Tag Archives: SBA size appeals

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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SBA OHA: 42%-49% Of Revenues Did Not Create Economic Dependence Affiliation

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A small business was not affiliated with its largest customer under the SBA’s economic dependence affiliation rule, even though the small business earned as much as 49% of its revenues from the alleged affiliate–and even though the small business’s SEC Annual Report stated that the small business was dependent on its customer.

SBA OHA’s decision indicates that receiving less than 70% of revenues from an alleged affiliate may not, absent other indicia of affiliation, establish affiliation under the economic dependence rule.

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The Nonmanufacturer Rule: Even “Rich Chicks” Must Supply Small Business End Items

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Under the nonmanufacturer rule, qualifying as a nonmanfucturer requires a small business to provide the end products of a small business–and even “Rich Chicks” must comply.

In a recent decision, the SBA Office of Hearings and Appeals held that a company named “Rich Chicks, LLC” had not complied with the nonmanufacturer rule because Rich Chicks’ proposal did not offer the end products of a small business.

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SBA OHA Size Appeals: Request To Reopen Does Not Extend Filing Deadline

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A company on the losing end of a SBA size protest can ask the SBA Area Office that issued the decision to consider reopening the size determination case.  However, the 15-day window in which to file a size appeal with the SBA Office of Hearings and Appeals is not extended by virtue of a request to reopen.

In a recent decision, SBA OHA dismissed a size appeal as untimely, holding that the 15-day appeals window begins upon the receipt of the size determination–not upon the SBA Area Office’s refusal to reopen the size determination.

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SBA Affiliation Rules: Contractor Affiliated With Puerto Rico, Says SBA

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Now here’s one you don’t see every day.  In a recent size appeal decision, the SBA Office of Hearings and Appeals upheld the SBA’s determination that the contractor was affiliated with the government of Puerto Rico.

In Size Appeal of Industria Lechera de Puerto Rico, Inc., SBA No. SIZ-5533 (2014), SBA OHA held that the contractor’s relationship with the Puerto Rican government rendered the contractor, in essence, a quasi-governmental entity, not an independent small business.

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SBA OHA: Prime Contractor Not Economically Dependent On Subcontractor

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A prime contractor was not economically dependent on its subcontractor for purposes of the SBA affiliation rules because a prime contractor “has the power to choose whatever subcontractor it desires.”

In a recent size appeal decision, the SBA Office of Hearings and Appeals stopped short of holding that a prime contractor could never be economically dependent on a subcontractor, but SBA OHA’s decision indicates that if such dependence ever existed, it would be in an unusual case.

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