More on the Ostensible Subcontractor Rule

April 22, 2016

Ostensible Subcontractor Rule: Management Alone Wasn’t Enough

Source: SmallGovCon, Steven Koprince, March 4, 2016Small Business Administration

The prime contractor’s management of a contract wasn’t enough to avoid ostensible subcontractor affiliation where the subcontractor would provide the labor, equipment, and facilities for performing the work.

In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that, where the subcontractor will provide the goods or services that the agency “actually seeks to acquire,” the subcontractor may be deemed an ostensible subcontractor under the SBA’s affiliation rules.

OHA’s decision in Size Appeal of Hamilton Alliance, Inc., SBA No. 5698 (2015) involved a NAVFAC solicitation seeking a contractor to provide refuse collection and processing, as well as the collection, processing and sale of recyclable waste.  Under the solicitation’s Performance Work Statement, the contractor was to be responsible for providing all labor, supplies, materials, equipment, transportation, facilities, supervision and management necessary to collect and process refuse and recyclable waste.  The solicitation was a SDVOSB set-aside under NAICS code 562119 (Other Waste Collection), with a corresponding $38.5 million size standard.

After evaluating competitive proposals, NAVFAC announced that Hamilton Alliance, Inc. was the apparent successful offeror.  An unsuccessful competitor then filed a size protest, alleging that Hamilton Alliance was unusually reliant on its two subcontractors, both of which were large businesses.  READ MORE….

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


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