Frontier Applied Sciences, Inc., No. 4316 (July 31, 1998) Docket No. SIZ-98-02-27-11 REDACTED COPY FOR PUBLIC RELEASE UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. _________________________________ ) SIZE APPEAL OF: ) ) Frontier Applied Sciences, Inc. ) ) Appellant ) Docket No. SIZ-98-02-27-11 ) Solicitation No. ) Decided: July 31, 1998 DAAB07-97-R-0017 ) U.S. Army Communications- ) Electronics ) Command Acquisition Center ) Fort Huachuca, Arizona ) ________________________________ ) APPEARANCES for Appellant David A. Vogel, Esq. Richard J. Webber, Esq. Arent Fox Kintner Plotkin & Kahn, PLLC for Data Systems Analysts, Inc. Edward J. Hoffman, Esq. Robert G. Fryling, Esq. Blank Rome Comisky & McCauley, LLP for the Small Business Administration Sandra L. Park, Esq. Office of General Counsel DIGEST An offeror has standing to make a size protest, and an Area Office has authority to make a size determination, in an unrestricted procurement where status as a small business may be beneficial. An Appellant has not demonstrated good cause for submitting new evidence on appeal, on the grounds it had not known it needed to produce evidence on an issue to the Area Office where that issue was the subject of a written question from the Area Office. A firm which was formed by a second firm, which spun off one of its divisions less than one month before self-certification, is managed and controlled by former key employees of the second firm, is in a line of business related to that of the second firm, is performing all the contracts of the second firm's division, either as prime or as subcontractor, and which the shareholders purchased for a Note to the shareholders of the second firm, which Note now is held by the spouse of the President and principal shareholder of the second firm, and which Note provides for additional revenues to be paid to the Note holder in the event the firm succeeds financially, and which cannot demonstrate a clear fracture with the second firm, is affiliated with the second firm as a newly organized concern, under the totality of the circumstances. DECISION [1] HOLLEMAN, Administrative Judge: Jurisdiction This appeal is decided under the Small Business Act of 1958, 15 U.S.C. Sections 631 et seq., and 13 C.F.R. Parts 121 and 134 (1996). Issues Whether an offeror has standing to make a size protest, and an Area Office has authority to make a size determination, in an unrestricted procurement where status as a small business may be beneficial. Whether an Appellant has demonstrated good cause for submitting new evidence on appeal, on the grounds it had not known it needed to produce evidence to the Area Office on an issue, where that issue was the subject of a written question from the Area Office. Whether a firm which was formed by a second firm, which spun off one of its divisions less than one month before self- certification, is managed and controlled by former key employees of the second firm, is in a line of business related to that of the second firm, performing all the contracts of the second firm's division, either as prime or as subcontractor, and which the shareholders purchased for a Note to the shareholders of the second firm, which Note now is held by the spouse of the President and principal shareholder of the second firm, and which Note provides for additional revenues to be paid to the Note holder in the event the firm succeeds financially, and which cannot demonstrate a clear fracture with the second firm, is affiliated with the second firm as a newly organized concern, under the totality of the circumstances. I. BACKGROUND A. Procedural History On August 8, 1997, the U.S. Army Communications-Electronics Command Acquisition Center Fort Huachuca, Arizona (Army) issued the subject solicitation for software engineering and technical support services. The Contracting Officer (CO) assigned to the procurement Standard Industrial Classification (SIC) code 7379, Computer Related Services, Not Elsewhere Classified, with a corresponding $18 million average annual receipts size standard. The contract was not set aside, either in whole or in part, for small business. However, the solicitation stated the Army's intention to make multiple awards (up to three), with at least one award to a small business and a goal of 30-40% of the contract value. Proposals were due on September 8, 1997.1 [2] The CO issued minor amendments to the solicitation on August 18th, August 29th, September 3rd, September 4th, and November 3rd. Best and Final Offers were due on November 26, 1997. On January 16, 1998, the Army made an award to Frontier