Ostensible Subcontractor Rule

The ostensible subcontractor rule treats a prime contractor and its subcontractor “as joint venturers, and therefore affiliates, for size determination purposes” when the subcontractor “performs primary and vital requirements of a contract,” or the prime contractor is “unusually reliant” upon the subcontractor.

SBA’s affiliation rules provide that a subcontractor who either performs the majority of the primary and vital requirements of a contract or whom the prime contractor is unusually reliant upon may be considered a joint venturer with the prime contractor and, thus, affiliated with the prime contractor for size purposes. This is referred to as the “ostensible subcontractor” rule, and is a common affiliation trap on many size protests.