NOAA2014-1_Amendment_0002.pdf

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods:

(a) By completing items 8 and 15, and returning 1 or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment your desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

E. IMPORTANT: Contractor is not, is required to sign this document and return copies to the issuing office.

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1. CONTRACT ID CODE

2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)

7. ADMINISTERED BY (If other than Item 6) CODE

STANDARD FORM 30 (REV. 10-83)

Prescribed by GSA FAR (48 CFR) 53.243

FACILITY CODE

9A. AMENDMENT OF SOLICITATION

NO.

9B. DATED (SEE ITEM 11)

10A. MODIFICATION OF CONTRACT/ORDER NO.

10B. DATED (SEE ITEM 13)

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers is extended, is not extended.

12. ACCOUNTING AND APPROPRIATION DATA (If required) copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted;

13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS.

IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

CHECK ONE A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO.

IN ITEM 10A.

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).

C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

D. OTHER (Specify type of modification and authority)

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15C. DATE SIGNED

15A. NAME AND TITLE OF SIGNER (Type or print)

16C. DATE SIGNED

16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

PAGE OF PAGES

6. ISSUED BY CODE

8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code) (X)

CODE

15B. CONTRACTOR/OFFEROR

(Signature of person authorized to sign)

16B. UNITED STATES OF AMERICA

(Signature of Contracting Officer)

NSN 7540-01-152-8070

Previous edition unusable

(a) The purpose of this amendment is to Respond to Questions and Answers received.

(b) Question and Anwer #2 is attached. No additional Questions and Answers shall be posted.

(c) Proposal due date remains unchanged (January 29, 2014 at 4:00

N/A joan.e.clarkston Typewritten Text Joan Clarkston joan.e.clarkston Typewritten Text Contract Specialist joan.e.clarkston Typewritten Text 14 Jan 2014 joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text

NOAA2014-1

joan.e.clarkston Typewritten Text November 13, 2013 joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text 14 Jan 2014 joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text

AJ830023

joan.e.clarkston Typewritten Text

DOC/NOAA/EAD, 601 EAST 12TH STREET, RM 1756

KANSAS CITY, MO 64106, USA

JOAN CLARKSTON, 816-426-7469

joan.e.clarkston Typewritten Text joan.e.clarkston Typewritten Text

NOAA2014-1 Amendment 0002 14 Jan 2014

Questions and Answers #2 to NOAA2014-1 Small Business Innovation Research (SBIR) Phase I January 14, 2014

Q: I have some questions with respect to the small business requirements of this SBIR. What are the requirements surrounding the timing of a company qualifying as an Small Business for the SBIR. For example, a firm qualifies as a small business at the time of submission (January 29) but becomes a wholly owned subsidiary of a large company at a later time or after award (February, March, June or after award). Would that business still be eligible to keep the SBIR award if the that applied company still meets the Small Business requirements?

A: In order to receive an SBIR award, the company must be a small business at time of award. There is a certification requirement with Form 9.5 of the solicitation. We typically have firm’s confirm this has not changed prior to award. Typically awards are anticipated in July of 2014.

In a unique situation where a firm is purchased by another company (prior to award), the government would need to review the specific situation and make final decisions at that time as to whether to accept the proposal or exclude it from award. For example, the government would need to further reviewer, with its legal department, whether the new firm can be bound by the proposal submitted by the prior company. Additionally, the government would have potential concerns with the original proposal submitted no longer being accurate due to the potential business restructure (e.g. key personnel, personnel, facilities, etc).

Q: Does being a wholly owned subsidiary of a large business affect a company from qualifying as a Small Business under this SBIR?

A: As indicated in the solicitation, please visit 13 CFR 121.702 regarding the definition of Small Business Concern (Section 1.7.13). Additionally, you will want to review the questions related to affiliation for additional information. Protests related to a firm’s size is referred to the Small Business Administration (SBA) for determination. You may be able to request additional information regarding size determination issues and affiliation questions from calling the SBA Government Contracting Area Director. Another good location to find some additional information is at:

http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/small-business-size-standards

Q: Does being a wholly owned subsidiary of a large, not for profit business affect a company from qualifying as a for profit Small Business under this SBIR?

A: See question above for additional information related to affiliations and obtaining information on size determination issues.

http://www.google.com/url?q=http%3A%2F%2Fwww.sba.gov%2Fcategory%2Fnavigation-structure%2Fcontracting%2Fcontracting-officials%2Fsmall-business-size-standards&sa=D&sntz=1&usg=AFQjCNH_h0brXi9ZYGaKHr4eXl03SahsWg http://www.google.com/url?q=http%3A%2F%2Fwww.sba.gov%2Fcategory%2Fnavigation-structure%2Fcontracting%2Fcontracting-officials%2Fsmall-business-size-standards&sa=D&sntz=1&usg=AFQjCNH_h0brXi9ZYGaKHr4eXl03SahsWg

Q: With regard to the subject SBIR solicitation, I want to make sure we will be including the correct information in our proposal. In the Supplemental Budget and Other Information, described on page 27 of the solicitation, I understand we are required to include a "screen shot or similar copy of proposer's Company Registry". Is this the SBIR.gov SBC Registration Control ID Form?

