TAYLOR CONSULTANTS, INC., APPELLANT

*1 This appeal arises from a January 26,2006 size determination finding Appellant to be other than a small business. This Office decides size determination appeals under the Small Business Act of 1958,15 U.S.C. § 631 et seq., and 13 C.F.R. Parts 121 and 134.

*1 Whether the Area Office made a clear error of fact or law when it determined Taylor Consultants, Inc., not to be a small business based upon its affiliation with an other than small concern because of the application of the ostensible subcontractor rule or the newly organized concern rule.

*1 1. The U.S. Department of the Army, Army National Guard Bureau, Arlington, Virginia, (“Army”), issued RFP No. W9133L-06-R-0003 (“RFP”) on November 1,2005. The Army sought to award a fixed-price Level of Effort Direct Labor contract with cost reimbursable line items for Family Assistance Center Services at locations throughout the United States (RFP, Section C.) The Army anticipated the contract term to include one base year and up to four option years (RFP, Section I, page 37).

*2 2. The Army Contracting Officer (“CO”) set-aside the procurement for small businesses under North American Industry Classification System (“NAICS”) code 541611, Administrative Management and General Management Consulting Services. This NAICS code has a $6 million average annual receipts size standard (See Amendment 0001, Section K, page 13 and note reply to question No. 27 at page 11).

*2 3. RFP Section M, Evaluation Factors for Award, states the evaluation factors are, in order of importance: (1) Technical Expertise and Experience; (2) Management Plan; (3) Personnel/Staffing Plan; (4) Past Performance; and (5) Cost. Award was to be based upon an integrated assessment of the offerer's solicitation response.

*2 4. Taylor Consultants, Inc.,¹ (“Appellant”) certified it was small under NAICS code 541618 on December 5,2005, the date of its offer under the RFP² (Appellant's Offer - certifications). Appellant's Offer for the first year (including travel) exceeded $XX³ million dollars and increased for each subsequent option year.

*2 5. The CO notified the unsuccessful offerors of his intent to award a contract arising from the RFP to Appellant on December 20,2005 (Sygnetics letter of December 22,2005). The CO awarded the contract anticipated by the RFP to Appellant on December 21,2005 (e-mail of December 23,2005).

*2 6. On December 22,2005, the CO received a detailed and specific size protest from Sygnetics, Inc (“Sygnetics”) (e-mail of December 23,2005). Sygnetics alleged Appellant was an affiliate of Military Personnel Services Corporation (“MPSC”), a concern whose size exceeded standard for the NAICS code designated in the RFP. Sygnetics alleged MPSC shared a common management with Appellant and shared an identity of interest. Alternatively, it alleged Appellant and MPSC were affiliated under the ostensible subcontractor rule. Sygnetics included significant exposition (including documents) to support its protest,

*2 7. In a letter dated December 23,2005, Calumet Group, Inc. (“Calumet”) filed a protest with the CO. Calumet also alleged Appellant was affiliated with MPSC and in violation of the ostensible subcontractor rule. However, Calumet also alleged MPSC and Appellant were affiliated under the newly organized concern principle (13 C.F.R. § 121.103(g)).

*2 8. The CO forwarded both protests to the U.S. Small Business Administration (“SBA”), Office of Government Contracting, Area II (“Area Office”) on December 27,2005. The Area Office sent Appellant copies of the protests (2-2006-24 & 25) on January 4,2005. In its letter providing the protests, the Area Office asked Appellant to provide certain information, including a completed SBA Form 355.

*2 9. Appellant provided the Area Office with completed SBA Form 355 for itself, a copy of its Teaming Agreement with MPSC, relevant copies of its S Corporation Income Tax Returns, financial statements, a response to the protestors' allegations, and other written information.

*3 10. In its January 9,2006 certified responses to the Area Office, Appellant:

*3 On January 26,2006, the Area Office issued Size Determination Nos. 2-2006-24 & 25 (“size determination”) finding Appellant was not a small business under NAICS code 541611. In its size determination, the Area Office summarized both protests, found both protests to be timely, and combined both protests.

