Company’s appeal of a size determination finding that it was not a small business is denied. The SBA Area Office found that the company was affiliated with a large business through a family relationship. Specifically, the company planned to subcontract with another firm owned by its principal’s father. Under SBA regulations companies owned by parents and children are presumed to be affiliated unless the concern can demonstrate that the family members do not have a business relationship. Here, the company relied on the subcontractor for facilities and experience. Moreover, the father and son had extant joint business interests. The company was unable to rebut the presumption of affiliation.
The U.S. Marshals Service awarded a contract to support its Asset Forfeiture Division to Cazador Investments LLC. Two disappointed bidders, Mirage Yacht and National Maritime Service, filed size protests, alleging that Cazador was not a small business.
After an investigation, the SBA Area Office determined that Cazador was not a small business due to its affiliation with a large business, Nielson Beaumont Marine, Inc. (NMBI). Cazador was owned by Hunter Beaumont. NMBI was owned by Hunter’s father, Don Beaumont. The Area Office determined that the Cazador and NMBI were affiliated through a family relationship. Cazador appealed to the SBA’s Office of Hearing and Appeals.
OHA noted that under SBA regulations firms that are owned by parents and children are presumed to be affiliated. This presumption can be overcome by showing a clear line of fracture between the businesses. A clear line of fracture exists if the family members have no business relationship or involvement with each other’s concerned, or the family members are estranged.
Here, OHA determined that Cazador had not demonstrated a clear line of fracture. Cazador proposed to use NMBI in the procurement. OHA found that this fact by itself was a strong indication there was no clear line of fracture. What’s more, Cazador planned to lease and use NMBI’s facilities to meet contract requirements. Additionally, Cazador intended to hire one of NMBI’s managers as a consultant of employee for performance of the contract. Hunter and Don Beaumont both jointly invested and participated in another company. Also, NMBI loaned money to Cazador and furnished the company with contracts and other business opportunities.
Cazador argued that the size determination should be overturned because it had subsequently decided not to use NMBI as a subcontractor. But that argument failed because size is determined at the time of self-certification—i.e., when a concern submits its proposal. A change in teaming after that date will not affect the determination.
Cazador is represented by its President, Hunter C. Beaumont. Protester Mirage Yacht, Inc, is represented by Mike Hatami. Protester National Maritime Services, Inc. is represented by Brian S. Gocial of Blank Rome LLP.