Independent, not SAM.gov

Affiliate rules that decide your small business size in 2026

Updated 6 October 2026

ZeroGov covers the lane of US federal contracting for small businesses, and we are independent of SAM.gov and the agencies. The affiliate question sits inside that lane because size determination is a per-offer decision, while your SAM.gov record is just the doorway.

Why affiliate rules matter more than the size threshold

Most contractors fixate on the dollar figure in SBA's size table. The 2026 SBA size standards proposal, published for comment in summer 2026, tweaks a lot of those numbers, but the affiliate tests in 13 CFR 121.103 are the actual gate. Two companies can each post $14 million in revenue and be small individually, and be considered a single $28 million concern once affiliation is found, which is enough to knock a business out of most NAICS codes under the new proposed levels.

Affiliation can come from stock, board overlap, a management contract, or a long string of joint venture deals. It can also come from the HUBZone, 8(a) or WOSB status of a sister firm. The size protest does not ask whether you feel small. It asks whether you are small, defined as a concern that is independently owned and operated, and is not dominant in its field.

The four tests SBA actually applies

SBA's size specialists work through a checklist that, in practice, always circles back to the same four questions.

Ownership. More than 50 percent common stock or ownership of two or more parties acting in concert flips affiliation on its own. The 2026 proposed rule keeps that 50 percent line, even as it revises dollar thresholds around it.

Control. A minority owner can still affiliate the companies if that owner controls the board, sets the day to day decisions, or holds the power to do so. Control can be rebuttable, but the rebuttal must be in writing and dated before the protest lands.

Revolving door executives. If the same person is the CEO of both firms, or was an officer of one within the past year, affiliation is presumed. The presumption is the same in the August 2026 proposed rule as it was in earlier guidance.

Identical or substantially identical business. Two sister firms in the same NAICS code, working the same customer base, are presumed affiliated. The exception is for businesses that can show they operated separately, with separate customers and separate facilities, for at least three years.

Joint ventures and the ostensible subcontractor rule

Joint ventures are the most common affiliate trap. A small prime and a large mentor can form a populated joint venture to chase an 8(a) or WOSB set-aside, and that structure works, until the size specialist runs the math on the joint venture itself.

SBA reviews the joint venture partner's revenue first, then the joint venture itself. The proposed 2026 size standards would push several revenue thresholds higher, so a partner that looked too big at the old line might now fit. But the ostensible subcontractor rule is unchanged. If the small partner is doing less than 40 percent of the work, the joint venture is treated as a large concern, regardless of the revenue number.

For mentor protégé joint ventures, the mentor's size is not the issue. The revenue of the mentor and its affiliates is. A mentor pulling in $50 million in revenue does not, on its own, affiliate the joint venture. A mentor that owns 51 percent of the small protégé's parent does.

How SBA adds up revenue for an affiliated group

Once affiliation is found, the math is mechanical. SBA totals the receipts of the affiliated concern, deducts 34 CFR 121.104 items such as the excluded interest, and uses a three year average unless the concern has been in business for less than five years.

The 2026 proposed rule continues to use the same three year averaging method. The dollar figures change, the averaging does not. So a company whose three year average is $19 million under today's $25.5 million NAICS ceiling might be safe today and out at the proposed $22 million ceiling, but only because of the affiliate total, not the test itself.

A worked example: two LLCs, one landlord

Consider two LLCs sharing an address, sharing a registered agent, and sharing a single office manager. The members are spouses. Each LLC holds a separate SAM.gov record. Each LLC has its own NAICS code, one in 541512 and one in 541715.

SBA's size specialist is going to ask for the operating agreements, the lease, the bank statements, the payroll records and the meeting minutes. If the spouse is the sole signatory on both accounts, the presumption is affiliation under identical or substantially identical business. The only rebuttal is three years of arm's length operation, with separate customers, separate staff, and a paper trail that shows it.

What this page is not

This page is not a substitute for legal advice on a live size protest. It is not a description of the 8(a) social disadvantage rule, which ZeroGov covered separately, and it is not a checklist for the SAM.gov renewal deadline, which is its own article. It is also not a comparison of SAM.gov and UEI, and it is not a step by step on the FAR overhaul.

What to put in your file before the next solicitation

The cleanest defence against an affiliation protest is a paper trail that is older than the protest. Keep these in a single folder, scanned and dated, before you bid.

Operating agreements that name all owners, all classes of membership, and the percentage of every class, with the signatures dated before any contract action. Board minutes or written consents for every decision that could be read as control. Bank statements that show separate accounts, paid by separate payroll runs, with no transfers that look like a parent covering a child's loss. Customer lists that show real overlap only where the work required it, and overlap that has been disclosed in offers before bid opening. A written rebuttal template, dated, in the file before the solicitation lands.

Where the 2026 proposal leaves the affiliate tests

The proposed rule that opened for comment in summer 2026 left the affiliate tests alone, which is itself newsworthy. The dollar thresholds in the size table moved, the employee based size standards for several services NAICS moved, and the receipts averaging for 5 year concerns moved. The four affiliation tests did not move.

That means contractors preparing for set-asides in late 2026 should size up the affiliate exposure first, and the size threshold second. If the affiliate exposure is wrong, the threshold number is decoration. The size protest is decided on affiliation, every time, and the only thing that changes between now and the final rule is the threshold that the affiliation total gets compared to.

Where ZeroGov fits in

ZeroGov covers the lane of US federal contracting for small businesses, and we are independent of SAM.gov, of SBA, and of any agency. The affiliate question is exactly the kind of lane question we cover, because it sits between your SAM.gov record, your size determination, and your offer. We do not file size protests. We do not draft operating agreements. We explain the test, point at the sources, and let you and your counsel decide.

Independent information, not legal advice. Confirm status and rules on sam.gov and the current FAR text.