Information On SBA 8a Small Business Applications Denial 13 CFR 124.106

All 8a small business applicants must meet the statutory requirements for approval into the 8(a) BD Program. The following case demonstrates the results for failure to meet those requirements.

Companies Still Battle 8a Small Business Denials

If you are not familiar with the program requirements, 8a small business applicants might consider bringing in professionals that are experienced in 8(a) business development (bd) program applications.

See recent case where Watson & Associates overturns SBA decision. The following case gives an example. The Small Business Administration’s determination denying Petitioner entry into the 8(a) BD program is not arbitrary, capricious, or contrary to law. 15 U.S.C. § 637(a)(9)(C); 13 C.F.R. § 134.406(b).

On January 13, 2010, Office Design Group, Inc. (Petitioner) appealed a Small Business Administration (SBA) determination denying Petitioner entry into the 8 a  Business Development (BD) program.

SBA found Petitioner ineligible for the 8(a) BD program because Petitioner could not provide sufficient documentation: (1) to establish that Mr. Smith, the disadvantaged owner upon whom Petitioner’s eligibility is based, holds the highest officer position in the firm; or (2) to demonstrate compliance with the 8a small business requirements governing the participation of non-disadvantaged individuals. 

OHA Ruling

The OHA ruled that “..based on the evidence before it at the time of its determination, the SBA reasonably concluded that Mrs. Smith, a non-disadvantaged individual, received greater compensation than Mr. Smith, the disadvantaged individual upon whom eligibility is based, and Petitioner failed to demonstrate that the compensation arrangement helps Petitioner.

Accordingly, because Petitioner failed to demonstrate that excessive compensation was in Petitioner’s best interest, the SBA reasonably concluded that Petitioner is not in compliance with the 8(a) business development (bd) program application regulation regarding the involvement of non-disadvantaged individuals. 13 CFR 124.106(e).”

One of the important issues for approval of your SBA 8 a application package is to address the business ownership and control issues. The 8a applicant must own and control the business entity. Generally speaking, another corporate officer cannot have the ability to control the 8a applicant.

This can substantially impair approval of the 8a application. The SBA reviews such documents as corporate minutes, corporate By-laws and other relevant evidence to address the issue of control. Control regulations can be viewed in 13 CFR 124.106.

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For additional questions and help, call the government contract law attorneys Watson & Associates, LLC at -1866-601-5518.