A: Once you register, you receive the unique SBC Control ID. A system email (if provided through the system) or system screen shot indicating that you have registered is acceptable.

Q: Subtopic 8.1.3 SG : According to the solicitation, the contractor will identify appropriate technologies and select target species group in phase I. In phase II, a prototype system for discrimination of species and origin (5 commercially important species and common substitutions). Since NOAA mentioned 5 important species in Phase II, is it correct to assume that it will be the guideline to select target species as well as to identify appropriate technologies in phase 1?

A: For Phase 1, we expect that identification of appropriate technologies and selection of target species group could reasonably include:

1. Selection of one or more commercially important target species

2. Identification of common substitute species

3. Analysis of currently available discrimination methods

4. Planning how to achieve a rapid, portable, accurate system that is usable by non-specialists

5. Presenting a reasonable design for such a system, including a justification for why it will work.

The number of commercially important species in Phase I is not set at five, though there must be at least one and its attendant substitutes.

We have a singular aim for phase 1 - the order in which the submitter chooses to prioritize components of that task is not a concern, as long as the methodology is sound.

Q: Subtopic 8.1.3 SG : Considering the time and resource constraints of phase I, it is reasonable to select these 5 important species? Is it correct to assume that the submitter would identify target species (specific aim 1) and screen various technologies to identify species and origin (specific aim 2) because that is the logical order for the scientific investigation? Is it correct to assume that there is only one specific aim in Phase I ( i.e. identification of potential technologies that would discriminate species and origin of selected (5)commercially important seafood)?

A: For Phase 1, we expect that identification of appropriate technologies and selection of target species group could reasonably include:

1. Selection of one or more commercially important target species

2. Identification of common substitute species

3. Analysis of currently available discrimination methods

4. Planning how to achieve a rapid, portable, accurate system that is usable by non-specialists

5. Presenting a reasonable design for such a system, including a justification for why it will work.

The number of commercially important species in Phase I is not set at five, though there must be at least one and its attendant substitutes.

We have a singular aim for phase 1 - the order in which the submitter chooses to prioritize components of that task is not a concern, as long as the methodology is sound.

Q: Subtopic 8.2.1F: The SBIR Summary sounded like there are existing cameras in place on ROVs, AUVs, etc. and that the goal is to be able to process imagery from these existing camera sources. Is this assumption correct?

A: Correct

Q: Subtopic 8.2.1F: If so, would it be possible to get a sample collection of some of the stills (or video) along with the camera source description? If not, would you like the proposal to include suggested equipment?

A: Yes, video and still data will be made available. Our camera specifications will be provided. The objectives are to develop software, however suggested equipment is welcomed.

Q: Subtopic 8.2.1F: In order to identifying the size of fish, it would require some clue as to the distance away the fish is to the camera along with the lens characteristics. For aerial shots to a ship deck, would this distance be known already or would additional hardware be needed to determine this distance?

A: For underwater stereo video and stills will be made available with calibration data so fish length can be accurately estimated. The distance of fish from calibrated stereo video is not necessary to estimate length. For automated image processing of fish aboard fishing vessels, we have data sets of fish images on gridded backgrounds for which length can be estimated. We do not have stereo data of fish images aboard vessels at this time.

Q: Subtopic 8.2.1F: For underwater shots, are two offset cameras used to determine a distance, is there acoustic data available, or is there some other means for determining range?

A: For underwater stereo video and stills will be made available with calibration data so fish length can be accurately estimated. The distance of fish from calibrated stereo video is not necessary to estimate length. For automated image processing of fish aboard fishing vessels, we have data sets of fish images on gridded backgrounds for which length can be estimated. We do not have stereo data of fish images aboard vessels at this time.

Q: Subtopic 8.2.1F: Are the cameras moving when the pictures are taken and if so, what is the typical speed or the range of speeds?

A: Underwater stereo video and on-board stills data sets are typically from fixed stereo cameras.

Data from mobile platforms (AUVs) and trawls can be provided.

Q: Subtopic 8.2.1F: Is NOAA interested in the identification for demersal or pelagic economically important and frequently encountered fish?

A: We are interested in a large array of demersal and pelagic fish species that are of commercial and recreational importance. Underwater stereo video is available for Gulf of Mexico reef fish, Hawaiian bottom fish, and west coast rockfishes.

