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When you calculate the size of your business for size compliance purposes, you must also include the annual receipts and the employees of your affiliates. The complicated question is who are your affiliates? Under SBA affiliation rules, your company can be investigated to see who has the ability to control your business. When the ability to control a small business exists, even if it is not actually exercised, affiliation still exists under SBA affiliation rules.
SBA Affiliation Litigation Services
- Counseling on building subcontractor teaming arrangements and joint venture relationships
- Filing and intervening in small business size protest cases
- Assessment of teaming agreements and relationships with prime and subcontractors
- Application of subcontractor rules and regulation to adverse decisions made by the SBA
- Determinations on whether the SBA committed clear error
- Intervening on behalf of federal contract awardees
- Litigation SBA size appeals at the SBA Office of Hearings and Appeals (SBA OHA)
- Legal counsel on legal issues to avoid under the Ostensible Contractor Affiliation
- Appellate cases before the US Court of Appeals for the Federal Circuit
To avoid costly legal mistakes with affiliated business arrangements and speak with an SBA attorney, call 1-866-601-5518 for a FREE initial consultation.
- Competitive legal rates
- Prompt turnaround
- Nationwide help
- Clear and honest legal opinions to our clients
- Washington DC and Colorado locations.
Ostensible Subcontractor Rule Analysis
The ostensible subcontractor rule provides that a subcontractor which is not a similarly situated entity to the prime contractor challenged concern, and which either is actually performing the primary and vital requirements of a contract, or upon which the prime contractor is unusually reliant, is treated as a joint venturer, and thus an affiliate, of the challenged concern. 13 C.F.R. § 121.103(h)(4).
13 CFR 121.103 & SBA Affiliation Rules
The SBA definition of Ostensible Subcontractor Affiliation Rule under 13 CFR 121.103 is a subtle provision in government contracting that can impact the award decision by the agency. Without proper legal representation, companies lose lucrative government contracts every day. SBA subcontractor rules and regulation rules are very potent weapons that your competition can use against you when they do not win a contract. Alternatively, if you have lost a contract when the awardee has violated the Ostensible Subcontractor Rule can be to your benefit.
- Many small businesses find themselves defending their business arrangements due to violation allegations during a size standard bid protest.
- The legal analysis in SBA size protests cases includes a variety of approaches that companies may not be familiar with during the size protest litigation stage.
- Note that affiliation does not apply to large prime contractors
At Watson & Associates, LLC, our SBA contractor lawyers frequently help small businesses deal with legal challenges to the relationships between prime and subcontractors doing business with the Federal Government. We understand then when a small business size protest occurs, your company can miss out on substantial amounts of revenues for your business. Whether you are filing a size protest or the intervenor, you want to make sure that your legal position is legally sound.
Our team of government contract attorneys ensures that small businesses can reduce liabilities while safeguarding their revenues. The law firm uses over 30 years of combined experience to protect your federal projects and reputation while safeguarding your bottom line.
You gain access to seasoned federal procurement law professionals who consistently work within the courts and understand how to craft sound legal arguments regarding ostensible subcontractor issues. We have earned a reputation for gaining favorable results for small businesses through vigorous representation.
Our SBA subcontracting law firm has represented government contractors in a variety of situations relevant to Ostensibly related companies and affiliated business arrangements. We appear not only before the SBA and the SBA Office of Hearings and Appeals but also before the US Court of Federal Claims and US Court of Appeals for the Federal Circuit.
Having a deep understanding of the SBA subcontracting rules and ostensible definition can make the difference between keeping the award and losing it. The SBA has issued new rules that limit the possibility of affiliation for similarly situated small businesses.
Our goal is to help small businesses in various industry groups, and even DOD contractors, to understand SBA subcontractor rules and regulations and to overcome the complex rules involving the ostensible subcontractor affiliation rule and how it can impact the facts of the case. We help clients to seek out certain challenges that can potentially defeat or prove SBA affiliation allegations. See some of our top cases.
Definition of Ostensible
If you are a small business doing business with the federal government, you must be very much aware of your relationships with other small businesses and even large businesses that are subcontractors. Under SBA rules, the definition of ostensible relates to a subcontractor in federal contracting that is a named subcontractor in your bid that is not a similarly situated entity, defined in 13 CFR 125.1, and performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant.”
both your company as the prime contractor and your subcontractor can be deemed affiliated if the subcontractor is determined to be an “ostensible subcontractor”.
When this happens, the SBA will then merge both businesses as a joint venture. This will have the legal effect of joint both companies’ resources for purposes of revenues or employees and could violate the small business size standards.
Under SBA definition of Ostensible, the SBA will deem your subcontractor is an “ostensible subcontractor” when:
- The subcontractor performs the primary and vital requirements of a contract, or of an order under a multiple award schedule contract; or
- The prime contractor is unusually reliant on the subcontractor.
The SBA looks at all aspects of your relationship and could find a violation of the Ostensible Subcontractor Rule for various reasons. Having a lawyer that understands the rules and regulations can save your company headaches.
How Does the SBA Ostensible Subcontractor Rules and Regulations Analyze Potential Violations Under the Ostensible Subcontractor Definition?
Under 13 CFR 121.103, the ostensible contractor definition extends to an existing or proposed subcontractor that is not a similarly situated entity and has a questionable affiliated business arrangement. The SBA definition also would show that the subcontractor would perform the primary and vital requirements of the contract.
- If you are a subcontractor upon which the prime is unusually reliant, your company can also be subject to the ostensible definition.
Primary and Vital Contract Requirements
When submitting a government bid, courts consider the primary and vital contract requirements as those associated with the principal purpose of the contract. Can you perform the work without the help of your subcontractor? Do you have the necessary experience where you could have been awarded the contract without help from the subcontractor’s past performance? These are all questions that either the SBA of the court will look into.
- The mere fact that a requirement is a substantial part of the solicitation does not make it primary and vital under the SBA size standards rule.
- In evaluating claims under SBA affiliation rules, the appeals court will base its analysis on the solicitation and proposal before it.
Watson’s SBA OHA Small Business Affiliation Lawyers & Ostensible Subcontractor Attorneys
With law offices in Washington DC and Colorado, the government contract law attorneys at Watson & Associates, LLC frequently file or defend SBA affiliation rules and cases under the Ostensible Subcontractor Rule both at the SBA level and appeals at SBA OHA. Our SBA Subcontractor attorneys frequently represent clients before the SBA, and SBA Office of Hearings and Appeals when there is an adverse decision or disputes about the ostensible definition.
Our SBA affiliation attorneys have a deep understanding of government small business affiliation rules, prime contractor subcontractor relationships, and how small business ostensible subcontractor affiliation applies when looking at bidding opportunities.
Call Our CO and Washington DC SBA Ostensible Subcontractor Rule Lawyers
To preserve your rights under 13 CFR 121.103, and SBA rules and regulations, affiliation meaning in appeals cases, and adverse SBA decisions. Call Watson & Associates’ Ostensible Subcontractor lawyers at 1866-601-5518 for a Free Initial Consultation.