Applied Sciences, Inc. (Appellant). On the same day, the Army notified unsuccessful offerors by telecopier. On January 23, 1998, Data Systems Analysts, Inc. (DSA), an unsuccessful offeror, filed a size protest with the CO. DSA asserted Appellant was affiliated with Frontier Electronic Systems Corporation (FESC). On January 26, 1998, the CO forwarded the protest to the Small Business Administration (SBA) Area V Office of Government Contracting in Fort Worth, Texas (Area Office). On January 28, 1998, the Army issued a stop work order on the contract. On January 28, 1998, the Area Office informed Appellant of the protest, and requested it submit an SBA Form 355 and certain other information. On February 2, 1998, Appellant timely filed the requested information. On February 10, 1998, DSA, through counsel, submitted supplemental information to support its protest. The Area Office treated this submission as untimely filed and did not consider it. On February 12, 1998, the Area Office wrote to FESC, with a copy to Appellant, informing it of the size protest, and asking a number of questions. Question 7 stated: "Describe Edward Shreve's relationship with FESC or its owners/managers." On February 13th, Peggy J. Shreve, FESC's President, replied that, prior to August 15, 1997, Ms. Shreve then stated: "Edward L. Shreve is married to Peggy J. Shreve." The letter said nothing more about the relationship between Mr. and Ms. Shreve, and Appellant submitted no evidence to the Area Office concerning that relationship. On February 17, 1998, the Area Office issued a size determination concluding Appellant was affiliated with FESC and, thus, was other than small. On February 18, 1998, Appellant received the size determination. On February 27, 1998, Appellant filed the instant appeal. Appellant failed to serve the SBA Office of General Counsel, and served only a redacted copy on DSA. On March 5, 1998, DSA objected to the redactions and to the new evidence introduced in the appeal. On March 5, 1998, the Administrative Judge issued an Order directing Appellant to serve its appeal in accordance with 13 C.F.R. Section 134.204(a) and, if Appellant wished to protect any portion of its pleadings, also to seek a Protective Order. On March 6, 1998, Appellant filed a request for a Protective Order, which the Administrative Judge granted on March 17, 1998. The Administrative Judge also ordered Appellant to respond, by filing a motion for admission of new evidence and establishing good cause for its admission for the first time on appeal, to DSA's objection to Appellant's new evidence. The Administrative Judge further ordered both parties to address the issue of this Office's jurisdiction over the instant appeal because the procurement was not set aside for small business; he also invited comments from the CO and SBA on this issue. On March 24, 1998, the Army responded to the March 17th Order, asserting this Office should take jurisdiction. On March 30, 1998, DSA filed a Motion for Leave to Submit Additional Evidence. On April 3rd, the Administrative Judge ordered DSA to proffer its new evidence on the issue of the Shreves' marital status only, and to show good cause for its admission for the first time on appeal. The Administrative Judge reserved his decision on whether to admit this new evidence, and also denied other portions of DSA's March 30th Motion. On April 6, 1998, Appellant filed a Motion for Consideration of New Evidence, and a Memorandum on Jurisdiction, in response to the March 17th Order, together with new evidence. On April 7, 1998, DSA filed its response to the appeal, and to the March 17th and April 3rd Orders, together with new evidence. On April 7, 1998, SBA, through counsel, moved to intervene as of right under 13 C.F.R. Section 134.210(a), and requested an extension of time to file its comments. On April 8th, the Administrative Judge granted this request. [3] On April 16, 1998, the Administrative Judge held a telephone conference to discuss procedural matters. That same day, the Administrative Judge issued an Order permitting Appellant's counsel to release portions of the protected material to Appellant; permitting DSA's counsel to release the non-protected portion of its brief to its client; permitting the parties to file, by April 21st, responses to the new evidence in the April 6th and 7th submissions; and setting May 1, 1998 as the close of record. The Administrative Judge also reserved his decision on the admissibility of the new evidence. On April 21, 1998, Appellant responded to DSA's April 7th filing, and proffered additional new evidence. Also on