Q: Subtopic 8.2.1F: We assume that line scan camera is not used. Is this correct assumption?

A: Correct. Data sets are not available from line scan cameras, but line scan camera technology is of interest as a potential approach for automated imaging of fish on conveyor belts.

Q: Subtopic 8.2.1F: Are still images captured by video camera or still-image camera? If video camera is used, what is the frame rate? Are those captured images from single model or different model?

During image capture period, is this camera moving or staying still? This information will be used to determine the counts or abundance within capturing area.

A: Both stills and video. Still frame rate of 1/sec and video frame rate of 30/sec. Various models are used. Typically fixed cameras. The objective is to count and measure fish.

Q: Subtopic 8.2.1.F: What is illumination method (intensity) during image capture period? Does this illumination maintain constant?

A: Illumination can vary. Underwater deployments are restricted to daytime and to depths no greater than 200 meters. No lights are used.

Q: Subtopic 8.2.1F: What is the property of image: how many pixels in width and length? Will distance from camera to fish be known? What is the resolution or pixel size? Is color or not? If color, is true color or pseudo-color?

A: Underwater camera have a field of view of 72 degrees. Overall resolution varies considerably and camera pixel resolution is 1280 x 960 or better.

Q: Subtopic 8.2.1F: If funded, will NOAA provide the images and help to provide the truth (such as species of fish, length, numbers, and confidence level for the truthing) for the images provided by

NOAA?

A: Yes, data sets will include fish species ID, length, and numbers.

Q: Subtopic 8.2.1F: Can we get a few samples of fishery images that this solicitation topics is interested in?

A: Here are a few potential samples to provide a basic reference point.

Q: Subtopic 8.2.1F: Currently, how much time is used to identify images containing fish, fish species, sizes, and counts? What is the workflow?

A: The workflow (processing time to analyses) ranges 4:1 to 8:1. For a typical 20 minute fixed stereo video deployment, fish are observed almost continuously and up to 100 fish can be observed at a given time.

Q. Subtopic: 8.2.1F: What is the expected extent of the project in terms of data variation due to camera characteristics such as resolution, depth rating, etc. ? Both underwater environment as well as image quality may depend on such characteristics affecting the technical approaches and/or system configuration. If such information is not available at this time, study of different imaging hardware and image characteristics would be also part of Phase-I study.

A. There is some variation in resolution, depth and lighting with the various collection methods.

Q: Subtopic 8.2.2R: Can we obtain additional information on the existing non-dispersive infrared gas analyzer (NDIR) system?

A: Additional information can be found by looking up the ACT comparison tests found in the reference information. You can also go directly to the link below and look at pages 5 and 6.

http://www.act-us.info/Download/Evaluations/pCO2/PMEL_MAPCO2_Battelle_Seaology/.

Information such as Dimensions, Power consumption, Power requirements, and weight can be located there.

Q: Subtopic 8.2.2R: Can we get information on the specification sheets for major components?

A: The purpose of this subtopic is to locate a potential lower cost, less complex, and reduced power consumption replacement or alternative CO2 gas analyzer. The current gas analyzer that we are using is a LICOR 820 ( http://www.licor.com/env/pdf/gas_analyzers/820/820_brochure.pdf ). The Licor 820 has a power consumption of ~2.0 W when powered on without running the heater, for example.

The Licor’s total energy consumption is around 1195J per measurement (includes running measurement, two point calibration, and measuring air and seawater PCO2 for about 10 minutes).

http://www.google.com/url?q=http%3A%2F%2Fwww.act-us.info%2FDownload%2FEvaluations%2FpCO2%2FPMEL_MAPCO2_Battelle_Seaology%2F&sa=D&sntz=1&usg=AFQjCNFcX7Ae-syHo_0z71B5UC_mWgyOtQ http://www.google.com/url?q=http%3A%2F%2Fwww.act-us.info%2FDownload%2FEvaluations%2FpCO2%2FPMEL_MAPCO2_Battelle_Seaology%2F&sa=D&sntz=1&usg=AFQjCNFcX7Ae-syHo_0z71B5UC_mWgyOtQ http://www.google.com/url?q=http%3A%2F%2Fwww.act-us.info%2FDownload%2FEvaluations%2FpCO2%2FPMEL_MAPCO2_Battelle_Seaology%2F&sa=D&sntz=1&usg=AFQjCNFcX7Ae-syHo_0z71B5UC_mWgyOtQ http://www.google.com/url?q=http%3A%2F%2Fwww.licor.com%2Fenv%2Fpdf%2Fgas_analyzers%2F820%2F820_brochure.pdf&sa=D&sntz=1&usg=AFQjCNETTNIJgo7TOn2CaMGQpo0OpxBJ0w

Q: Subtopic 8.2.2R: I understand that there are many different buoys, but perhaps you can provide some general information on stabilility, power availability, and its sampling system?

