SBA Denies 8(a) Status Based on Applicant’s Ability to Successfully Overcome Gender-Based Discrimination in Her Field

OHA recently affirmed the 8(a) status denial of a 100% woman-owned small business performing in the historically male-dominated renewable energy field. The applicant—who SBA called an “advocate” and “mentor” to women in the industry—detailed specific instances of gender-based-discrimination that plagued her education, employment, and career. But SBA was unmoved, instead focusing its analysis on the applicant’s triumph over these obstacles—apparently an indication that she was not socially disadvantaged in the first place. Unfortunately, this perplexing holding does fall in line with many past SBA denials of women-owned companies for 8(a) status.

In 7Skyline, SBA No. BDPE-574 (Feb. 8, 2019), SBA’s denial cited five deficiencies in the initial application. The applicant promptly resolved four deficiencies, leaving only one: that SBA did not see social disadvantage under 13 C.F.R. § 124.103.

So, the applicant submitted a request for reconsideration focusing exclusively on her alleged social disadvantage. She explained that women are severely underrepresented in the U.S. energy industry, making up less than 24% of the solar industry workforce and less than 5% of the executive board membership of the industry’s top companies. She stated that the majority of women in the renewable energy industry also serve in administrative roles, rather than technical and ownership roles.

In addition to these general assertions and statistics, her request discussed her first-hand experiences as a minority in the field. She provided several specific instances of gender-based discrimination from her own life, explaining that her undergrad Geology/Chemistry program at Brown University was only 35% women and her graduate Earth Sciences program at Dartmouth was even more male-dominated, made up of only 25% women.

More specially, in her narrative, she explained that she was one of several female students sexually harassed by a male professor at Brown. She expressly addressed the impact this had on her education, because she received a C in his class after refusing further contact with him. And even from an objective perspective, this was a harsh deviation from the typical A’s she worked hard to earn in her other Geology and Chemistry classes. Also, even though she had detailed this incident on her end-of-year evaluation of the professor, it was years before this case was eventually brought to trial. And when it was—as a lawsuit by several female-victims and their families—the applicant was subpoenaed to testify to the traumatic experience all over again.

In her early employment in the field, the applicant “witnessed the social patterns and pressures that discourage women from pursuing technical roles in the renewable energy field.” She was personally promised a leadership role in a local company based on dedication and achievements, which was later revoked by the company’s male executives. She expressed her struggles with the gender-based “ceilings” she faced in nearly every job she took in the field. And she explained the impact of this on her career as she was forced to leave jobs where it was clear she was “outgrowing her role.”

The applicant’s extensive narrative also set forth several examples of the day-to-day gender discrimination she faced in her business pursuits, where she was “affected socially by the pervasive negative treatment of women in the energy industry.” At one company, the applicant contacted the human resources department regarding private threats from male bosses and clients, which unfairly resulted in her removal (and removal of another female deputy project manager) from the project. She explained that she was often denied access to meetings and was omitted from important email correspondence as well. She provided instances of gender-based condescension as well, stating that her male colleges were not subject to the same. One recruiter openly called the applicant a “smart girl,” although she was 40 years old at the time.

At another firm, she was constantly assigned administrative functions, where she was unable to earn stock and larger bonuses. And after being promised an office manager position for three years with no corresponding action, she left the firm—and a younger man with less experience was instead promoted to that position. She explained that management in her industry was often unfriendly to women, such as by separating coed teams and demoting the women in groups. The applicant even gave specific examples of gender inequality in conference budget allocations and labor rates, and of the refusal of men to accept her as an “expert” in the field. She explained, “a lot of men are gender biased and don’t like working with women, and do not believe they are technically competent or have enough experience to provide high level strategic advice for electric transmission, gas pipeline, and other energy projects.”

But, after explaining her struggles and their impact on her career, the applicant proudly explained that she “ha[s] been able … to overcome these obstacles.” She discussed her endless efforts to obtain speaking roles at conferences, how she inserted herself in networking opportunities that were not provided to her, how she climbed in her career without a mentor (since she was unable to find one who would help her), and how she was even recently asked to join a premier renewable energy advocacy organization—which would make her the “only woman-owned business represented in the organization.” She also provided an impressive resume to the SBA. But regardless of her accomplishments, she made it clear that overcoming discrimination had not been easy. She had to “work nights [and] weekends” to get ahead and be promoted—while male peers were not required to do so.

In denying her entry, the SBA explained that it was “not persuaded that [she] had experienced chronic and substantial social disadvantage, or that [her] experiences negatively impacted her entry into or advancement in the business world.” SBA argued that the owner had advanced in the business world because, based on a description of her work at one company, she “was quickly promoted during her ten years at the company, held several high-level positions, and managed large projects.” While at another company, she was “serving as Client Service Manager, leading large groups of technical professionals, and working on signature projects.” SBA stated that the applicant “apparently is a very successful company, well respected in its field,” and therefore did not “prove social disadvantage to entering or advancing in the business world.”

OHA subsequently affirmed the Area Office’s decision to deny the applicant’s entry into the 8(a) BD Program for failing to demonstrate social disadvantage by a preponderance of the evidence. OHA echoed the SBA in noting that the owner “was quickly promoted by her employers, held several high-level positions, and managed various large projects.”

Sadly—in this case—SBA seems to be penalizing the applicant (as we have seen in other instances) for having successfully overcome the hurdles of running a business in a male-dominated industry. What’s even more frustrating, this holding seems to imply that the applicant here successfully overcame all of her struggles and is no longer socially disadvantaged in her field.

But this unfortunate denial may also demonstrate an important point regarding SBA policy. The 8(a) regulations and guidance both stress the importance of identifying the long-term negative impacts of discrimination in an applicant’s social disadvantage narrative, and SBA bases many of its status denials on the perceived failure to meet this requirement. As such, this case may provide helpful insight for all of our small-business owners pursuing 8(a) Program acceptance.

Though many women are—and should rightfully be—proud of their abilities to overcome gender-based impediments in their careers, that may not be the best area of focus for a social disadvantage narrative. Many readers (including myself) may struggle with the finding of no social disadvantage for a woman who overcame significant hurdles in a male dominated field—even to the extent that other women in the industry now consider her a “mentor” or “advocate” to other women fighting these battles. But this decision could (hopefully) be a useful guide for future applicants to avoid a similar fate.