Question 1

How does affiliation affect size standard calculations?

Accepted Answer

Affiliated businesses' revenues and employees are combined when determining size. Affiliation exists when one entity controls or has the power to control another, through common ownership, management, stock options, contractual relationships, or economic dependence. SBA's affiliation rules are complex — common triggers include family members owning related businesses, identical or near-identical owners, and the ostensible subcontractor rule for subcontracting relationships.

Question 2

What is the ostensible subcontractor rule?

Accepted Answer

The ostensible subcontractor rule deems a subcontractor to be an affiliate of the prime contractor if the subcontractor performs the primary and vital requirements of the contract and the prime is unusually reliant on the subcontractor. When this rule applies, the subcontractor's size is combined with the prime's to determine size standard compliance. This rule is frequently cited in size protests involving small prime/large sub arrangements.

Question 3

How is size calculated for a joint venture bidding on a set-aside?

Accepted Answer

For a joint venture (JV) pursuing an SDVOSB set-aside, the JV must qualify as small based on the size standards of all JV members combined. However, for an approved mentor-protégé JV under SBA's program, only the protégé's size is used — the large business mentor's size is excluded. For all other JVs, SBA aggregates revenues or employees of all members to determine size.

Question 4

How does SBA determine whether a business qualifies as small?

Accepted Answer

Size is determined as of the date the business certifies its size as part of an offer. SBA conducts formal size determinations when a size protest is filed. The Area Office examines the firm's revenues or employees (including affiliates) and issues a written determination within 15 business days. Either party can appeal an Area Office decision to SBA's Office of Hearings and Appeals (OHA).

How does affiliation affect size standard calculations?

More on Size Standards

Related Questions

Related Tools & Directories