Tag Archives: SBA affiliation rules

SBA Size Protests: SBA Need Not Seek “Outside Sources” Of Information

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When the SBA evaluates a size protest, it need not obtain and consider “outside sources” of information–that is, information that is not provided by the protester or the protested business.

A recent decision of the SBA Office of Hearings and Appeals highlights the need for a size protest to include specific, detailed information about why the protested firm is alleged to be “other than small.”  If the protester does not include information from outside sources, the SBA is not required to seek out such information on its own.

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Ostensible Subcontractor Rule: Hiring Subcontractor’s Project Manager Didn’t Create Affiliation

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Ostensible subcontractor affiliation was not created when the small prime contractor proposed to hire its subcontractor’s current employee to serve as the prime contractor’s project manager.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that, where the prime contractor would retain supervision and control of contract performance, the prime contractor was not dependent on its subcontractor for contract management.

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8(a) Mentor-Protege Joint Venture Agreements: Details Matter, Court Says

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An 8(a) mentor-protege joint venture was not entitled to take advantage of the special mentor-protege exception from affiliation because the joint venture agreement lacked adequate detail.

In a recent decision, the U.S. Court of Federal Claims held that the SBA had reasonably determined the joint venture to be a large business because the joint venture agreement did not sufficiently address certain requirements.  The Court’s decision should be a warning for all 8(a) mentor-protege joint ventures: details matter.

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SBA Affiliation Rules: “Inter-Affiliate Transactions” Exception Is Narrow

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Under the SBA’s affiliation rules, the so-called “inter-affiliate transactions” exception applies only where the companies in question would be eligible to file a consolidated tax return.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the inter-affiliate transactions exception does not apply when affiliated companies are ineligible to file a consolidated tax return–a result that seems to authorize “double counting” of affiliated companies’ revenues in the context of SBA size determinations.

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VA CVE Verification Does Not Provide Affiliation Shield, Says SBA OHA

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Even if the VA Center for Verification and Evaluation has found that a service-disabled veteran “unconditionally” controls a SDVOSB, the SBA may nonetheless determine that other individuals or entities also control the company within the meaning of the SBA’s affiliation rules.

As demonstrated by a recent decision of the SBA’s Office of Hearings and Appeals, VA CVE verification does not shield a SDVOSB from an adverse SBA affiliation determination, even if that determination is based on a finding that non-veterans control the company.

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Ostensible Subcontractor Affiliation: SBA Proposes Exception For “Similarly Situated” Entities

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The ostensible subcontractor affiliation rule would be modified to include an exception for “similarly situated” entities serving as subcontractors, if a recent rule change proposed by the SBA goes into effect.

Under the SBA’s proposal, a small business would be exempt from ostensible subcontractor affiliation with another small business for a small business set-aside contract, an 8(a) participant with another 8(a) participant for an 8(a) set-aside contract, and so on.

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Family Relationships & Affiliation: SBA Proposes Clarifications

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The SBA’s regulations regarding affiliation between companies controlled by close family members would be clarified under a proposed rule introduced on December 29.

Under the SBA’s current affiliation regulations, companies controlled by family members may be presumed to be affiliated, but the regulation leaves it to the SBA Office of Hearings and Appeals to determine how close the family relationship must be for the presumption to apply.  The proposed rule would clarify exactly when the presumption applies.

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