April 21, 1998, DSA moved to exclude Appellant's new evidence. SBA filed its comments on April 21st. On May 1, 1998, Appellant and DSA replied to SBA's filing. B. The Size Determination The Area Office discussed Appellant's corporate history. In January 1996, Robert L. Johnston and Royce D. Chancellor, employees of FESC's predecessor, Frontier Engineering, Inc. (FEI), approached Peggy J. Shreve, FEI's majority stockholder, about purchasing FEI's Technical Services Division. Edward L. Shreve, Ms. Shreve's husband, was FEI's minority stockholder. The Area Office found that, on July 17, 1997, FEI incorporated Appellant as a wholly-owned subsidiary, and transferred to Appellant all assets, liabilities, and employees of its Technical Services Division. On August 15, 1997, FEI changed its name to FESC. Also on August 15th, FESC sold 100% of its stock in Appellant to the former Technical Services Division employees through an Employee Stock Ownership Plan (ESOP). The ESOP purchased the stock from Mr. and Ms. Shreve with a Promissory Note for , secured by Appellant's assets. Ms. Shreve assigned her interest in the Note to Mr. Shreve, in return for all of his stock in FESC. The Note contains a purchase price adjustment which requires Appellant to pay the holder (Mr. Shreve) % of gross revenues over $ and, if Appellant is sold, a percentage of the sales price in excess of the original purchase price. [4] The ESOP is held in a trust, the original trustees of which were Ms. Shreve and Mr. Shreve. On August 15th, Mr. Johnston and Mr. Chancellor became the trustees. Mr. Johnston is Appellant's President and a Director, Mr. Chancellor is Appellant's Executive Vice-President, Chief Financial Officer and a Director. Neither Mr. Johnston nor Mr. Chancellor is an officer, director, or stockholder of FESC, and neither has worked for FESC since August 15, 1997. FESC assigned all of its Technical Services Division's contracts to Appellant, except for two 8(a) contracts, which it subcontracted to Appellant. The Area Office further found Ms. Shreve is President, Treasurer, sole Director and 92% shareholder of FESC. Mr. Shreve does not own stock in, and is not an officer of, FESC. Further, FESC does not employ Mr. Shreve in any capacity. However, Mr. Shreve is Appellant's landlord, because he owns the office space Appellant occupied after August 15th. Appellant moved to this space gradually, over a period of three weeks after the purchase, completing the move three days before its self- certification, on September 5, 1997. The Area Office found Appellant and FESC were not affiliated based on common ownership or common management. Conversely, the Area Office also found Appellant was affiliated with FESC, as a newly organized concern, based on the totality of the circumstances. Before its self-certification for the subject procurement, Appellant had existed for only two months, was independently owned for less than a month; and was located apart from FESC for only a few days. Appellant has competed for some awards, ; and The firms are in the same or similar lines of business. A majority of FAS' employees were former employees of FESC, and nearly all of its contracts formerly were FESC's. Appellant's Officers and ESOP trustees previously were FESC executives. Further, the Area Office found an identity of interest between the Shreves as husband and wife and, because they are Appellant's principal creditor and FESC's President and majority shareholder, found this was another indicia of affiliation. In sum, the Area Office concluded Appellant and FESC were affiliated, computed their average annual receipts accordingly, and determined Appellant was other than small. C. Arguments on Appeal 1. Jurisdiction Appellant asserts, in its April 6, 1998 memorandum to OHA, that the appeal is not moot and OHA has jurisdiction. Appellant seeks a decision regarding its ability to self-certify as a small business in future procurements, and asserts the size determination still prevents it from doing so. Appellant's May 1st filing asserts SBA has authority to issue a size determination only if the offeror benefits in a competition from being a small business concern. Appellant further asserts the CO's report in the GAO case established that the award decisions were made independent of any offeror's size status. Further, the GAO decision held DSA lacked standing to protest the award because, among all eligible offerors, it was not next in line for award after Appellant; and the contract was not set aside for small business. Accordingly, because its size was not a factor in the award, Appellant