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SBA OHA decides 3-year receipts calculation period still applies

September 12, 2019 By Andrew Smith

Since being passed by Congress in late 2018, the Runway Extension Act has been the source of great confusion among small business contractors: would size under receipts-based NAICS codes be calculated under the 3-year calculation period set out in the SBA’s regulations, or under the new 5-year calculation period mandated by Congress?

In a decision just publicly released, the SBA Office of Hearings and Appeals has weighed in.  As of now, the SBA will still calculate size under the 3-year calculation period.

The applicability of the Runway Extension Act was debated in Cypher Analytics, Inc. dba Crown Point Systems, SBA No. SIZ-6022 (Aug. 27, 2019).  In that case, Cypher Analytics was found to be other than small under NAICS code 541611 after the SBA applied a 3-year calculation period.

Cypher Analytics appealed to the OHA, arguing that the SBA erred by not applying the 5-year calculation period required under the Runway Extension Act.  Despite several arguments raised on appeal, OHA was unpersuaded that the 5-year calculation period should apply.

To understand the reasoning behind OHA’s decision, visit:  SmallGovCon

Filed Under: Contracting News Tagged With: SBA, SBA OHA, size standards

A reminder regarding the importance of SDVOSB control rules

August 22, 2019 By Andrew Smith

The recent decision in CVE Appeal of Valor Construction, Inc, SBA No CVE-121-A (June 3, 2019) provides a useful reminder to contractors regarding the difference between unconditional ownership and unconditional control, and the importance of assessing both when analyzing service-disabled veteran owned small business (“SDVOSB”) eligibility.  Specifically, the decision in Valor – which was issued by the Small Business Administration’s (“SBA”) Office of Hearings and Appeals (“OHA”) – demonstrates that an individual’s majority ownership of a SDVOSB, alone, does not vest that individual with unconditional control over the SDVOSB.  The Valor decision further reflects how the revised control regulations may cause eligibility problems for contractors.  Avoiding these pitfalls requires some background knowledge regarding the dual SDVOSB programs and the revision of the applicable regulations, a thorough understanding of the revised regulations themselves, and an awareness of the most common eligibility problems that contractors can face under these regulations.

Continue reading at:  Obermayer

Filed Under: Contracting Tips Tagged With: ownership and control, SBA, SBA OHA, SDVOSB, unconditional ownership

Uncertainty in how small business joint ventures must be managed

August 15, 2019 By Andrew Smith

U.S. Small Business Administration (“SBA”) regulations require that mentor-protégé and socioeconomic joint ventures designate the protégé or socioeconomic member as the “managing venturer” of the joint venture.  However, the regulations do not define “managing venturer” or state how much control such a “manager” must maintain over the joint venture.  In the context of typical small business operating entities (i.e., notjoint ventures), SBA’s Office of Hearings and Appeals (“OHA”) has offered detailed guidance on what it means to “control” such entities, but this case law has never been applied to joint ventures.  This leaves joint venturing firms without any direction on the subject — beyond the general requirement that they designate a “managing venturer.”

As discussed in more detail below, this is a “gap” in SBA regulations and case law that has led to uncertainty in the governance of small business joint ventures.  Given the increasing use of joint ventures by contractors pursuing small business set-aside procurements, this uncertainty is increasingly harmful to the business community.

This article surveys the available OHA case law in order to identify the specific limits of the aforementioned “gap,” and then offers predictions and recommendations for the way that SBA should define the term “managing venturer” in order to minimize business uncertainty and thereby promote small business development through joint venture participation.

Continue reading at:  Miles and Stockbridge

Filed Under: Contracting Tips Tagged With: joint venture, mentor-protege, SBA, SBA OHA

CVE verification pointer: remember to provide truthful information

July 17, 2019 By Andrew Smith

In government contracting—as in life—it’s important to be honest.  And in our experience, most government contractors are honest.  Where a contractor is dishonest or untruthful, it can face significant sanctions.

So it was in a recent SBA Office of Hearings and Appeals decision, in which the OHA considered the cancellation of an entity’s SDVOSB status.  In CVE Appeal of Afily8 Government Solutions, LLC, SBA No. CVE-125-A (2019), the OHA affirmed the cancellation of Afily8’s SDVOSB verification based on concerns that Afily8 did not provide truthful information to the VA’s Center for Verification and Evaluation.

Continue reading at:  SmallGovCon

Filed Under: Contracting Tips Tagged With: CVE, OHA, SBA, SBA OHA, SDVOSB, VA Verification, verification, VOSB

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