Ostensible Subcontractor Affiliation Explained

April 21, 2016

Ostensible Subcontractor Affiliation: Beware These “Four Key Factors,” Says SBA OHA

Source: SmallGovCon, Steven Koprince, March 14, 2016Small Business Administration

Ostensible subcontractor affiliation can arise for many reasons–but a small business may be in grave danger of affiliation with its subcontractor when four specific factors are present.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that a small prime contractor was unusually reliant on its large subcontractor where “four key factors” indicated that the small prime contractor was bringing little to the table but its small business status.

OHA’s decision in Size Appeal of Modus Operandi, Inc., SBA No. SIZ-5716 (2016) involved an Air Force solicitation for research, studies, engineering, and related services.  The solicitation was issued as a small business set-aside under NAICS code 541690 (Other Scientific and Technical Consulting Services), with a corresponding $15 million size standard.

The solicitation was a follow-on to a procurement for similar services, known as the Sustainment Systems Engineering & Acquisition Management Services contract.  BAE Systems Technology Solutions & Services, Inc., a large business, was the incumbent under the SSEAMS contract.  READ MORE….

Contact your nearest PTAC for further explanation of the Ostensible Subcontractor Rule.


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