*3 The Area Office considered and summarized the facts alleged by Appellant. Some of the facts it relied upon in finding affiliation between MPSC and Appellant include:

*3 a. Thomas Taylor established Appellant on April 6,2000, Mr. Taylor owns 100% of Appellant. He is also the President/CEO and sole Director of Appellant and is currently employed by MPSC;

*3 b. Appellant claims no affiliates and reports it currently has XX employees;

*3 c. Appellant provided no income tax returns for 2005,2004, and 2003. Appellant stated the return for 2005 has not been prepared, but states it had about $XXX,XXXXXXXXX in total income. Appellant states it was dormant for 2004 and 2003. The Area Office found Appellant had zero revenues for 2001 and 2000.⁴

*3 d. Appellant did not contest that MPSC is other than small for the size standard applicable to the RFP;

*3 e. The CO stated MPSC is the incumbent contractor for parts of the work required by the RFP;

*3 f. MPSC has XXX employees available to work on the procurement;

*4 g. Mr. Taylor is a Senior Consultant/Director of Education and Training of MPSC (since 2000) and 16% shareholder of MPSC;

*4 h. The purpose of the Teaming Agreement between MPSC and Appellant was to pursue work with the Air and Army National Guard Family Programs. The word team in the proposal refers to Appellant and MPSC;

*4 i. At least three and possibly four members of the Executive Management Team for the procurement are currently MPSC employees;

*4 j. Appellant's technical proposal included three resumes for three key individuals. Two of the three are MPSC employees; and

*4 k. Volume 2 of Appellant's proposal shows MPSC has substantial performance experience and Appellant has minimal performance experience.

*4 The Area Office initiated the “Findings” portion of its size determination by quoting 13 C.F.R. § 121.103(a)(l) through (5). This part of SBA's size regulations addresses determining affiliation through analysis of the power of one concern to control another. 13 C.F.R. § 121.103(a)(5) requires the Area Office to consider the totality of the circumstances in determining affiliation. In response to this requirement, the Area Office concluded the totality of the factors listed in 13 C.F.R. § 121.103(a) supports a finding of affiliation between Appellant and MPSC. It noted that since Mr. Taylor, Appellant's President, was still an employee of MPSC, this gave MPSC the power to control Appellant. However, the Area Office also stated there were other factors that showed MPSC had the ability to control Appellant that it would discuss in the remainder of the size determination.

*4 The Area Office next addressed the newly organized concern rule (13 C.F.R. § 121.103(g)) raised by the Calumet protest. The Area Office inserted the entire text of 13 C.F.R. § 121.103(g) and cited Size Appeal ofB.L. Harbert, LLC, to identify the four elements that must be satisfied for affiliation under the newly organized concern rule (SB A No. SIZ-4525 (2002)). The Area Office specifically found that:

*4 a. Mr. Taylor was employed at MPSC as a Senior Consultant/Director of Training;

*4 b. That as a director of a division and/or a unit of a company it can reasonably be concluded that Mr. Taylor has critical influence and is/was a key employee of MPSC;

*4 c. Mr. Taylor is President and owner of Appellant;

*4 d. MPSC and Appellant are in the same line of business;

*4 e. MPSC is providing, at a minimum, technical assistance for work required by the RFP; and

*4 f. Appellant has demonstrated no clear fracture between itself and MPSC.

*5 The Area Office also addressed the ostensible subcontractor rule issue raised by both protestors (13 C.F.R. § 121.103(h)(4)). The Area Office states the test for this rule is whether the prime is unusually reliant upon the subcontractor. The Area Office explained concerns may augment their skills by subcontracting out part of the work, provided certain standards are met. Then, it discussed the “Seven Factors Test” this Office originally mentioned in Size Appeal of D.P. Associates, Inc., and applied those factors to this case (SBA No. SIZ-2719 (1987)).

*5 The Area Office first analyzed who is going to manage the contract. It found that of the four individuals listed as part of the Appellant/MPSC Executive Management Team, three are currently employed by MPSC. Thus, it found it reasonable to conclude that MPSC was really managing the contract.

