No Ostensible Subcontractor Rule for Manufactured Product Procurements, SBA OHA Confirms

The SBA’s ostensible subcontractor rule can be a minefield for small prime contractors, who must be careful to avoid risk factors for affiliation with their large subcontractors.

But not every small prime need worry about ostensible subcontractor affiliation. As a recent SBA Office of Hearings and Appeals decision confirms, the ostensible subcontractor rule does not apply to procurements for manufactured products.

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OHA and the Ostensible Subcontractor Rule: A Two-Prong Test You Can’t Fix After the Fact

In a recent decision, OHA ruled that the ostensible subcontractor rule requires a two-prong evaluation before SBA can find affiliation. The SBA Area Office took a look at only one prong, which resulted in a remand from OHA. Ultimately, OHA found affiliation, reversed the SBA Area Office and found the concern ineligible. As OHA made clear, entities can’t fix deficiencies after the fact.

Think of the ostensible subcontractor rule like the preferred go-to move (other than line dancing) at a Country/Western Dance Hall, it is the ostensible subcontractor two-step. Follow along as I lead you through the dance you need to get right to avoid stepping on the toes of your proposal.

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YouTube Tuesday: Procedures & Pitfalls of Size Protests & Appeals Handbook Now Available

I’m proud to announce that the new GovCon Handbook, Procedures & Pitfalls of Size Protests & Appeals, is now available! This video highlights some of the main topics from the book.

You can order the book here. I’m also conducting a webinar on August 5 to explore some of the key insights. Be sure to check out the webinar or contact me if you have questions.

New GovCon Handbook Arriving July 28! Procedures and Pitfalls of Size Protests and Appeals

I’m pleased to announce that my forthcoming  Koprince Law LLC GovCon Handbook, entitled Procedures and Pitfalls of Size Protests and Appeals, will be published through Amazon on July 28! In addition, I’ll be hosting an accompanying webinar through Koprince Law on August 5.

If you’ve had questions about size protests and appeals, and how to prepare for them, this is the book for you. It will cover the basic (and advanced) strategies and tips that will help your company put itself in the best possible position to file or respond to a size protest. It will also delve into the size appeal process and help you prepare for a size appeal or to respond to one. Be sure to mark your calendars and stay tuned for more details!

New GovCon Handbook Coming Soon! Procedures and Pitfalls of Size Protests and Appeals

I’m pleased to announce that volume 5 of the “Koprince Law LLC GovCon Handbooks” series will be published soon! This GovCon Handbook, entitled Procedures and Pitfalls of Size Protests and Appeals, will be published through Amazon. Check the video below and the rest of this post for additional details.

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SBA OHA: For Calculating Receipts, Look to Tax Returns

To calculate a company’s size under a receipts-based NAICS code, the SBA will add the company’s total income to its costs of goods sold, as those amounts are reported on its tax returns. In fact, the SBA’s regulations are clear that it must use these reported amounts to determine a company’s size status.

What happens, then, when a company’s taxes show “income” that might not really reflect money in the company’s accounts? The SBA’s Office of Hearings and Appeals recently considered this question, and affirmed a company’s ineligibility based on the income reported in its tax returns.

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Size Protest Was Untimely Because CO Did Not Require Size Recertification

Let’s suppose that you, a small business, were previously awarded a long-term contract set aside for small businesses. But over the past few years, business has been good and you’ve outgrown the size standard assigned to the contract. Can you still be awarded a task order under the contract? Yes–if the contracting officer doesn’t require you to recertify your size in connection with the task order request, and no contract-specific terms–like mandatory off-ramps–say otherwise.

This important principle recently played out in DNT Solutions, LLC et al., SBA No. SIZ-5962 (2018).

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