asserts it did not benefit from being a small business and, therefore, this Office should vacate the size determination. DSA also asserts this Office has jurisdiction to hear the appeal. First, this Office has jurisdiction over size appeals from Area Office size determinations. Second, SBA's size regulations cover all procurement programs for which size status as a small business is required, and the solicitation clearly stated that at least one award would be given to a small business. Third, SBA's regulations allow another government agency to request an SBA size determination for use in determining compliance with small business requirements in its statutes, regulations, or programs. Fourth, SBA regulations permit an offeror to file a size protest in a procurement where small business status "may be beneficial". 13 C.F.R. Section 121.1001(a)(5). Here, the solicitation clearly stated the Army's intent to award at least one contract to a small business. The Army asserts this Office's decision would not be advisory because, if this Office affirms the size determination, the Army will re-evaluate its award. SBA asserts the Area Office has the authority to make a size determination in any case where small business status may be beneficial, regardless of whether the solicitation is a formal set-aside. Further, since the Area Office had authority to make this size determination, this Office has jurisdiction to hear this appeal. [5] 2. Admission of New Evidence Appellant attempts to rebut the presumption of identity of interest, based on the Shreves' marriage, by introducing new evidence showing Appellant attaches to its appeal a February 27, 1998 letter from Mr. Shreve asserting The alleged rationale for the spin-off was to . Appellant submits with its Motion for Consideration of New Evidence an April 2, 1998 affidavit from Mr. Shreve, reiterating that , and that they decided to establish Appellant to . Although , they do not plan to . Appellant submits, with its May 1st filing, an April 20, 1998 affidavit from Mr. Shreve, replying to the evidence DSA submitted. He asserts . Appellant asserts, in its Motion for Consideration of New Evidence, that its evidence satisfies this Office's precedent for the submission of new evidence on appeal where good cause is shown. Appellant asserts the Shreves' marital status is relevant, and its proposed evidence does not enlarge the issues. Appellant asserts the Area Office improperly failed to inform it that the Shreves' marital status might be an issue, and made an assumption contrary to the facts. Appellant further asserts it could not have known this would be an issue, because neither of the Shreves owned or controlled Appellant. DSA's April 7th submission proffers new evidence to establish that Mr. and Ms. Shreve are , but . DSA's evidence includes . DSA further asserts the Administrative Judge should exclude Appellant's evidence, because Appellant knew at the Area Office level, from the size regulations, SBA Form 355 and the Area Office's February 12th letter, that the Shreves' marital status was relevant. Conversely, the Administrative Judge should admit DSA's proffered new evidence, because it had no prior notice Appellant would attempt to argue a lack of affiliation based on the Shreves' . DSA also submits as new evidence a Dun & Bradstreet report, which states Mr. Chancellor still was an FESC consultant on August 21st. In reply, Appellant submits an affidavit from Mr. Chancellor, asserting the Dun & Bradstreet report cited by DSA was erroneous 3. Affiliation Appellant asserts first, it is not affiliated with FESC based on its creditor, Mr. Shreve's marriage to FESC's President, Ms. Shreve, because they are . Second, Appellant asserts FESC, not FESC's former key employees, established it. Third, Appellant asserts the firms are not in the same line of business. FESC designs equipment and manufactures while Appellant, FESC's former services division, provides information technology and engineering-related services. Further, Appellant receives no financial or technical assistance from FESC; and FESC neither controls nor has the power to control it. In addition, Appellant's rental of space from Mr. Shreve is not an indicia of affiliation, because it is an arm's- length rental of the only available office space. Further, the debtor-creditor relationship with Mr. Shreve is not an indicia of affiliation, because the Promissory Note is subordinate to bank debt. Appellant also asserts all the findings used by the Area Office to characterize Appellant as a newly organized concern are common to all businesses spun off