*5 Next, the Area Office analyzed which party had the requisite background and expertise to perform the contract. It concluded the evidence showed that MPSC had the experience and expertise necessary to perform the work and not Appellant.

*5 The Area Office also analyzed the degree of collaboration that probably occurred in constructing Appellant's Proposal. It found that based upon the Teaming Agreement and the makeup of the key managers, MPSC had a significant amount of input and collaboration in constructing the proposal.

*5 The Area Office also found there would be commingling of personnel. Essentially, it pointed out there was no outline of tasks to be performed by MPSC and Appellant, nor was there a breakdown of costs between the two. The Area Office noted that MPSC would be providing around half of the employees to work the contract (XXX). Moreover, the Area Office noted that it could not tell the amount of work being completed by MPSC or Appellant, since the proposal said work would be performed by the MPSC/Appellant Team. Nor could the Area Office decide which party would perform the more complex and costly contract functions. Rather, it noted that only MPSC had the infrastructure in place to perform a contract of this magnitude.

*5 The Area Office went on to review several decisions of this Office affirming findings of unusual reliance. The first decision it noted, Size Appeal of Crown Support Services, Inc., SB A No. SIZ-3294 (1990), affirmed a finding of affiliation based upon facts similar to those found by the Area Office in this case. The Area Office also cited decisions discussing commingling of personnel and constant identification of a team within the proposal, e.g., Size Appeal of Analytical Research Technology, Inc., SBA No. SIZ-3556 (1991) and Size Appeal ofSecTek, Inc.. SBA No. SIZ-4558 (2003).

*6 The Area Office concluded Appellant and MPSC were affiliated because MPSC has the power to control Appellant. It also found Appellant was affiliated by operation of the newly organized concern rule and the ostensible subcontractor rule.

*6 Appellant received the Area Office's size determination on January 26,2006. Appellant filed its appeal of the Area Office's size determination on February 1,2006.

*6 In its Appeal Petition, Appellant challenges the size determination by alleging the Area Office had made several errors of fact and law, including:

*6 1. That Appellant was an inactive business and generated no revenues until 2005. Appellant's counsel alleged it did have income in 2001 and 2002. In addition, counsel notes Mr. Taylor formed Appellant before he became an employee of “TCI”;⁵

*6 2. Overemphasizing MPSC as the incumbent contractor for portions of the work when much of the work was new with a wider scope;

*6 3. Incorrectly finding Mr. Taylor was a key employee of MPSC or that his status as an employee [of MPSC] demonstrated MPSC controlled Appellant when the evidence demonstrates otherwise;

*6 4. Ignoring the clear fracture between Appellant and MPSC as demonstrated by the management roles set forth in the Teaming Agreement and Appellant's independence in performing a contract for the Air Force National Guard without MPSC's help or assistance;

*6 5. The Area Office's misstatement about Appellant's current employment level; i.e., it apparently did not understand Appellant needed to only add XXX employees to the XX it had to perform the contract along with MPSC's XXX employees; and

*6 6. The contract was going to be managed by Appellant and its personnel.

*6 Appellant argues the finding mat MPSC had the power to control Appellant because Mr. Taylor is employed by MPSC is wrong. Essentially, given the case it cites (Size Appeal of Diversified Technical Services, Inc., SBA No. SIZ-3837 (1993)) and the arguments it makes later, Appellant alleges Mr. Taylor is not a key employee of MPSC, Thus, under 13 C.F.R. § 121.103(g), the newly organized concern rule does not apply. Appellant makes other arguments including alleging there is a clear line of fracture and that Appellant's program manager would be in charge of the contract resulting from the RFP.

*6 Appellant also challenges the Area Office's application of the ostensible subcontractor rule in finding that Appellant is unusually reliant upon MPSC. Appellant states the Area Office incorrectly presumes a number of things and downplays TCI's experience, the management structure, and TCI's personnel contribution. Appellant also alleges that since the CO saw no problem with Mr. Taylor's employment or Appellant's transition plan and management structure, the SBA should not either. Finally, Appellant asserts the Area Office is simply wrong when it presumed that more than 50 percent of the critical contract work would be performed by MPSC.

