Dennis Casey

As your business grows and starts engaging in various relationships you must always consider how affiliation will affect you.  The government looks at affiliation as follows “Business concerns are affiliates of each other if, directly or indirectly, either one controls or has the power to control the other, or another concern controls or has the power to control both. In determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships; provided, that restraints imposed by a franchise agreement are not considered in determining whether the franchiser controls or has the power to control the franchisee, if the franchisee has the right to profit from its effort, commensurate with ownership, and bears the risk of loss or failure. Any business entity may be found to be an affiliate, whether or not it is organized for profit or located in the United States or its outlying areas.” FAR 19.101  But there’s more than the FAR, 13 CFR 121.103 talks about how the SBA determines affiliation.

As a competitor in the bidding process you have a right to challenge the size of other competitors and they can challenge you.  Any size protest must have credible evidence of an infraction before the SBA will commence a determination investigation.  If the SBA finds you affiliated you are forbidden from claiming small business status until there is a significant fracture of the entities involved.  If you wish to appeal a finding you may do so with the SBA’s Office of Hearings and Appeals.  There are certain timeframes for filing and you must provide evidence indicating there was an error in the determination but it may save your contracting future if you rely on being small.

SBA’s Office of Hearings and Appeals FAQ for Size Appeals

e-CFR link to 13.121.103  

Sample case attempting to appeal a size determination

Dennis Casey, Executive Director of CPTAC

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