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.
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.
The SBA’s Office of Hearings and Appeals does not have jurisdiction to hear an appeal challenging the SBA’s refusal to approve a joint venture for an 8(a) set-aside contract.
In a recent decision, OHA dismissed an appeal filed by an 8(a) mentor-protege joint venture, in which the joint venture attempted to challenge the SBA’s decision not to approve the joint venture to pursue an 8(a) set-aside.
An 8(a) program protege was deemed affiliated with its mentor–and ineligible for a small business set-aside contract–because the joint venture agreement between the mentor and protege failed to comply with certain mandatory 8(a) joint venture requirements.
In a recent decision, the SBA Office of Hearings and Appeals concluded that an 8(a) mentor-protege joint venture was not entitled to take advantage of the special exception from affiliation because of the flaws in its joint venture agreement. OHA’s decision is an important reminder to 8(a) mentors and proteges of the critical importance of strictly complying with the 8(a) joint venture regulation.
A company’s President was deemed to control the company for purposes of the SBA affiliation rules, even though the company’s majority shareholder had the unilateral right to remove the President from office at any time.
In a recent size appeal decision, the SBA Office of Hearings and Appeals held that a company’s President exercised “critical influence” over the company, and that the President’s influence was not rendered illusory simply because the 100% owner could remove the President from office.
An 8(a) protege and its mentor were not affiliated with one another, despite forming eight joint ventures over a four-year period–and winning 15 contracts with those joint ventures.
In a recent size appeal case, the SBA Office of Hearings and Appeals upheld the decision of the SBA Area Office, which found that the mentor and protege were not affiliated despite their substantial history of joint venturing.
A small business was affiliated with companies owned by the business owner’s father and siblings, based on the family relationship and the companies’ ongoing history of doing business together.
In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the small business had not successfully rebutted the regulatory presumption that companies owned by close family members are affiliated, because the small business had earned substantial revenues from the alleged affiliates, and intended to issue a subcontract to both affiliates with respect to the procurement at issue.