A: Stability (pitch, roll, yaw) = about a max of +/- 15 deg. for roll and pitch. Time scales are very wave state dependent anywhere from 1s to 20s+ periods, pitch/ roll can be greater in really rough sea states. Yaw is very buoy / mooring dependent (most buoys are non-directional (i.e. have no preferred orientation), so they tend to yaw on longer time scales maybe 10 deg. in 10 minutes).

Power availability (amperage, AC/DC, generating capacity, storage capacity) = see References website for ACT-us for additional details.

Sampling system

○ Available flow = 1 lpm, but it can be modified

○ Sample conditioning, especially particulate filtering = current filtering using pall filter 66149, see: http://www.pall.com/main/laboratory/product.page?id=20061 and syringe filter:

http://www.coleparmer.com/Product/Cole_Parmer_PTFE_Nonsterile_Syringe_Filters_0

_45/EW-02915-22.

○ The gas is also passed thru a silica dryer to keep the water vapor from condensing in the detector, which results in the 85% RH non-condensing.

○ Tubing - Lengths, diameter, materials = total is ~ 30' of 1/16" ID Kynar and / or PTFE tubing.

Q. Subtopic 8.4.5 R,W-P: Is the project solicitation open to alternative solutions to those outlined that achieve the technical objectives of dropsondes in an unconventional UAS platform? (e.g., distinct from conventional fixed-wing and rotorcraft designs).

A. The subtopic includes the requirements we want to achieve. How those requirements are met is up to the proposer.

Q: Subtopic 8.4.5 R,W-P: Similarly, with regards to this project is there interest in exploring the application of a persistent airborne sense/warning UAS technology for this purpose?

A. Any proposed device that meets the requirements listed in the subtopic will be reviewed.

http://www.google.com/url?q=http%3A%2F%2Fwww.pall.com%2Fmain%2Flaboratory%2Fproduct.page%3Fid%3D20061&sa=D&sntz=1&usg=AFQjCNHi8_shiKxbWujA2zSl0C9TzUB5sg http://www.google.com/url?q=http%3A%2F%2Fwww.pall.com%2Fmain%2Flaboratory%2Fproduct.page%3Fid%3D20061&sa=D&sntz=1&usg=AFQjCNHi8_shiKxbWujA2zSl0C9TzUB5sg http://www.google.com/url?q=http%3A%2F%2Fwww.coleparmer.com%2FProduct%2FCole_Parmer_PTFE_Nonsterile_Syringe_Filters_0_45%2FEW-02915-22&sa=D&sntz=1&usg=AFQjCNGaqh0hPi3xe0r4SWvaKpUc84DnhQ http://www.google.com/url?q=http%3A%2F%2Fwww.coleparmer.com%2FProduct%2FCole_Parmer_PTFE_Nonsterile_Syringe_Filters_0_45%2FEW-02915-22&sa=D&sntz=1&usg=AFQjCNGaqh0hPi3xe0r4SWvaKpUc84DnhQ

13 CFR §121.702 What size and eligibility standards are applicable to the SBIR and STTR programs?

To be eligible for award of funding agreements in SBA's SBIR and STTR programs, a business concern must meet the requirements below at the time of award of an SBIR or STTR Phase I or Phase II funding agreement:

(a) Ownership and control for the SBIR program.

(1) An SBIR awardee must:

(i) Be a concern which is more than 50% directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other small business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), or any combination of these;

(ii) Be a concern which is more than 50% owned by multiple venture capital operating companies, hedge funds, private equity firms, or any combination of these (for agencies electing to use the authority in 15 U.S.C. 638(dd)(1)); or

(iii) Be a joint venture in which each entity to the joint venture must meet the requirements set forth in paragraph (a)(1)(i) or (a)(1)(ii) of this section. A joint venture that includes one or more concerns that meet the requirements of paragraph (a)(1)(ii) of this section must comply with §121.705(b) concerning registration and proposal requirements.

(2) No single venture capital operating company, hedge fund, or private equity firm may own more than 50% of the concern.

(3) If an Employee Stock Ownership Plan owns all or part of the concern, each stock trustee and plan member is considered an owner.

(4) If a trust owns all or part of the concern, each trustee and trust beneficiary is considered an owner.

(b) Ownership and control for the STTR program.

(1) An STTR awardee must:

(i) Be a concern which is more than 50% directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other small business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), or any combination of these; or

(ii) Be a joint venture in which each entity to the joint venture must meet the requirements set forth in paragraph (b)(1)(i) of this section.

(2) If an Employee Stock Ownership Plan owns all or part of the concern, each stock trustee and plan member is considered an owner.

