Tag Archives: SBA affiliation rules

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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SBA 8(a) JVs: No OHA Appeals Of Disapprovals

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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.

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8(a) Mentor-Protege JVs: Faulty JV Agreement Results In Affiliation

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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.

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SBA Affiliation Rules: President Controlled Company Despite Removal Provision

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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.

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Forming Eight JVs Did Not Create Affiliation Between JV Members

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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.

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Family Relationship, Plus Revenues & Subcontracts, Caused Affiliation, Says SBA OHA

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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.

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Ostensible Subcontractor Rule: Size Determined as of the Date of Final Proposal

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For the purposes of the ostensible subcontractor rule, a firm’s small business size is determined as of the date of final proposal revisions.

As demonstrated in a recent SBA Office of Hearings and Appeals decision, any changes to the relationship between the prime contractor and subcontractor made after the date of final proposal have little to no bearing in determining compliance with the ostensible subcontractor rule.

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