Your small business may at some point receive an adverse small business size determination from the SBA. Since so much is at stake, your immediate reaction would be to file a U.S. Small Business Administration – SBA size appeal to the Office of Hearings and Appeals ( SBA OHA). Your decision may be valid. However, you want to avoid costly mistakes when filing SBA size appeals to SBA OHA.
Think that you can handle the arguments on appeal may be a valid assumption. However, small businesses should be aware of the legal landmines that await companies that seek to file SBA size appeals without legal counsel.
Are you required to have legal counsel when filing SBA size appeals? The answer is generally no. However, SBA OHA recently granted a motion to dismiss in size protest appeal case because the appeal failed to identify any error of fact or law in the SBA’s size determination pursuant to 13 CFR 134.203(c).
In the case of Size Appeal of DB Systems Tech, Inc, the U.S. Small Business Administration (SBA) Office of Government Contracting, Area I (Area Office) issued a Size Determination, finding that DB Systems Tech, Inc. (Appellant) was not a viable small business for A VA solicitation.
The SBA size determination found that the appellant did not meet the solicitation’s $7.5 million annual receipts size standard because of affiliation with its subcontractor under the ostensible subcontractor rule. The SBA actually found that the prime contractor (appellant) proposed key personnel were actually employees of the proposed subcontractor.
Problem with appellant filing the SBA size appeal to SBA OHA. The appeal document stated that the SBA size determination was incorrect because the appellant as the prime contractor “is performing all management aspects of the contract and is providing its own technician to support the contract.”
In response to the SBA business size appeal to OHA, the attack to support the motion to dismiss was that the appeal documents fail to allege any factual or legal grounds under 13 CFR 134.203(c) for reversing the size determination.
Here is a brutal lesson to small businesses filing an SBA size appeal to SBA OHA: The appellant in this case appeared not have filed a response to the motion to dismiss. That is a fatal mistake because in this case SBA OHA also found that under its own rule, when a non-moving party (here the appellant) does not file a response to a motion to dismiss, then OHA will see it as consenting to the relief sought by the person filing the motion to dismiss. See 13 CFR 134.211(c).
- Always file a response to a motion to dismiss
- Regardless of how strong your case is on appeal, failure to respond can pull the rug from under you and you can lose the case for technical reasons.
What are the basics for filing small business SBA size appeals to SBA OHA under 13 CFR 134.314?
When you appeal an adverse SBA size determination, you have to show by a preponderance of the evidence, all elements of the appeal. As the small business appealing the adverse SBA business size determination, your appeal to SBA OHA must prove that the size determination is based upon a clear error of fact or law. 13 CFR 134.314.
- Your size appeal to SBA OHA must have clear and concise statement of the factual basis of the case and any applicable legal arguments as directed by SBA regulations. 13 CFR 203(a)(3).
- Your appeal must articulate what the SBA did wrong AND how it results in clear error of fact or law.
- Arguing as to what the SBA should have reviewed in making its size determination would almost always get a terrible result. Instead, appellants should translate how what the SBA did or did not do violate the law or in some fashion forces OHA to reverse your appeal.
As SBA size appeal attorneys, we find that many small businesses fail on this critical element of filing SBA business size appeals to OHA. As a result, a potentially meritorious case could be lost.
For help preparing and filing your SBA size appeal to SBA OHA, call our government small business attorneys at 1-866-601-5518.