from another business, e.g., the three weeks when some of Appellant's employees worked at FESC; and do not support a finding of affiliation. The firms currently share no facilities. The firms have no ongoing contractual relationship, except for two 8(a) subcontracts. SBA would not novate these contracts to Appellant, and FESC, after the spin-off, no longer has the capability to perform them. Appellant responds to the Area Office's finding, that it has not yet demonstrated it is able to win awards, by pointing to the instant award. DSA asserts only or a similar clear fracture can end the identity of interest between Mr. and Ms. Shreve. DSA asserts its new evidence establishes an between the Shreves. DSA further asserts the Area Office's findings of affiliation are supported by this Office's precedent, and Appellant has failed to establish a clear fracture between itself and FESC. DSA also asserts the Promissory Note establishes affiliation, because Appellant gave it initially to both Shreves, and the large amounts due to them give them a financial interest in Appellant's business success. DSA reiterates that, because the Shreves receive significant funds from Appellant, Appellant is contractually dependent on FESC. In addition, OHA should affirm the size determination because Appellant's key employees came from FESC, most of Appellant's contracts were transferred from FESC, and Appellant has not demonstrated financial independence. In its April 21st filing, Appellant asserts DSA's new evidence fails to rebut its evidence of the Shreves' because, although , they . II. DISCUSSION A. Timeliness and Jurisdiction Appellant filed the instant appeal within 15 days of receipt of the size determination, and it is thus timely. 13 C.F.R. Section 134.304(a)(1). The threshold question here is whether this Office has jurisdiction over the instant appeal. SBA's current regulations specifically permit any offeror to file a size protest in "any unrestricted Government procurement in which status as a small business may be beneficial". 13 C.F.R. Section 121.1001(a)(5). The Administrative Judge holds that, because the Area Office has jurisdiction to make formal size determinations in such cases, this Office has jurisdiction to hear the resulting appeals. 13 C.F.R. Sections 121.1002; 134.102(k). Accordingly, he explicitly overrules the previous cases which have held otherwise, because these decisions were based on SBA's previous size regulations, which limited SBA's size determination authority. See Size Appeal of Control Data Corporation, No. 3056 (1989) (citing 13 C.F.R. Section 121.8(a) (1989)). The prior precedent held that, where the solicitation has not been set aside in whole or in part for small business, the Area Office should dismiss the size protest. If the Area Office issues a size determination in such a case, this Office would vacate the size determination. Size Appeal of Herk Elevator Co., Inc., No. 1876 (1984). This Office subsequently recognized SBA's expanded size determination authority, albeit without noting that the current regulations overrule the earlier cases. Size Appeal of Intercontinental Manufacturing Co., No. 3879 at 3-4, n. 1 (1994). The remaining jurisdictional question is whether, under these facts, the Area Office has authority to issue a size determination adverse to Appellant. That is, in this unrestricted procurement, would Appellant's small business status be beneficial. 13 C.F.R. Section 121.1001(a)(5). The Administrative Judge rejects Appellant's assertion that its small business status would not be beneficial, because it is directly contradicted by the Army's express statement in the solicitation, that it intends to make an award to small business. Moreover, 13 C.F.R. Section 121.1001(a)(5) clearly is an independent grant of authority, intended to expand SBA's authority to make size determinations in procurements that are not formal set asides, where small business status may be beneficial. [6] Accordingly, in order to protest, DSA need not establish that Appellant's small business status created an actual benefit, but only that it may have. The standard is not high, and DSA's protest met it here. In this case, because the Administrative Judge finds status as a small business is beneficial, the Area Office had jurisdiction to entertain the size protest, and this Office has jurisdiction over the appeal. [7] B. New Evidence The Administrative Judge next must address whether to admit the new evidence Appellant proffers on appeal. The Administrative Judge will not consider evidence a party failed to present to the Area Office, unless