Wednesday, September 11, 2019

FAR Update for Definition of "Affiliates"

The FAR (Federal Acquisition Regulations) Councils issued an amendment this week to revise the FAR definition of "Affiliates".

FAR 2.101 - The basic definition did not change. It read and still reads:
Affiliates means associated business concerns or individuals if, directly or indirectly either one controls or can control the other; or third party controls or can control both.
The change is the 'exceptions' to the definition. In the old definition, there were no exceptions. In the new definition, there are two:

  1. For the use in subpart 9.4 (Debarment, Suspension, and Ineligibility), see the definition of 'affiliates' at 9.403
  2. For the use in subpart 19.1 (SBA Size Standards), see the definition of 'affiliates' at 19.101. 
The definitions are similar but each take it a step further to detail or give examples of what the word "control" means.
9.403: Affiliates - Business concerns, organizations, or individuals are affiliates of each other if, directly or indirectly, either one controls or has the power to control the other or a third part controls or has the power to control both. Indicia of control include, but are not limited to interlocking management or ownership, identity of interests among family members, shared facilities and equipment, common use of employees, or a business entity organized following the debarment, suspension , or proposed debarment of a contractor which has the same or similar management, ownership, or principal employees at the contractor that was debarred, suspended, or proposed for debarment.
19.101: Affiliates means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. In determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relations. SBA determines affiliation based on the factors set for at 13 CFR 121.103
The CFR reference is an extensive list describing how SBA determines 'affiliations'. SBA wants to make very sure that they are not awarding contracts to businesses that are affiliated with large businesses.

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