(3) If a trust owns all or part of the concern, each trustee and trust beneficiary is considered an owner.

(c) Size and affiliation. An SBIR or STTR awardee, together with its affiliates, must not have more than 500 employees. Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists. For the purposes of the SBIR and STTR programs, the following bases of affiliation apply:

(1) Affiliation based on ownership. For determining affiliation based on equity ownership, a concern is an affiliate of an individual, concern, or entity that owns or has the power to control more than 50 percent of the concern's voting equity. However, SBA may find a concern an affiliate of an individual, concern, or entity that owns or has the power to control 40% or more of the voting equity based upon the totality of circumstances. If no individual, concern, or entity is found to control, SBA will deem the Board of Directors to be in control of the concern.

(2) Affiliation arising under stock options, convertible securities, and agreements to merge. In determining size, SBA considers stock options, convertible securities, and agreements to merge (including agreements in principle) to have a present effect on the power to control a concern. SBA treats such options, convertible securities, and agreements as though the rights granted have been exercised.

(i) Agreements to open or continue negotiations towards the possibility of a merger or a sale of stock at some later date are not considered “agreements in principle” and are thus not given present effect.

(ii) Options, convertible securities, and agreements that are subject to conditions precedent which are incapable of fulfillment, speculative, conjectural, or unenforceable under state or Federal law, or where the probability of the transaction (or exercise of the rights) occurring is shown to be extremely remote, are not given present effect.

(iii) An individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. SBA will not give present effect to individuals', concerns' or other entities' ability to divest all or part of their ownership interest in order to avoid a finding of affiliation.

(3) Affiliation based on common management. Affiliation arises where the CEO or President of a concern (or other officers, managing members, or partners who control the management of the concern) also controls the management of one or more other concerns. Affiliation also arises where a single individual, concern, or entity that controls the board of directors of one concern also controls the board of directors or management of one or more other concerns.

(4) Affiliation based on identity of interest. Affiliation may arise among two or more persons (including any individual, concern or other entity) with an identity of interest. An individual, concern or entity may rebut a determination of identity of interest with evidence showing that the interests deemed to be one are in fact separate.

(i) SBA may presume an identity of interest between family members with identical or substantially identical business or economic interests (such as where the family members operate concerns in the same or similar industry in the same geographic area).

(ii) SBA may presume an identity of interest based upon economic dependence if the SBIR/STTR awardee relies upon another concern or entity for 70% or more of its receipts.

(iii) An SBIR or STTR awardee is not affiliated with a portfolio company of a venture capital operating company, hedge fund, or private equity firm, solely on the basis of one or more shared investors, though affiliation may be found for other reasons.

(5) Affiliation based on the newly organized concern rule. Affiliation may arise where former or current officers, directors, principal stockholders, managing members, general partners, or key employees of one concern organize a new concern in the same or related industry or field of operation, and serve as the new concern's officers, directors, principal stockholders, managing members, general partners, or key employees, and the one concern is furnishing or will furnish the new concern with contracts, financial or technical assistance, indemnification on bid or performance bonds, and/or other facilities, whether for a fee or otherwise. A concern may rebut such an affiliation determination by demonstrating a clear line of fracture between the two concerns. A “key employee” is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern. A concern will be considered “new” for the purpose of this rule if it has been actively operating continuously for less than one year.

(6) Affiliation based on joint ventures. Concerns submitting an application as a joint venture are affiliated with each other with regard to the application. SBA will apply the joint venture affiliation exception at §121.103(h)(3)(iii) for two firms approved to be a mentor and protégé under SBA's 8(a) program.

(7) Affiliation based on the ostensible subcontractor rule. A concern and its ostensible subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes. An ostensible subcontractor is a subcontractor or subgrantee that performs primary and vital requirements of a funding agreement (i.e., those requirements associated with the principal purpose of the funding agreement), or a subcontractor or subgrantee upon which the concern is unusually reliant. All aspects of the relationship between the concern and subcontractor are considered, including, but not limited to, the terms of the proposal (such as management, technical responsibilities, and the percentage of subcontracted work) and agreements between the concern and subcontractor or subgrantee (such as bonding assistance or the teaming agreement). To determine whether a subcontractor performs primary and vital requirements of a funding agreement, SBA will consider whether the concern's proposal complies with the performance requirements of the SBIR or STTR program.

(8) Affiliation based on license agreements. SBA will consider whether there is a license agreement concerning a product or trademark which is critical to operation of the licensee. The license agreement will not cause the licensor to be affiliated with the licensee if the licensee has the right to profit from its efforts and bears the risk of loss. Affiliation may arise, however, through other means, such as common ownership or common management.