a motion is served and filed establishing good cause for the submission, or the Administrative Judge orders it. 13 C.F.R. Section 134.308(a). Here, Appellant asserts as good cause that it could not have known the Shreves' would be an issue. The Administrative Judge rejects Appellant's argument for several reasons. First, Question 7 of the Area Office's February 12th letter explicitly informed Appellant that Mr. Shreve's relationship with Ms. Shreve, FESC's President and majority shareholder, was an issue. Appellant could have responded to the Area Office, by notifying it of the Shreves' . Instead, Appellant allowed into the record, without contradiction or explanation, FESC's simple statement that Mr. and Ms. Shreve were married. Appellant cannot now argue it was unaware Mr. and Ms. Shreve's was an issue. Second, because Appellant had the burden of persuasion in the size determination, it was responsible for presenting to the Area Office all evidence demonstrating a clear fracture between FESC and itself. 13 C.F.R. Section 121.1009(c). Appellant cannot correct on appeal its failure to submit evidence available at the protest stage, on an issue the Area Office previously had informed Appellant it was considering. Size Appeal of H.J. Vetter Interiors, No. 4174 (1996). Concerning DSA's proffered new evidence of the Dun & Bradstreet report and Appellant's reply affidavit, DSA has not established any good cause for its late submission. The Administrative Judge therefore excludes both submissions from the record. Accordingly, the Administrative Judge concludes neither Appellant nor DSA has established good cause, and DENIES the motions for submission of new evidence. [8] C. Affiliation Regarding the merits of the instant appeal, Appellant has the burden of proving, by a preponderance of the evidence, all the elements of its appeal. Specifically, it must prove the Area Office size determination is based on a clear error of fact or law. 13 C.F.R. Section 134.314; Size Appeal of Rebmar, Inc., No. 4173 (1996). The Area Office found Appellant affiliated with FESC as a newly organized concern, based on the totality of the circumstances. While the revised size regulations do not retain the newly organized concern rule as an independent basis for affiliation, it remains a factor in finding affiliation on other grounds. Size Appeal of Lyons Security Service, Inc., No. 4264 at 6 (1997); 60 Fed. Reg. 57982, 57985 (1995). Under the newly organized concern rule, firms are affiliated when former officers, principal stockholders or key employees of one firm organize another firm in the same or a related line of business; and one of the firms furnishes the other with subcontracts, financial assistance, or other facilities. To rebut a finding of affiliation in these situations, a challenged firm must demonstrate a clear line of fracture between itself and the large firm, even absent evidence the new firm was formed to circumvent the regulations. Size Appeal of Field Support Services, Inc., No. 4176 at 8 (1996). Here, Appellant clearly meets the first test, because it was formed by the parent firm, FESC (as Appellant emphasizes). Key employees of the parent left FESC, and now manage Appellant and control the voting stock as trustees of the ESOP. The Administrative Judge rejects Appellant's attempt to distinguish these facts from the OHA precedent, because the parent firm's establishment of a spin-off indicates a greater, rather than a lesser connection. Second, despite Appellant's protestations, it has failed to meet its burden of establishing FESC and it are not in the same or related lines of business. It is apparent that, prior to the spin-off, FESC manufactured high technology equipment, and its Technical Services Division provided complementary information technology services. While these lines of business may not be exactly the same, they clearly are related. Appellant was spun off from FESC's Technical Services Division and continues its work, including contracts originally awarded to FESC. The two firms represent a continuum of products and services and an interdependency in the same or related industries, suggestive of affiliation. Size Appeal of Agrigold Juice Products, No. 4136 at 14 (1996). Third, FESC has provided Appellant with assistance. Appellant's shareholders purchased the corporate assets, with credit extended by FESC's shareholders (Mr. and Ms. Shreve), in a transaction which took place just a few weeks prior to its self- certification, the date when Appellant's size is determined. 