Tag Archives: SBA size protests

SBA OHA: Contractor Successfully Fractured Economic Dependence Affiliation

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A contractor is not economically dependent upon another firm where it receives only a small proportion of its revenues from the other firm as of the self-certification date for a set-aside contract–even if the contractor previously received more than 70% of its annual revenues from the other firm.

This was the commonsense decision of the SBA Office of Hearings and Appeals in a recent size appeal case, in which SBA OHA held that a contractor’s prior economic dependence on another company does not necessarily mean that the companies are still affiliated under the SBA’s affiliation rules.

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Federal Court Enjoins Contract Award Pending SBA OHA Size Appeal

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If a contractor ends up on the losing end of a SBA size protest, the contractor has the right to appeal to the SBA Office of Hearings and Appeals.  The problem is that SBA OHA size appeals can take months.  A contracting officer may be unwilling to wait, and simply award the contract to the next company in line.

Neither the FAR nor the SBA’s regulations require the contracting officer to suspend award or performance pending SBA OHA’s decision.  However, as a recent case demonstrates, if the SBA OHA appeal has a reasonable likelihood of success, the U.S. Court of Federal Claims may issue an injunction prohibiting the procuring agency from awarding the contract pending the result of the SBA OHA size appeal.

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SBA Size Protests: Timeliness Mistake Proves Costly

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SBA size protests are often dismissed when contractors misunderstand the size protest timeliness rules.

A recent SBA Office of Hearings and Appeals decision offers an important reminder that for negotiated procurements, the clock starts ticking on a potential SBA size protest upon notification of the prospective awardee–not when the contract is actually awarded.

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8(a) Mentor Protege Agreements And Shared Employees: A Risk Of Affiliation?

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Can an SBA 8(a) program mentor and protege be affiliated, notwithstanding their 8(a) mentor-protege arrangement, if the firms engage in extensive employee sharing?

Maybe.

In a recent decision, the SBA Office of Hearings and Appeals suggested that extensive employee sharing between an 8(a) protege and its mentor might be outside the bounds of protected “assistance” under the 8(a) mentor-protege program.  And in the same case, SBA OHA raised an interesting question: does a mentor-protege relationship protect the mentor from affiliation, as well as the protege?

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SBA Affiliation Rules: Directors’ Control “Illusory,” Says SBA OHA

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A director does not “control” a company under the SBA affiliation rules when that director can be removed at any time by the majority shareholder, according to a recent size appeal decision of the SBA Office of Hearings and Appeals.

In Size Appeal of Environmental Quality Management, Inc., SBA No. SIZ-5429 (2012), SBA OHA arrived at the commonsense conclusion that when a majority shareholder has unfettered discretion to fire a company’s directors, the majority shareholder–not the directors–control the company for purposes of the SBA affiliation rules.

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Late SBA Size Protest Response Sinks Contractor’s Small Business Eligibility

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No matter a company’s actual size, the company will be deemed an ineligible large business if it fails to timely respond to a SBA size protest.

Just ask American Blanching Company, which was recently found ineligible for a small business set-aside contract because it did not respond to a SBA size protest within the short size protest response window.

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Don’t Subcontract to Mom? SBA OHA Finds Mother-Son Companies Affiliated

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Affiliation based on family relationships is perhaps one of the least understood SBA affiliation rules, and continues to trip up many small government contractors.  Case in point: a recent SBA Office of Hearings and Appeals decision finding a small business affiliated with a company controlled by the mother of the small business’s owner, based on the family relationship and subcontracts between the companies.

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