*7 Appellant summarizes its argument by alleging that rather than consider the totality of the circumstances, the Area Office “relied upon isolated snippets and had to assume or presume many things because it did not seek any answers to the apparent questions that did not support its conclusions” (Appeal Petition, page 4).

*7 Finally, Appellant argues Size Appeal of Technical Management & Analysis Corp., SBA No. SEZ-3723 (1993) supports its position in its appeal. In Technology Management, this Office allegedly held there was no affiliation even though there was evidence of mutual recruitment and cooperation in preparing the proposal between various entities. Rather, this Office noted the procurement consolidated several existing contracts and that the resulting contract would exceed the experience and capability of any single subcontractor, many of who were incumbents. Appellant notes that there are no guaranteed percentages and it controls the work assignments in its situation. Since this Office did not find it to be as issue for the prime to laud the experience of its subcontractors in Technology Management, Appellant claims that should be acceptable in the instant case. Finally, Appellant alleges the Technology Management analysis of the “Seven Factors” is applicable and argues that as analyzed by it, the factors do not support a finding of affiliation.

*7 On February 21,2006, Sygnetics filed a request for a Protective Order and for an Extension of Time so that its outside counsel could review the record to prepare Sygnetics response to the appeal. I issued a Protective Order on February 21,2006. The Protective Order permitted outside counsel to apply for access to protected material and extended the time to respond until March 7,2006.

*7 Sygentics' outside counsel applied for access to material subject to the Protective Order as did counsel for Calumet. Sygnetics' counsel replied to Appellant's Appeal Petition on March 7, 2006. Other than a brief statement of opposition to the Appeal Petition Calumet's counsel filed on February 10,2006, Calumet's counsel did not reply to the appeal petition, even though it too applied for access to protected material.

*7 Sygnetics filed a detailed response to the Appeal Petition. It offered facts it says “establish a totality of circumstances that is more than sufficient to support the Area Office's finding under 13 C.F.R. § 121.103 that TCI is affiliated with MPSC and thus not a small business concern for the subject procurement.” Sygnetics first argued the totality of the circumstances demonstrate MPSC is an ostensible subcontractor of Appellant and thus an affiliate under 13 C.F.R. § 121.103(h). Alternatively it alleges Appellant is a newly organized concern and thus an affiliate of MPSC.

*8 Sygnetics then addressed the newly organized concern rule and 13 C.F.R. § 121.103(g). It argues the rule is not an independent basis for a finding of affiliation, but rather a part of a broader inquiry into the totality of the circumstances concerning the relationship of one concern with another.

*8 Sygnetics argues:

*8 (footnotes omitted).

*8 Sygnetics rejects Appellant's assertions that affiliation does not exist because: (1) Appellant planned to hire XXX new employees to work the contract; (2) Thomas Taylor founded TCI a few months before he became an MPSC employee; (3) Thomas Taylor is not a “key” MPSC employee; and (4) The CO found Appellant's arrangement with MPSC to be “no problem” because the RFP provided the agency would assess the past performance information of joint ventures, teaming partners, and major subcontractors.

*8 Sygnetics makes other arguments as well. First, that Appellant's proposal states the “TCI/MPSC” [Appellant/MPSC] team, not the Appellant, would hire XXX new employees. Second, that Thomas Taylor's founding of Appellant before joining MPSC is irrelevant, because Appellant was dormant in 2003 and 2004 and only revived in 2005. By then Mr. Taylor had been employed by MPSC for four years and owned 16% of MPSC. Third, the Area Office was correct to determine Mr. Taylor to be a “key” employee of MPSC, for its website identifies him as one of four individuals on MPSC's Management Team and the MPSC SBA Firm Profile identifies Mr. Taylor as one four MPSC “principals,” and Mr. Taylor owns 16% of MPSC's stock. Finally, it is irrelevant what the CO said since he has no authority to waive affiliation rules.

*8 Appellant appealed the Area Office's January 26,2006 size determination within 15 days of receiving it Therefore, its appeal is timely. 13 C.F.R. § 134.304(a)(l).

