Size of Small Business Protest and SBA Ostensible Subcontractor Appeals Attorneys

Aggressively Representing Your Rights-Washington DC and Nationwide. 1-866-601-5518.

If your company loses a government contract for a federal small business set-aside contract, you may be able to file a size protest, asking the U.S. Small Business Administration (SBA) to investigate the awardee’s small business status. If the SBA concludes that your competitor is not a legitimate small business under the SBA small business size standards assigned to the contract, the procuring government agency will terminate the contract award — potentially paving the way for your company to obtain the work. The common disputes revolve around affiliation and violation of the Ostensible Subcontractor Rule.  The government contract attorneys at Watson & Associates, LLC help businesses in Washington, DC and nationwide by:

• Filing Size of Small Business Protests
• Analyzing possible violation of affiliation rules
• Defending small business size protests
• Assisting in response to SBA protest investigation
• Filing Small Business size appeal to SBAOHA
• Providing proactive guidance in the initial bid proposal stage

 

Our law firm also offers:

• Free initial consultations
• Flat rate options
• Complete protest filings with appropriate case law and legal authority

 

Experience Listing

• 8(a) Program
• HUBZone (Historically Underutilized Business Zone) Program
• Limitations on Subcontracting
• Joint Ventures
• Mentor-Protégé Programs
• Minority Businesses
• NAICS Code Changes and Appeals
• Regulatory & Program Compliance Audits
• SBA Size Eligibility Protests & Appeals
• Subcontracting Plans
• Teaming Agreements & Subcontracts
• Tribally-Owned Businesses
• Veteran-Owned & Service-Disabled Veteran-Owned Small Businesses
• Women-Owned Small Business Program

 

√ Meet short size protest deadlines. If you are contemplating filing a small business size protest, you have until the close of business of the 5^th day to do so. This why is critical to contact a bid protest attorney as soon as possible.

 √Do you have standing to file a size of small business protest? Not just anyone can file a size protest. Rather, your small business must have submitted an offer as the prime contractor on the procurement in question and must not have been eliminated from the competition for reasons unrelated to size.

√ Does your size determination protest meet the legal standard? An SBA size protest must be “specific,” that is, provide the SBA with detailed reasons why you believe your competitor does not qualify as a small business under the procurement’s size standard. Our attorneys can prepare the necessary documents on your behalf.

√ Avoid Ostensible Subcontractor Rule violations. Affiliation in a small business size standard protest means staying clear of the Ostensible Subcontractor Rule. Our bid protest lawyers help you to access unlawful pass through of critical aspect of the project, assess possible affiliation based on common ownership, experience challenges and overall legal analysis of the facts of your case.

 

See also our Size and affiliation FAQs.

 

Legal experts in federal small business programs

As experts in federal government small business programs, we frequently assist contractors that are proposing teaming, joint ventures and traditional prime-sub relationships. Our success includes representing 8(a) Certified, HUBZone and Service Disabled Veteran-Owned Businesses. More specifically, the law firm’s government procurement practice serves as 75% of our efforts. We represent litigants in small business status determination protests before the SBA and appeal decisions before the SBA Office of Hearings and Appeal (SBAOHA).

Recent representative cases include:

Size Appeal of Accent Service Co., SBA No. SIZ-5237 ( 2011) (Master Subcontracting Agreement did not establish joint venture and did not establish that one firm was ostensible subcontractor of the other; the fact that contested firm often awarded subcontracts to another firm did not establish economic dependence, if anything it made the other firm dependent on contested firm).

 

Size Appeal of Argus and Black, Inc, SBA No. SIZ-5204 (2011) (Watson & Associates overturns Area Office’s finding of affiliation through economic dependence because it was based only on one, small contract and did not satisfy the conditions for such a finding).

 

See other outcomes in government contract cases.

 

See samples of cases where contractors prevailed on appeal.

 

Size Appeal of Nuclear Fuel Services, Inc., SBA No. SIZ-5324 (Feb. 2, 2012) (reverses Area Office; “present effect” rule does not require finding of affiliation where discussions between two firms concerning merger or acquisition had not reached status of agreement in principle at time of self-certification (although agreement was reached three weeks later); NAICS code under which size should have been assessed was the one the Prime Contractor had assigned to the RFP in question rather than the NAICS code for the firm’s primary industry).

