Firm Found Small Despite Significance Economic Dependence on Large Business
On July 25, 2019, the SBA Office of Hearing and Appeals ("SBA OHA") found that a contractor (Telaforce) qualifies as a small business even though it relied on a large business (CACI) for more than 70% of its business. The catch? A mentor-protégé agreement existed.
Even though TelaForce derived more than 70% of its receipts from CACI through the date of self-certification, a majority of these receipts were generated after the SBA had approved a mentor-protégé agreement between them. Accordingly, SBA OHA found that there was no valid basis to find TelaForce affiliated with CACI through economic dependence. This is because SBA regulations provide that an SBA-approved mentor and protégé are broadly exempt from affiliation based on their mentor-protégé relationship or assistance within the scope of their MPA. 13 C.F.R. §§ 125.9(d)(4) and 121.103(b)(6)
Size Appeal of Avar Consulting, Inc., SBA Siz 6017 (July 25, 2019)