*9 The standard of review for this appeal is whether the Area Office based its size determination upon clear error of fact or law. 13 C.F.R. § 134.314. In evaluating whether there is a clear error of fact or law, this Office does not consider Appellant's size de navo. Rather, we (this Office) review the record to determine whether the Area Office based its size determination upon a clear error of fact or law. Thus, I may disturb the Area Office's size determination only if it resulted from a clear error of fact or law based upon the evidence in the record it had at the time it made its determination.

*9 The clear error standard is rigorous but not as deferential as review under the arbitrary and capricious standard See RICHARD S. PIERCE, JR., ADMINISTRATIVE LAW TREATISE, § 11.2 (4th ed. 2002). For example, Black's Law Dictionary defines clear error as “a trial judge's decision or action that appears to a reviewing court to have been unquestionably erroneous.” BLACK'S LAW DICTIONARY 563 (7th ed. 1999). Appellate courts also apply the clear error standard in reviewing a trial court's factual findings. See Easley v. Cromartie, 532 U.S. 234,242 (2001). A reviewing court will not reverse the lower court's finding of fact simply because they would have decided the case differently. Id. Instead, the reviewing court will reverse only if, on the basis of the entire evidence, it is left with the “definite and firm conviction that a mistake has been committed.” Id. (quoting the clearly erroneous standard applied in U.S. v. U.S. Gypsum Co., 333 U.S. 364,395 (1948)). In Easley, the Court applied the same “definite and firm conviction” test used in a clearly erroneous review. Id. The Court engaged in an extensive review of the lower court's findings, for clear error, and found that the review left them “with the definite and firm conviction” that the lower court's key findings were mistaken. Id. at 243 (emphasis added).

*9 “Clear error” is synonymous with the “clearly erroneous” standard of review. Clear error and clearly erroneous are also both “terms of art signaling court/court review.” Dickinson v. Zurko, 527 U.S. 150,152 (1999). Review under the clearly erroneous standard is “significantly deferential” requiring a “definite and firm conviction that a mistake has been committed.” Concrete Pipe and Products of Col. v. Constr. Laborers Pension Trust for S. Cat, 508 U.S. 602, 623 (1993).

*10 The clearly erroneous standard is not as deferential as the reasonableness standard, which requires even greater certainty of error on the part of the reviewing body. Under the reasonableness standard, a reviewing court must sustain the finding of fact unless it is so unlikely that no reasonable person would find it to be true. Concrete Pipe, 508 U.S. at 623. Therefore, this Office interprets clear error and clearly erroneous to mean that on the basis of the Record before the Area Office [entire evidence], we are left with the “definite and firm conviction” that “key findings [legal or factual] are mistaken.” Easley v. Cromartie, 532 U.S. 234,243 (2001) (emphasis added).

*10 In articulating the clear error standard, we are not giving license to Area Offices to be careless or negligent in preparing the Administrative Record. Rather, as long as the Area Office did not commit clear error in the creation of the Record, that is sufficient.

*10 The Record is well developed. It contains information provided by the Appellant and two protestors. I have been unable to find anything discussed by the parties not adequately covered by the Record. Accordingly, I conclude the Record is adequate for a decision on the merits.

*10 I conclude that while I may not have written a decision finding Appellant other than small in the same way the Area Office did, that the size determination is supported by the facts in the Record and it is consistent with the law. I also conclude the size determination discussed that part of the size standards applicable to the facts in the Record.

*10 The Area Office found facts relevant to its size determination. I generally agree with its recitation of the relevant facts. But, I find it did not mention all of the relevant facts the Record could have supported. Accordingly, I find, with some additions, that the relevant facts include:

*10 1. Mr. Thomas Taylor owns Appellant. Mr. Taylor is also the President and CEO of Appellant.

*10 2. Mr. Taylor is an employee of MPSC. He is a Senior Consultant/Director of Education and Training and owns 16% of MPSC's stock. In addition, MPSC lists him in two places as being vital to it. Specifically, MPSC variously calls him a member of its management team (MPSC website) and as a principal (the SB A Firm Profile).

*10 3. Appellant and MPSC are in the same line of work.

