XL EagleAffiliation (SBA affiliation rules)
Affiliation stands for SBA affiliation rules. Under SBA rules, businesses are affiliated when one controls or has the power to control another, or a third party controls both. When firms are affiliated, SBA adds their receipts or employees together to decide size.
Affiliation can come from common ownership, shared management, close family relationships with identical business interests, heavy economic dependence on another firm, or certain joint venture and subcontracting arrangements. One well-known example is the ostensible subcontractor rule, where a sub that does the main work can be treated as affiliated with the prime.
Why it matters to a small contractor
If you own part of another company, or one customer controls most of your revenue, check affiliation before claiming small status. A successful size protest can cost you a contract you already won.
Example
A small landscaping firm's owner also owns most of a large commercial construction company. When the landscaping firm bids a small business set-aside, a competitor protests, and SBA counts both companies' revenue together.
Affiliation: common questions
Does teaming with a large prime make me affiliated?
Not automatically. Normal subcontracting does not create affiliation, but if a sub performs the primary and vital parts of a set-aside contract, problems can arise.
Where are the affiliation rules?
In SBA's regulations at 13 CFR 121.103 and related sections. Free counseling is available through SBA resource partners.
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