FAR Business Ownership Restrictions

Jeffro59,

If you are asking whether or not Federal Regulations (including but not limited to the FAR) discuss when a small business becomes an affiliated entity of a larger business, such that it loses its small business status, the answer is YES. But it's not so simple as only being the percentage of ownership. Why don't you ask Barbara Michael? I bet she'll know the correct answer off the top of her head. If not, she can give you the regulatory cites you will want to review.

Hope this helps.

Appreciate your reply...especially because you also know Barbara's here!

why does a large (other than small) business even want to compete for small biz set-asides ?

brian,

I'm not sure what you're getting at. Are you asking why a for-profit company (of any size) would like to compete for new revenue in a market where competition has been restricted? Or are you asking why a large business would think it would be permitted to compete in such a market?

It's been my experience that contractors do not understand the affiliation rules very well. (Candidly, I would have to admit that I don't either. I would not consider myself to be an SME in that particular area.) It's been my experience, over and over again, that large companies think they can aquire a small business of some variety without changing its status as a small business. (I suppose that it can be done, but it would have to be done in a very careful and deliberate manner ... not something that I've seen to be a part of the average M&A "due diligence" process.) What I've experienced, over and over, is that the acquirer is surprised to learn that it just knocked its acquisition out of a very nice niche, and all those pretty revenue projections the financial types used to justify the acquistion just became worthless.

H2H

H2H,

I haven't looked at SI's profile in the SBA's Dynamic Small Business Search, or whatever it's called nowadays.

But I did look at their website, and they present themselves as the market leader.

Recalling the definition of "small business," and that it had something to do with "not dominant in its market segment," SI is not a small biz.

Jeffro's initial post sounds like SI is trying to compete for SBSA work through acquiring a legit SB.

I've seen SAIC, Lockheed, and several other "other than small" firms try the same trick.

This is especially offensive because in SI's principal market, there is no transparency in acquisition.

brian,

Thank you for explaining your thinking.

I don't know about your use of the term "offensive" in this context. If the rules and regulations permit it, then it's not wrong. If the rules and regulations prohibit it, then the organization is subject to significant penalties. See the recent history of GTSI, for an example.

H2H

I haven't looked at SI's profile in the SBA's Dynamic Small Business Search, or whatever it's called nowadays. But I did look at their website, and they present themselves as the market leader. Recalling the definition of "small business," and that it had something to do with "not dominant in its market segment," SI is not a small biz.

Don't confuse advertising with reality. Moreover, a "leader" is not necessarily "dominant." Samsung sells a lot more smart phones than Apple, but guess who's the leader in that market.

H2H,

I'm gonna have to look up the latest on GTSI.

I remember when, as a BUDS (Small Biz Advocate) for a DOI Bureau in ~2005,

I checked out GTSI's 10-K Report on Edgar, and read where they were warning their stockholders that, due to something they had not anticipated, they no longer qualified as a Small Biz, and worried that the US Govt would stop them from getting any more SBSA work.

I told the Bureau Procurement Exec and asked if we could stop all SBSA and FAR 8.4 SB awards to GTSI. It took about 6 months for that to be approved.

Boy, were the buyers unhappy with me.

Most couldn't care less if an "other than small" biz was stealing from SBC's,

and GTSI was known for furnishing swag to buyers.

Vern,

U right about dat.

But I assumed, with the opening post, that acquisition of a SB was under consideration as a way for SI Corp to tap into SBSA work that SI couldn't pursue openly. And you know what they say about assumptions -- everybody has one.