*10 4. MPSC is the incumbent contractor for some of the work required by the RFP.

*10 5. MPSC is other than small for the size standard the CO designated for the RFP. It is thus ineligible to make an offer for the RFP.

*10 6. MPSC and Appellant are parties to an active Teaming Agreement designed to lead to business with the Air and Army National Guard Family Programs, the subject matter of the RFP. The Teaming Agreement has some indices of a joint venture, e.g., it contains exclusivity provisions and a provision that either MPSC or Appellant could be the prime.⁶

*11 7. Appellant is an unproven concern. While in existence since 2000, it showed net losses (without income) in 2000 and 2001.⁷ Moreover, Appellant did not file tax returns for 2002,2003, and 2004. The first time it appears to have performed work is in 2005, wherein it claimed revenues of approximately $XXX,XXXXXXX.

*11 8. Volume II of Appellant's proposal shows MPSC has substantial performance experience and that Appellant has minimal performance experience, i.e., the experiences contained in Volume H pertain to MPSC for seven of the eight listed.

*11 9. Appellant has XX employees at present while MPSC has XXX available to work on the procurement. In its proposal, Appellant represented the “TCI/MPSC” team would hire XXX employees to perform the contract.

*11 10. At least three members of the executive management team to work the procurement are currently MPSC employees.

*11 11. The proposal included three resumes for key individuals. Two of the three are MPSC employees.

*11 12. Appellant's proposal does not delineate what part of the work its employees are to perform or that part of the work MPSC's employees are to perform. Accordingly, there is a commingling of personnel.

*11 13. There is no way to tell from the proposal how much of the work, on a dollar or complexity basis, would be performed by Appellant or MPSC.

*11 As described above, I must determine whether the Area Office made a clear error of law or fact. 13 C.F.R. § 134.314. In this case, my analysis is bounded by 13 C.F.R. § 121.103(a)(5)'s requirement that the Area Office consider the totality of the circumstances to determine whether affiliation exists. This means I must evaluate whether the Area Office: (1) Properly considered available and relevant facts; (2) Evaluated the arguments of the parties; and (3) Correctly applied the regulations and law to the relevant facts in making its size determination.

*11 In reviewing the facts and the law applicable to the size determination, the totality of the circumstances test means the Area Office cannot abandon objective reality. That is, it must consider whether the facts, taken together, show the Appellant and its putative affiliate are acting in such a manner as to trigger the intent arid specific coverage of SBA's affiliation rules. In this case, it is plain the Area Office had no doubt that Appellant was affiliated with MPSC for a variety of reasons. These included affiliation through the power to control, the newly organized concern rule, and the ostensible subcontractor rule.

*11 It is interesting the parties have avoided fully discussing the “elephant in the room.” Specifically, Appellant is an unproven concern, yet the CO has awarded it a contract worth approximately $XX million in the first year alone (Fact 4). This contract value is almost 50 times the amount of its work to date. Plainly, the CO could only have determined Appellant to be responsible for award of the contract by relying upon MPSC's experience and expertise as Appellant's subcontractor.

*12 The Evaluation Factors for Award (RFP, Section M) emphasise it was MPSC's experience that permitted the CO to award the contract to Appellant. Specifically, Section M places the most emphasis on Technical Expertise and Experience, while also requiring evaluation of Past Performance (Fact 3). As Sygnetics said, Appellant's experience examples included only one job it actually performed; the rest were MPSC's. Accordingly, Appellant could not have competed for award of the procurement contemplated by the RFP without MPSC. This makes MPSC's experience the dominant factor in the award of this procurement.

*12 The ostensible subcontractor rule is an independent basis for finding affiliation between two concerns. 13 C.F.R. § 121.103(h)(4). The purpose of the rule is to prevent other than small firms from forming relationships with small firms to evade SBA's size requirements. The ostensible subcontractor rule permits the Area Office to determine a subcontractor and a prime have formed a joint venture (and are thus affiliates) for determining size. An ostensible subcontractor is a subcontractor that performs primary and vital requirements of a contract. Li determining whether a subcontractor performs primary and vital requirements, the Area Office may consider all aspects of the prime-subcontractor relationship, including, but not limited to, the proposal, teaming agreements, whether the subcontractor is an incumbent contractor and is ineligible to submit a proposal because it exceeds the size requirements for the solicitation. Id, Traditionally, SB A has applied the “unusual reliance” standard to evaluate whether the rule has been violated. Size Appeal of Radiation Service Organization, SBA No. SIZ-1270 (1979) (further citations omitted).

