Affiliation under the ostensible subcontractor rule is determined at the time of proposal submission–and can’t be “fixed” by later changes.
In a recent size appeal decision, the SBA Office of Hearing and Appeals confirmed that a contractor’s affiliation with its proposed subcontractor could not be mitigated by changes in subcontracting relationships after final proposals were submitted.
Businesses controlled by brothers were presumed affiliated under the SBA’s affiliation rules.
In a recent size determination, the SBA Office of Hearings and Appeals held that a contractor was affiliated with companies controlled by its largest owners’ brother, even though the companies had only minimal business dealings. OHA’s decision highlights the “familial relationships” affiliation rule, which can often trip up even sophisticated contractors–but the decision, which was based on a March 2016 size determination request, did not take into account changes to that regulation that went into effect a few months later.
When the SBA evaluates a size protest, it is not required to investigate issues outside of those raised in the size protest itself.
A recent decision of the SBA Office of Hearings and Appeals demonstrates the importance of submitting a thorough initial size protest–and confirms that the SBA need not investigate issues outside of the allegations raised in the protest.
A contractor successfully challenged an adverse size determination that found affiliation under the newly organized concern rule, by establishing that its president and chief executive officer was not a former key employee of its supposed affiliate.
In a recent size appeal decision, the SBA Office of Hearings and Appeals clarified the definition of “key employee” under the newly organized concern rule, by noting that such a former employee’s title was not conclusive—instead, to be a key employee, that person had to have influence or control over the operations of the business as a whole.
An unsuccessful offeror lacked the ability to file a valid SBA size appeal involving the size status of a competitor, because the unsuccessful offeror was eliminated from the competitive range–and its elimination had been upheld in a GAO bid protest decision.
In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that an offeror that cannot possibly be awarded the contract ordinarily lacks standing to file a size appeal.
So-called “common investments” affiliation under the SBA’s affiliation rules arises most frequently when individuals own common interests in at least two operating companies. But common investments affiliation can also be based on common interests in real estate.
In a recent decision, the SBA Office of Hearings and Appeals held that the SBA had performed an inadequate size determination because the SBA Area Office asked the protested company about common investments in companies–but didn’t directly ask about common investments in real estate.
Under the SBA’s affiliation rules, one of the many ways a small business can be deemed affiliated with another is through the economic dependence rule: where a small business derives 70% or more of its revenues from another entity, the SBA ordinarily considers it to be economically dependent upon—and thus subject to the control of—that other entity.
So it was in a recent decision from the SBA’s Office of Hearings and Appeals (“OHA”), which confirmed the so-called “70% rule” for economic dependence.