13 C.F.R. Section 121.404. Mr. Shreve now is sole holder of the Promissory Note, and his wife, Ms. Shreve, is the majority shareholder of FESC. Since they are married, they have an identity of interest, and the Administrative Judge treats them as one party. [9] 13 C.F.R. Section 121.103(a)(3). This extension of credit to purchase the firm is a form of financial assistance. FESC has provided further assistance by assigning those Technical Services Division contracts it could to Appellant, and subcontracting to it those it could not assign. Finally, Appellant cannot demonstrate a clear fracture between itself and FESC. The Promissory Note guarantees Mr. Shreve a percentage of Appellant's revenues (which obviously increases if Appellant does well) and further revenues if Appellant's shareholders sell the firm for a profit. Appellant itself characterizes Mr. Shreve's position as that of a nonvoting stockholder. Appeal at 10. While the Promissory Note alone is not evidence of control, it does establish that Mr. Shreve, and by extension, his wife, FESC's majority shareholder, continue to have a financial interest in Appellant. The absence of clear fracture is further shown by Appellant's lease of office space Mr. Shreve owns, even though this transaction may not constitute financial assistance. The subcontracts continue in effect. In fact, Appellant proffers nothing, other than the spin-off itself, to demonstrate that a clear fracture has taken place between it and FESC. Further, Appellant does not rebut the Area Office's determination that , except for the instant procurement. This assertion is not sufficient to meet the burden of establishing clear error on the part of the Area Office. [10] Therefore, the Administrative Judge concludes Appellant has not met its burden of demonstrating clear error in the Area Office's conclusion it is affiliated with FESC as a newly organized concern, under the totality of the circumstances. Because Appellant does not challenge the Area Office's determination that the two firms' combined average annual receipts exceed the applicable size standard, the Administrative Judge affirms the Area office's finding the two firms are other than small. III. CONCLUSION For the above reasons, the Administrative Judge AFFIRMS the Area Office size determination and DENIES the instant appeal. This is the final decision of the Small Business Administration. See 13 C.F.R. Section 134.316(b). ______________________________ CHRISTOPHER HOLLEMAN Administrative Judge _________________________ [1] On June 30, 1998, SBA published new regulations, 63 Fed. Reg. 35,726, 35,766 (1998) (to be codified at 13 C.F.R. parts 121, 124 and 134). The new regulations do not apply to this appeal because it was filed prior to June 30, 1998. [2] Offerors self-certify as eligible small businesses as of the date of their initial offer. 13 C.F.R. Section 121.404. [3] On April 16, 1998, the Army filed a copy of the General Accounting Office (GAO) decision dismissing DSA's protest of the award to Appellant. Data Systems Analysts, Inc., No. B-279099; B- 279099.2 (April 13, 1998) (unpublished) holding a small business protester is not in line for award, and thus lacks standing to protest, where there are two intervening offers between itself and the protested firm, and the procurement was not set aside for small business. [4] The percentage is for after the sale, and declines to in , with due after . [5] SBA's pleading addressed only the issue of jurisdiction. [6] Although a formal set aside may be a prerequisite in a GAO protest, the regulation frees SBA from that requirement. [7] As Appellant asserts, the appeal is not moot because it remains ineligible for future procurements under the designated SIC code unless and until SBA recertifies it as small. Size Appeal of Gallagher Transfer & Storage Co., Inc., No. 4295 (1998). [8] Therefore, the Administrative Judge need not consider DSA's Motion to submit evidence rebutting Appellant's proffered evidence. [9] The Administrative Judge notes that, even if he had admitted Appellant's proffered evidence of , it is doubtful Appellant could have met its burden of establishing error in the Area Office determination. The Administrative Judge notes in particular DSA's evidence, and Mr. Shreve's admissions that ; he mentions ; the Shreves , they ; and have . Finally, Mr. Shreve's statement that clearly demonstrates continuing mutual financial interests. SBA is primarily concerned with common financial interests in determining affiliation, not with marital status per se. [10] Appellant's contention that its organization is characteristic of all spin-offs is irrelevant. Posted: August, 1998