*12 The Area Office did not commit a clear error of fact or law when it determined Appellant was unusually reliant upon MPSC and thus affiliated with MPSC under the ostensible subcontractor rule. 13 C.F.R. § 121.103(h)(4). Rather, I hold Appellant was unusually reliant, in almost every particular, upon MPSC.

*12 As mentioned above (A.4.) the Area Office applied the “Seven Factors Test” to find Appellant was unusually reliant upon MPSC. The Seven Factors Test is an earlier way of encapsulating what has become 13 C.F.R. § 121.103(a)(5). This test was merely one way of requiring Area Offices to consider what is now understood to be the totality of the circumstances. These seven factors are now almost twenty years old; they are neither exclusive nor exhaustive. Instead, Area Offices should analyze factors outside of the seven factors if relevant. In their analyses, Area Offices may choose to concentrate on one factor if it is dominant or persuasive. See Size Appeal ofAhuska Int'l Security Corp., SBA No. SEZ-4752 (2005). Therefore, while it is acceptable to consider the seven factors, the Area Office must evaluate the totality of the circumstances as it effectively did here.

*13 As discussed above, the only reason Appellant could even be awarded the contract resulting from the RFP is MPSC's experience as its subcontractor. As a team, Appellant and MPSC promised to increase their workforce by 72%. Hence, Appellant represented it was going to manage a workforce XXX,⁸ including MPSC) approximately nine times its current size (XX), while managing a contract almost 50 times greater (on a yearly basis) than all of its revenues to date. When I consider this along with the thirteen facts listed in C. 2., above, there is no question mat Appellant is unusually reliant upon its ostensible subcontractor, MPSC, for MPSC is the dominant factor behind its ability to submit an offer and qualify for the contract. These facts are quintessential examples of circumstances that make a prime unusually reliant on a subcontractor that is other than small. They are not “isolated snippets.” Rather they are persuasive indicators of unusual reliance.

*13 I hold the totality of the circumstances fully supports a finding that Appellant is unusually reliant upon Appellant. See 13 C.F.R. § 121.103(h)(4). What is more, to hold otherwise would be to ignore the objective reality of facts established in the Record. Therefore, it is appropriate to affirm the size determination on this basis alone.

*13 The newly organized concern rule is an independent basis for finding affiliation. In the preamble to its proposed 13 C.F.R. § 121.103(g), SBA noted it was appropriate to add back the newly organized concern rule as a separate basis for finding affiliation. 67 Fed. Reg. 70339, 70341 (Nov. 22,2002) (preamble to proposed 13 C.F.R. § 121).

*13 Under the newly organized concern rule, firms are affiliated when former officers, directors, principal stockholders, or key employees of one firm organize a new firm 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. 13 C.F.R. § 121.103(g).

*13 Appellant disputes whether: (1) Mr. Taylor is a key employee of MPSC; (2) Appellant really is a newly organized concern under 13 C.RR. § 121.103(g); and (3) Appellant has demonstrated a clear fracture between itself and MPSC. These issues are of first impression since 13 C.RR. § 121.103(g) was added back to the CFR. Therefore, this Office's decision in Size Appeal ofB.L Harbert International, LLC,SBA SIZ-4525 (2002), while instructive and bearing a close relationship to the factors listed in 13 C.F.R. § 121.103(g), is not controlling. That being said, the Area Office's size determination is consistent with both Harbert and 13 C.F.R. § 121.103(g).

*14 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. 13 C.F.R. § 121.103(g). The Area Office was correct to determine Mr. Taylor to be a “key employee” of MSPC, for it was MPSC who identified him in this manner. Specifically, MPSC's website identifies him as one of four individuals on MPSC's Management Team while the MPSC SBA Firm Profile identifies Mr. Taylor as one of four “Principals.” Moreover, to reiterate, Mr. Taylor owns 16% of MPSC's stock.

