The 8(a) Program has survived a major challenge to its constitutionality–but the legal battle over the 8(a) Program’s future may well continue.
On Friday, a two-judge majority of the U.S. Court of Appeals for the D.C. Circuit held that the statute that creates the 8(a) Program is not unconstitutional. While the D.C. Circuit’s decision is a big win for proponents of the 8(a) Program, the limited scope of the ruling–and a sharp dissent from that ruling–signal that the fight over the future of the 8(a) Program may not be over.
The 8(a) Program regulations will undergo some significant changes as part of the major final rule recently released by the SBA, and effective August 24, 2016.
Here at SmallGovCon, we’ve already covered big changes to the SDVOSB Program and HUBZone Program brought about by the new SBA rule. But the 8(a) program is affected by the new rule too, and important changes involving eligibility, the application process, sole source awards, NHOs, and more will kick in later this month.
A Bulgarian immigrant’s thick accent and lack of English proficiency were not evidence of bias, and did not support the immigrant’s 8(a) Program application.
In a recent 8(a) Program decision, the SBA Office of Hearings and Appeals expressed sympathy for the language difficulties many immigrants face, but held that such difficulties, by themselves, do not constitute evidence of “social disadvantage” for 8(a) Program purposes because the 8(a) Program requires a showing of bias or prejudice.
A woman does not need to provide the SBA with “smoking gun” evidence of bias in order to be considered socially disadvantaged for purposes of her company’s application to the 8(a) program.
In a recent decision, the SBA Office of Hearings and Appeals sharply criticized the SBA’s evaluation of a woman-owned small business’s 8(a) application, holding that the SBA had improperly discounted evidence of bias, needlessly demanded that the woman provide irrelevant details, and made several other errors.
Last month, I wrote about the successful 8(a) program appeal filed by Gearhart Construction Services. In its decision, SBA OHA held that the SBA had misevaluated Gearhart on the “social disadvantage” factor, including by holding Gearhart to a too-high standard of proof. SBA OHA ordered the SBA to correct its errors and take another look at Gearhart’s application.
Now I can report that Gearhart’s story has a happy ending. On April 11, the SBA notified Gearhart that it had been admitted to the 8(a) program. SBA OHA then dismissed Gearhart’s appeal as moot, because Gearhart and achieved its goal.
Sometimes, gaining admission to the 8(a) program requires tenacity and a continued belief in one’s case, even when the SBA’s 8(a) office has repeatedly denied the application. Gearhart’s perseverance paid off, and the company now has nine years to reap the rewards.
In the 1990s comedy Groundhog Day, Bill Murray played a weatherman who found himself living the same day over and over again. I am having the same feeling reading SBA Office of Hearings and Appeals cases these days (yes, this is what qualifies as my reading material of choice; don’t judge).
As it has at least five other times since December, SBA OHA has shot down the SBA’s rejection of an 8(a) application under the “social disadvantage” factor. As was the case in several other recent decisions, the latest volley from SBA OHA states that the SBA failed to properly consider the evidence and explain its rationale for denying an 8(a) applicant.
The SBA’s Office of Hearings and Appeals has overturned yet another SBA 8(a) Program denial decision–at least the fifth such instance since December 2012.
As with the four previous cases, SBA OHA’s most recent 8(a) appeal decision indicates that the SBA improperly evaluated the applicant’s evidence of social disadvantage, both by misapplying the regulatory test for social disadvantage and by requiring the applicant to meet a higher standard of proof than called for by law.