(9) Exception to affiliation for portfolio companies. If a venture capital operating company, hedge fund, or private equity firm that is determined to be affiliated with an awardee is a minority investor in the awardee, the awardee is not affiliated with a portfolio company of the venture capital operating company, hedge fund, or private equity firm, unless:

(i) The venture capital operating company, hedge fund, or private equity firm owns a majority of the portfolio company; or

(ii) The venture capital operating company, hedge fund, or private equity firms holds a majority of the seats of the board of directors of the portfolio company.

(10) Totality of the circumstances. In determining whether affiliation exists, SBA may consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.

(d) Calculating ownership and control. SBA will review the small business' equity ownership on a fully diluted basis for purposes of determining ownership, control and affiliation in the SBIR and STTR programs. This means that SBA will consider the total number of shares or equity that would be outstanding if all possible sources of conversion were exercised, including, but not limited to:

Outstanding common stock or equity, outstanding preferred stock (on a converted to common basis) or equity, outstanding warrants (on an as exercised and converted to common basis), outstanding options and options reserved for future grants, and any other convertible securities on an as converted to common basis.

[77 FR 76225, Dec. 27, 2012; 78 FR 11745, Feb. 20, 2013]

13 CFR §121.103 How does SBA determine affiliation?

(a) General Principles of Affiliation.

(1) Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists.

(2) SBA considers factors such as ownership, management, previous relationships with or ties to another concern, and contractual relationships, in determining whether affiliation exists.

(3) Control may be affirmative or negative. Negative control includes, but is not limited to, instances where a minority shareholder has the ability, under the concern's charter, by-laws, or shareholder's agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders.

(4) Affiliation may be found where an individual, concern, or entity exercises control indirectly through a third party.

(5) In determining whether affiliation exists, SBA will consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.

(6) In determining the concern's size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit.

(7) For SBA's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, the bases for affiliation are set forth in §121.702...

(b) Exceptions to affiliation coverage.

(1) Business concerns owned in whole or substantial part by investment companies licensed, or development companies qualifying, under the Small Business Investment Act of 1958, as amended, are not considered affiliates of such investment companies or development companies.

(2)

(i) Business concerns owned and controlled by Indian Tribes, Alaska Native Corporations (ANCs) organized pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), Native Hawaiian Organizations (NHOs), Community Development Corporations (CDCs) authorized by 42 U.S.C. 9805, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or CDCs are not considered affiliates of such entities.

(ii) Business concerns owned and controlled by Indian Tribes, ANCs, NHOs, CDCs, or wholly-owned entities of Indian Tribes, ANCs, NHOs, or CDCs are not considered to be affiliated with other concerns owned by these entities because of their common ownership or common management. In addition, affiliation will not be found based upon the performance of common administrative services, such as bookkeeping and payroll, so long as adequate payment is provided for those services. Affiliation may be found for other reasons.

(3) Business concerns which are part of an SBA approved pool of concerns for a joint program of research and development or for defense production as authorized by the Small Business Act are not affiliates of one another because of the pool.

(4) Business concerns which lease employees from concerns primarily engaged in leasing employees to other businesses or which enter into a co-employer arrangement with a Professional Employer Organization (PEO) are not affiliated with the leasing company or PEO solely on the basis of a leasing agreement.

(5) For financial, management or technical assistance under the Small Business Investment Act of 1958, as amended, (an applicant is not affiliated with the investors listed in paragraphs (b)(5) (i) through (vi) of this section.

(i) Venture capital operating companies, as defined in the U.S. Department of Labor regulations found at 29 CFR 2510.3-101(d);

(ii) Employee benefit or pension plans established and maintained by the Federal government or any state, or their political subdivisions, or any agency or instrumentality thereof, for the benefit of employees;

(iii) Employee benefit or pension plans within the meaning of the Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. 1001, et seq.);

(iv) Charitable trusts, foundations, endowments, or similar organizations exempt from Federal income taxation under section 501(c) of the Internal Revenue Code of 1986, as amended (26 U.S.C.

501(c));

(v) Investment companies registered under the Investment Company Act of 1940, as amended (1940 Act) (15 U.S.C. 80a-1, et seq.); and

(vi) Investment companies, as defined under the 1940 Act, which are not registered under the 1940 Act because they are beneficially owned by less than 100 persons, if the company's sales literature or organizational documents indicate that its principal purpose is investment in securities rather than the operation of commercial enterprises.

(6) An 8(a) BD Participant that has an SBA-approved mentor/protégé agreement is not affiliated with a mentor firm solely because the protégé firm receives assistance from the mentor under the agreement. Similarly, a protégé firm is not affiliated with its mentor solely because the protégé firm receives assistance from the mentor under a Federal Mentor-Protégé program where an exception to affiliation is specifically authorized by statute or by SBA under the procedures set forth in §121.903.

Affiliation may be found in either case for other reasons.

