Paycheck Protection Program: Affiliation Still Matters
The SBA’s Paycheck Protection Program went into effect March 27, 2020. At that time many business owners faced confusion in trying to navigate the affiliation rules to determine their company’s eligibility for the program. Fast forward nearly two years and many businesses that received Paycheck Protection Loans have submitted applications for forgiveness of those loans. Some of those businesses are now having to consider potential affiliation issues that they may have initially overlooked in response to inquiries from SBA in its review of their loan forgiveness application.
We thought this would be a good time to revisit the basics of SBA’s affiliation rules for the Paycheck Protection Program.
Continue readingFive Things You Should Know: Common Misconceptions About SBA’s Affiliation Rules
Avoiding affiliation with other companies can be critical to qualifying as a small business under the SBA’s rules for government contractors. But not all SBA affiliation rules are intuitive, and in my career as a government contracts attorney I have seen the same misconceptions about the affiliation rules come up time and and time again.
So without further ado, here are five common misconceptions about the SBA’s affiliation rules.
Continue readingThe “Three-in-Two” SBA Joint Venture Rule is Partly Gone–Now It’s Time to Get Rid of the Rest
Last year, SBA made joint venturing a little easier by relaxing the so-called “three-in-two” rule. But the “two-year” portion of the rule still exists–and in my view, the rule continues to unfairly elevate form over substance.
SBA, it’s time to take the plunge, and get rid of the rest of the three-in-two joint venture rule.
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