 

Size Appeal of GPA Technologies, Inc., SBA No. SIZ-5307 (2011) (reverses Area Office’s findings of affiliation; no basis for finding lack of clear fracture or identity of interest based on limited number of shared employees).

 

In the Matter of SB Technologies, LLC, SBA No. SIZ-5319 (Jan. 20, 2012) (overturns Area Office’s finding of affiliation through identify of interest because there was a clear fracture between the allegedly affiliated firms and the individual with the alleged identity of interest is a minority shareholder who does not control the allegedly related firm).

 

Size Appeal of Rio Vista Management, LLC, SBA No. SIZ-5316 (Jan. 11, 2012) (Area Office’s size determination contained multiple errors, including (i) reliance on circumstances occurring more than three years before date of size determination; (ii) finding affiliation from assistance properly provided under approved 8(a) mentor-protégé agreement; (iii) finding violation of newly-organized concern rule when firm’s founder was not in one of proscribed positions at predecessor firm; and (iv) finding affiliation based on identity of interest between two individuals when neither of them controls allegedly affiliated firm).

 

What is a Small Business?

A small business is not dominant in its field of operation and qualifies as a small business concern under Title 13, Code of Federal Regulations, part 121 (13 CFR 121). SBA has established small business size standards for all for-profit economic activities as they are described under the North American Industry Classification System (NAICS) Identifying Industry Codes. Size standards are critical in the government-contracting process because they ensure a “level playing field” for competition among small businesses of varying sizes. They also apply to other SBA programs, such as its Loans & Grants and Technology (SBIR/STTR) Programs. In fact, they apply to all Federal programs that provide a benefit to a small business concern.

 

Five Ways to Avoid Costly Mistakes with SBA Small Business Status Affiliation

Contractors must be aware of the lurking dangers in the SBA size standard regulations. The main focus of the inquiry is control from the subcontractor over the small business prime. If control is present, then affiliation drives a negative result. You will now have to give up the awarded contract. When it comes to their small business status, common mistakes made by contractors include:

• Thinking that having a large prime subcontractor has no penalties
• Failing to get legal review of teaming relationships during the initial proposal stages
• Passing on the critical aspects of the project to subcontractors
• Responding to SBA Size standard investigations without counsel
• Assuming that the Contracting Officer makes the final determination of affiliation

 

View and register for our upcoming 2012 training classes.

 

Consequences of an Adverse Small Business Size Protest Decision

At the end of the day, if you receive an unfavorable decision in an SBA small business size protest, the agency will revoke the award. Furthermore, the decision will prohibit you from representing your company as a small business for future government contracts under that specific NAICS code until you pass a subsequent review by the SBA. This can have a serious impact on your bottom line.

The best approach to handling a bid protest of this nature is to have legal review of the relationship during the initial bidding stage. In addition, you should ensure that you do propose the important and critical aspects of the project to your subcontractor. This is especially important when you are considering the incumbent to be your subcontractor.

 

Size Appeals and Protests

With regard to procurement or sales of government property, a procuring (or selling) agency must accept as conclusive the SBA’s determination as to which a firm is a “small business concern.” Offerors on a procurement self-certify that they are small. In the case of size appeal or protest by another firm or interested party questioning the size status of the successful offeror, the contracting officer will forward the size appeal to the Office of Government Contracting where they will then be referred to the appropriate area office. The SBA will then contact you to respond to the allegations. This is where one of our experienced Size of Small Business Protest attorneys can help you.

Size Determination Process

The appropriate area office makes the initial small business size determination after an appeal. They are given a very tight time constraint (usually within 10 days of receiving a protest). Area office determinations may be appealed to the Office of Hearings and Appeals at SBA headquarters in Washington, D.C., by any of the interested parties. It is important to retain a lawyer at the beginning of a small business size protest because you want counsel to preserve your rights for appeal. You cannot introduce new evidence in a size appeal.

 

Filing a Size Appeal

An appeal for a size determination must begin by serving and filing an appeal petition in writing. The following lists the basic rules for appeals:

- If the appeal is for a size determination in a procurement or pending government property sale, then the appeal petition must be served and filed within 15 calendar days after the size determination was made.