(7) The member shareholders of a small agricultural cooperative, as defined in the Agricultural Marketing Act (12 U.S.C. 1141j), are not considered affiliated with the cooperative by virtue of their membership in the cooperative.

(8) These exceptions to affiliation and any others set forth in §121.702 apply for purposes of SBA's SBIR and STTR programs.

(9) In the case of a solicitation of offers for a bundled contract with a reserve (as defined in §125.1), a small business concern prime contractor may enter into a Small Business Teaming Arrangement with one or more other small business concerns and submit an offer as a small business for a Federal procurement without regard to affiliation, so long as each team member is small under the size standard corresponding to the NAICS code assigned to the contract and there is a written, signed teaming or joint venture agreement amongst the small business concerns. See §125.1 for the definition of Small Business Teaming Arrangement. With respect to Small Business Teaming Arrangements that are joint ventures, see §121.103(h) for specific requirements and limitations.

(c) Affiliation based on stock ownership.

(1) A person (including any individual, concern or other entity) that owns, or has the power to control, 50 percent or more of a concern's voting stock, or a block of voting stock which is large compared to other outstanding blocks of voting stock, controls or has the power to control the concern.

(2) If two or more persons (including any individual, concern or other entity) each owns, controls, or has the power to control less than 50 percent of a concern's voting stock, and such minority holdings are equal or approximately equal in size, and the aggregate of these minority holdings is large as compared with any other stock holding, SBA presumes that each such person controls or has the power to control the concern whose size is at issue. This presumption may be rebutted by a showing that such control or power to control does not in fact exist.

(3) If a concern's voting stock is widely held and no single block of stock is large as compared with all other stock holdings, the concern's Board of Directors and CEO or President will be deemed to have the power to control the concern in the absence of evidence to the contrary.

(d) Affiliation arising under stock options, convertible securities, and agreements to merge.

(1) In determining size, SBA considers stock options, convertible securities, and agreements to merge (including agreements in principle) to have a present effect on the power to control a concern. SBA treats such options, convertible securities, and agreements as though the rights granted have been exercised.

(2) Agreements to open or continue negotiations towards the possibility of a merger or a sale of stock at some later date are not considered “agreements in principle” and are thus not given present effect.

(3) Options, convertible securities, and agreements that are subject to conditions precedent which are incapable of fulfillment, speculative, conjectural, or unenforceable under state or Federal law, or where the probability of the transaction (or exercise of the rights) occurring is shown to be extremely remote, are not given present effect.

(4) An individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. SBA will not give present effect to individuals', concerns' or other entities' ability to divest all or part of their ownership interest in order to avoid a finding of affiliation.

(e) Affiliation based on common management. Affiliation arises where one or more officers, directors, managing members, or partners who control the board of directors and/or management of one concern also control the board of directors or management of one or more other concerns.

(f) Affiliation based on identity of interest. Affiliation may arise among two or more persons with an identity of interest. Individuals or firms that have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships) may be treated as one party with such interests aggregated. Where SBA determines that such interests should be aggregated, an individual or firm may rebut that determination with evidence showing that the interests deemed to be one are in fact separate.

(g) Affiliation based on the newly organized concern rule. Affiliation may arise where former officers, directors, principal stockholders, managing members, or key employees of one concern organize a new concern in the same or related industry or field of operation, and serve as the new concern's officers, directors, principal stockholders, managing members, or key employees, and the one concern is furnishing or will furnish the new concern with contracts, financial or technical assistance, indemnification on bid or performance bonds, and/or other facilities, whether for a fee or otherwise.

A concern may rebut such an affiliation determination by demonstrating a clear line of fracture between the two concerns. A “key employee” is an employee who, because of his/her position in the concern, has a critical influence in or substantive control over the operations or management of the concern.

(h) Affiliation based on joint ventures. A joint venture is an association of individuals and/or concerns with interests in any degree or proportion consorting to engage in and carry out no more than three specific or limited-purpose business ventures for joint profit over a two year period, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. This means that a specific joint venture entity generally may not be awarded more than three contracts over a two year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for all purposes. Once a joint venture receives one contract, SBA will determine compliance with the three awards in two years rule for future awards as of the date of initial offer including price. As such, an individual joint venture may be awarded more than three contracts without SBA finding general affiliation between the joint venture partners where the joint venture had received two or fewer contracts as of the date it submitted one or more additional offers which thereafter result in one or more additional contract awards. The same two (or more) entities may create additional joint ventures, and each new joint venture entity may be awarded up to three contracts in accordance with this section. At some point, however, such a longstanding inter-relationship or contractual dependence between the same joint venture partners will lead to a finding of general affiliation between and among them. For purposes of this provision and in order to facilitate tracking of the number of contract awards made to a joint venture, a joint venture must be in writing and must do business under its own name, and it may (but need not) be in the form of a separate legal entity, and if it is a separate legal entity it may (but need not) be populated (i.e., have its own separate employees). SBA may also determine that the relationship between a prime contractor and its subcontractor is a joint venture, and that affiliation between the two exists, pursuant to paragraph (h)(4) of this section.

