Wouldn’t you like to know five things about size protests and appeals?
Click here to read the answers to these questions: http://smallgovcon.com/five-things/size-protests-and-appeals/
One common way that contractors attempt to avoid affiliation is by limiting a particular individual to a minority ownership interest (often 49%).
But as a recent SBA Office of Hearings and Appeals case demonstrates, when a company’s owners are spouses (or other close family members), the SBA may disregard the legal ownership split, and treat the family members as one person for purposes of the affiliation rules.
OHA’s decision in Size Appeal of Gregory Landscape Services, Inc., SBA No. SIZ-5817 (2017) involved an Army solicitation seeking grounds maintenance at Fort Rucker, Alabama. The solicitation was issued as a WOSB set-aside under NAICS code 561730 (Landscaping Services), with a corresponding $7.5 million size standard.
After opening bids, the Air Force announced that Gregory Landscaping Services, Inc. was the apparent awardee. An unsuccessful competitor then filed a size protest. Although the size protest was untimely, the SBA saw potential merit to the protester’s allegations. The SBA adopted the size protest and initiated a size determination.
Keep reading this article at: http://smallgovcon.com/sbaohadecisions/familial-relationship-affiliation-sba-treats-spouses-as-one-party/
In determining whether a prime contractor and subcontractor are affiliated under the ostensible subcontractor rule, the SBA is supposed to consider the totality of the relationship between the parties. But when it comes to determining whether the ostensible subcontractor rule has been violated, not all components of the prime/subcontractor relationship are created equal.
In a recent decision, the SBA Office of Hearings and Appeals confirmed that there are “four key factors” that are strongly suggestive of ostensible subcontractor affiliation–especially if the subcontractor will perform a large percentage of the overall contract work.
OHA’s decision in Size Appeal of Charitar Realty, SBA No. SIZ-5806 (2017) involved a GSA solicitation for custodial, landscaping and grounds maintenance at two federal courthouses. The solicitation was issued as an 8(a) set-aside under NAICS code 561720 (Janitorial Services), with a corresponding $18 million size standard. The solicitation required, among other things, that offerors provide at least three past performance references, completed over the last three years, for similar work.
Keep reading this article at: http://smallgovcon.com/sbaohadecisions/ostensible-subcontractor-rule-oha-confirms-four-key-factors-to-avoid/
Under the Small Business Administration’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.
In Size Appeal of Core Recoveries, LLC, SBA No. SIZ-5723 (Mar. 21, 2016), the SBA Area Office, “acting on an anonymous complaint,” challenged Core Recoveries’ size under NAICS code 561440 (Collection Agencies), which carries a $15 million size standard. The Area Office alleged that Core Recoveries was affiliated with a large business, West Asset Management.
Core denied the Area Office’s allegations, and explained that, as of the date of the SBA’s November 19, 2015 inquiry, “West maintained only 1,616 accounts with [Core Recoveries], which represented only 1.1% of [Core’s] total account volume on that date.” Additionally, Core said that it no longer had an active contract with West.
Nonetheless, the Area Office found Core to be affiliated with West through economic dependence. Under OHA precedent, a small business is automatically deemed affiliated with another entity where the small business derives more than 70% of its revenue from that other entity. (There is a limited exception for new businesses, which didn’t apply here).
Keep reading this article at: http://smallgovcon.com/sbaohadecisions/sba-oha-reaffirms-70-threshold-for-economic-dependence-affiliation/
An 8(a) mentor-protégé agreement, which expired one year after its approval by the SBA, did not protect the 8(a) protégé and its mentor from affiliation–and meant that their 8(a) mentor-protégé joint venture was an ineligible large business.
A recent size appeal decision of the SBA Office of Hearings and Appeals is a cautionary tale for 8(a) protégé and their mentors, and highlights the importance of securing timely SBA reauthorization of 8(a) mentor-protégé agreements.
OHA’s decision in Size Appeal of North Star Magnus Pacific Joint Venture, SBA No. SIZ-5715 (2016) involved a joint venture between North Star Construction and Engineering, an 8(a) program participant, and North Star’s mentor, Magnus Pacific Corp.
On July 5, 2014, the SBA approved a mentor-protégé agreement between North Star and Magnus Pacific. The mentor-protégé agreement stated that the initial period of the agreement was one year. North Star, the protégé, was required to request continuance of the mentor-protégé agreement within 60 days prior to its expiration. The SBA’s letter approving the mentor-protégé agreement similarly stated, “[t]his agreement shall expire after one year, unless SBA approves an extension.” The letter reiterated that North Star was to request an extension within 60 days prior to expiration.
Keep reading this article at: http://smallgovcon.com/sbaohadecisions/expired-8a-mentor-protege-agreement-sinks-jvs-eligibility/