*14 The word principal is defined in Webster's as “a person who has controlling authority or is in a position to act independently.” (WEBSTER'S THIRD NEWINTERNATIONAL DICTIONARY 1802 (3rd ed. 1993)). Accordingly, MPSC's identification of Mr. Taylor as a “Principal” is dispositive. As a principal of MPSC, Mr. Taylor clearly meets the definition of a key person found in 13 C.F.R. § 121.103(g). This admission by MPSC, before the instant controversy, means neither Appellant nor MPSC may claim Mr. Taylor is not a key employee now.⁹ Under these facts, Appellant's citation of Diversified Technical Services is inapplicable, for MPSC has settled the matter of critical influence or substantive control.

*14 Appellant contends that since it was formed (incorporated) before Mr. Taylor began working for MPSC, that it could not be a newly created concern. This argument emphasizes form over substance. It was not until several years after Mr. Taylor joined MPSC that Appellant became an active concern.

*14 Mr. Taylor incorporated Appellant in 2000. Appellant earned no income in 2000 or 2001 and was dormant in 2002 through 2004 (not even filing income tax returns in 2002 - 2004). Thus, Appellant remained a nascent concern until it earned its first revenue in 2005. This is sufficient to make Appellant a newly organized concern under 13 C.F.R. § 121.103(g) until at least 2005 (four years after Mr. Taylor joined MPSC and obtained 16% of its stock).

*14 Appellant's status as a nascent concern makes Mr. Taylor's founding of Appellant in 2000 irrelevant. When considered in conjunction.with MPSC furnishing Appellant with technical assistance and the experience to qualify for award of the contract, Appellant's status as a newly organized concern is even more pronounced. Had Appellant been an active concern between 2000 and 2004 this might be decided differently, but for all practical intents and purposes, Appellant was not a revenue producing firm before 2005. I hold this makes Appellant precisely the kind of concern 13 C.F.R. § 121.103(g) is intended to reach.

*15 Affiliation under the newly organized concern rule can be rebutted if the challenged firm can demonstrate a clear line of fracture between itself and the other firm. 13 C.F.R. § 121.103(g). However, there is no sign of a fracture here. Instead, there is every sign that Appellant and MPSC enjoy the warmest and closest of working relationships.

*15 The-Teaming Agreement is probative of whether there is a fracture between MPSC and Appellant. I find that rather than proving a fracture as Appellant suggests, the Teaming Agreement proves the opposite. That is, the Teaming Agreement shows Appellant and MPSC intend to work together, exclusively, to find work where either can serve as prime contractor. That is strong proof of a relationship where both concerns have agreed to subordinate control of their own businesses to control of another concern. Mr. Taylor's key relationship with both concerns is a very plausible explanation for such an arrangement

*15 It is impossible to ignore that Mr. Taylor is a part owner of MPSC and an individual MPSC identifies as a principal. Notwithstanding his role with MPSC, Mr. Taylor is Appellant's CEO/President and 100% owner. These facts show a close, continuing, and cooperative relationship between MPSC and Appellant, not a fracture.

*15 Therefore, the Area Office did not commit clear error in determining affiliation based on the newly organized concern rule, for Mr. Taylor is a key employee of MPSC, Appellant is a newly created concern, and there is no fracture between Appellant and MPSC.

*15 Because I have found the Area Office's determination that violations of trie ostensible subcontractor and newly organized concern rules not to be based upon a clear error of fact or law, Appellant is thus other than small for this procurement and as an entity. It is therefore not necessary to reach this issue in this decision and I thereby decline to do so.

*15 I have considered Appellant's Petition in light of the record of the size determination. The Record shows the Area Office did not base its size determination upon a clear error of fact or law when it determined violations of the ostensible subcontractor and newly organized concern rules occurred. Therefore, the size determination is AFFIRMED.

*15 This is the final decision of the Small Business Administration. See 13 CJF.R. § 134.316(b).