Example 1 to paragraph (h) introductory text. Joint Venture AB has received two contracts. On April 2, Joint Venture AB submits an offer for Solicitation 1. On June 6, Joint Venture AB submits an offer for Solicitation 2. On July 13, Joint Venture AB submits an offer for Solicitation 3. In September, Joint Venture AB is found to be the apparent successful offeror for all three solicitations. Even though the award of the three contracts would give Joint Venture AB a total of five contract awards, it could receive those awards without causing general affiliation between its joint venture partners because Joint Venture AB had not yet received three contract awards as of the dates of the offers for each of three solicitations at issue.

Example 2 to paragraph (h) introductory text. Joint Venture XY receives a contract on December 19, year 1. It may receive two additional contracts through December 19, year 3. On August 6, year 2, XY receives a second contract. It receives no other contract awards through December 19, year 3 and has submitted no additional offers prior to December 19, year 3. Because two years have passed since the date of the first contract award, after December 19, year 3, XY cannot receive an additional contract award. The individual parties to XY must form a new joint venture if they want to seek and be awarded additional contracts as a joint venture.

Example 3 to paragraph (h) introductory text. Joint Venture XY receives a contract on December 19, year 1. On May 22, year 2, XY submits an offer for Solicitation 1. On June 10, year 2, XY submits an offer for Solicitation 2. On June 19, year 2, XY receives a second contract responding to Solicitation 1.

XY is not awarded a contract responding to Solicitation 2. On December 15, year 3, XY submits an offer for Solicitation 3. In January, XY is found to be the apparent successful offeror for Solicitation 3. XY is eligible for the contract award because compliance with the three awards in two years rule is determined as of the date of the initial offer including price, XY submitted its offer prior to December 19, year 3, and XY had not received three contract awards prior to its offer on December 15.

(1) Parties to a joint venture are affiliates if any one of them seeks SBA financial assistance for use in connection with the joint venture.

(2) Except as provided in paragraph (h)(3) of this section, concerns submitting offers on a particular procurement or property sale as joint venturers are affiliated with each other with regard to the performance of that contract.

(3) Exception to affiliation for certain joint ventures.

(i) A joint venture of two or more business concerns may submit an offer as a small business for a Federal procurement without regard to affiliation under paragraph (h) of this section so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract, provided:

(A) The procurement qualifies as a bundled or consolidated requirement, at any dollar value, within the meaning of §125.2(d) of this chapter; or

(B) The procurement is other than bundled or consolidated requirement within the meaning of §125.2(d) of this chapter, and:

(1) For a procurement having a receipts based size standard, the dollar value of the procurement, including options, exceeds half the size standard corresponding to the NAICS code assigned to the contract; or

(2) For a procurement having an employee-based size standard, the dollar value of the procurement, including options, exceeds $10 million.

(ii) A joint venture of at least one 8(a) Participant and one or more other business concerns may submit an offer for a competitive 8(a) procurement without regard to affiliation under paragraph (h) of this section so long as the requirements of §124.513(b)(1) of this chapter are met.

(iii) Two firms approved by SBA to be a mentor and protégé under §124.520 of these regulations may joint venture as a small business for any Federal government prime contract or subcontract, provided the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement and, for purposes of 8(a) sole source requirements, has not reached the dollar limit set forth in §124.519 of these regulations. If the procurement is to be awarded through the 8(a) BD program, SBA must approve the joint venture pursuant to §124.513. If the procurement is to be awarded other than through the 8(a) BD program (e.g., small business set aside, HUBZone set aside), SBA need not approve the joint venture prior to award, but if the size status of the joint venture is protested, the provisions of §§124.513(c) and

(d) will apply. This means that the joint venture must meet the requirements of §§124.513(c) and (d) in order to receive the exception to affiliation authorized by this paragraph. In either case, after contract performance is complete, the 8(a) partner to the joint venture must submit a report to its servicing SBA district office explaining how the applicable performance of work requirements were met for the contract.

(4) A contractor and its ostensible subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes. An ostensible subcontractor is a subcontractor that performs primary and vital requirements of a contract, or of an order under a multiple award schedule contract, or a subcontractor upon which the prime contractor is unusually reliant. All aspects of the relationship between the prime and subcontractor are considered, including, but not limited to, the terms of the proposal (such as contract management, technical responsibilities, and the percentage of subcontracted work), agreements between the prime and subcontractor (such as bonding assistance or the teaming agreement), and whether the subcontractor is the incumbent…