- If the appeal is for a size determination other than one in a pending procurement or pending government property sale, then the appeal petition must be served and filed within 30 calendar days after the size determination was made.

- An untimely appeal will be dismissed.

 

The Office of Hearing and Appeals will do a standard review of the appeal, issue a decision containing the facts and the conclusion that was made based on the appeal, and notify in writing all parties involved. This is the final decision of the SBA.

 

Teaming Agreements and Subcontracting Small Business Size Standard Mistakes

As a small business bidding on government contracts, you must be careful when utilizing 8(a) or other teaming agreements and subcontracting to other businesses. The dangerous landmines of affiliation and SBA size regulations await you. If you have recently been awarded a federal contract and are subject to a bid protest, you might consider retaining a government contract attorney that understands small business size regulations (13 CFR) and how to defend your position. On the other hand, if you are challenging the small business size determination at the Office of Hearing and Appeals, you want to ensure that you adhere to the short deadlines and procedural rules. Our office reviews, drafts and counsels clients on the correct way to form these relationships.

 

Filing and defending SBA small business size protest: When you subjected to this type of bid protest, you must show that you are not unduly reliant upon another entity. A size appeal involves several legal points of affiliation that you must defend against or allege. This includes affirmative or negative control, passing on the critical aspects of the contract to a subcontractor, identity of interests, common management, newly organized firms and more. When you have an experienced bid protest lawyer on your side, you can get the guidance of asserting specific factual details to help you to withstand a request to dismiss the allegation. There are certain legal procedural and filing requirements that must be met. You can also have a size protest defense lawyer to protect your rights in a challenge. The stakes are high and you should consider getting experienced representation.

 

Get Help with 8(a) Certification denial due to affiliation: As a new 8a applicant, you will immediately find that the requirements can be more complicated than they appear. If the SBA has denied your 8(a) application, one of the reasons could be due to affiliation. Although you are not subject to a bid protest in this scenario, the results can be devastating to your business plans. You still have the right to appeal the decision to the SBAOHA. Given the procedural requirements, hiring a lawyer can be of benefit to you simply because of the specificity required to avoid case dismissal. Our law firm will help you to properly assess your appeal and prepare the necessary court documents.

 

Ostensible Subcontractor Rule and Affiliation Litigation: Part the small business affiliation analysis includes the Ostensible Subcontractor Rule. This is governed by 13 CFR 121. Under this analysis, there are certain factors looked at to determine whether actual or perceived control exists. The SBA also looks at the totality of the circumstances to make an affiliation decision. Watson & Associates’ lawyers have broad experience in handling these sensitive issues. Call us for immediate assistance at 1-866-601-5518.

 

Do You Understand the General Principles of Size Standard Affiliation?

Under a small business size standard bid protest, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Control may arise through ownership, management, or other relationships or interactions between the parties. See Table of Small Business Size Standards.

a) General Principles of Affiliation. (1) Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists.

(2) SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.

(3) Control may be affirmative or negative. Negative control includes, but is not limited to, instances where a minority shareholder has the ability, under the concern’s charter, by-laws, or shareholder’s agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders.

(4) Affiliation may be found where an individual, concern, or entity exercises control indirectly through a third party.

(5) In determining whether affiliation exists, SBA will consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.

(6) In determining the concern’s size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit.

 

Serving Clients in all States

Watson & Associates can represent and defend bid protest based upon SBA Size standard violations in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, U.S. Virgin Islands, Utah, Vermont, Virginia, Washington, Washington, DC, West Virginia, Wisconsin, and Wyoming.

Cities in which we represent contractors in size determinations include Anchorage, AK; Atlanta, GA; Austin, TX; Chicago, IL; Colorado Springs, CO; Dallas, TX; Denver, Colorado; Indianapolis, IN; Las Vegas, NV; Los Angeles, CA; Miami, FL; Philadelphia, PA; San Antonio, TX; San Diego, CA; San Francisco, CA; San Jose, CA; Santa Clara, CA; and Tampa, FL.

 

Contact us for Immediate Representation

For immediate representation with filing a small business size protest or SBA size determination defense and appeals, contact the government contract attorneys at Watson & Associates, LLC. Call toll free for a free initial consultation at 1-866-601-5518.