OHA Denies First-Ever VA SDVOSB Status Protest

The Small Business Administration Office of Hearings and Appeals has denied a protest of the service-disabled veteran-owned small business status of a company seeking to perform work for the U.S. Department of Veterans Affairs.

The decision was not particularly controversial or otherwise notable in and of itself. What is notable is that this was the first VA-status SDVOSB protest decision ever issued by OHA.

OHA’s jurisdiction to hear such protests is brand new. On October 1, an updated version of 13 C.F.R. § 134.102 went into effect, providing OHA with jurisdiction to hear protests regarding “eligibility for inclusion in the Department of Veterans Affairs Center for Verification and Evaluation (CVE) database[.]” Until then, all status protests over a concerns eligibility for the VA’s SDVOSB program had to go to CVE.

OHA did not have to wait long to consider its first SDVOSB protest. Just four days after the regulation went in to effect, Blue Cord Design and Construction, LLC, protested the status of its competitor Contract and Purchasing Solutions, Inc.

Blue Cord argued that Contract Purchasing was not owned and controlled by a service disabled veteran because, among other reasons, during a site visit someone else signed the sign-in sheet as an owner. Blue Cord also alleged that Contract Purchasing relies on non-veterans for critical licenses.

Blue Cord’s site visit allegation was true, but it turns out that Contract Purchasing is owned 50-50 by two service-disabled veterans and they share operational control, something that is expressly allowed by the relevant regulations. It was the other veteran who signed the sign-in sheet.

OHA found nothing improper about this relationship, so it moved on to the issue of the licenses, which was slightly more complicated. When a non-veteran holds a “critical” license for the operation of a business, according to 13 C.F.R. § 125.13, it creates a rebuttable presumption that the veteran is not in control.

The protester had argued that the veteran did not hold licenses that would allow it to perform in Georgia or Florida. And, in fact, for both states Contract Purchasing relied on qualifying agents to hold those licenses for the firm.

OHA found that each qualifying agent had signed an agreement with Contract Purchasing stating that they would defer salary until such time as the company needs to perform a contract in their state, will be placed on the payroll then “at a mutually agreeable rate[,]” and that they expressly acknowledge that they have no control over Contract Purchasing.

OHA found that Contract Purchasing had rebutted the presumption of no control and, thus—for the first time ever in this setting—concluded that a company had “proven its eligibility as an SDVOSB by a preponderance of the evidence.”