8(a) Program: Participant Terminated For Missing Annual Review

Participants in the SBA’s 8(a) Program must timely submit their annual review packages to the SBA.

In a recent decision, the SBA Office of Hearings and Appeals held that the SBA may terminate a participant from the 8(a) Program for failing to provide the required information–even if the 8(a) company’s owner has had personal difficulties that contributed to the failure.

OHA’s decision in KC Consulting, LLC, SBA No. BDPT-563 (2017) involved the 8(a) Program participation of a Michigan-based small business.  On January 8, 2016, KC Consulting received a letter from the SBA requesting that the company provide its 8(a) annual review information.  KC Consulting did not provide the information.  The SBA sent a second letter in March 2016; again, KC Consulting didn’t comply.

On April 12, 2017, the SBA issued a Termination Letter to KC Consulting.  In the letter, the SBA stated that KC Consulting would be terminated from the 8(a) Program because of its repeated failure to submit the required annual review information.

KC Consulting filed an appeal with OHA, arguing that it should not be terminated from the 8(a) Program.  KC Consulting admitted that it failed to submit the annual review information despite SBA’s requests for it.  But KC Consulting explained that its President and Managing Member had been undergoing some personal difficulties: his parents had both passed away, and he was in the midst of divorce proceedings.  KC Consulting said that these issues had a significant impact on the firm, and asked for another year in the 8(a) Program to get the company “back on track.”

OHA noted that the SBA’s 8(a) Program regulations allow the SBA to terminate a participant for “[a] pattern of failure to make required submissions or responses to SBA in a timely manner,” including the timely submission of annual review information.  Here, KC Consulting “admits the violation and confirms SBA’s grounds for termination.”  It is “of no consequence that [KC Consulting’s] violation was not intentional.”

OHA dismissed the appeal.

As the KC Consulting case demonstrates, the SBA takes the 8(a) annual review very seriously.  Although it’s an area of broad discretion, the SBA has the right to terminate a company from the 8(a) Program for repeatedly failing to submit the annual review information, or other relevant information requested by the SBA–even if the 8(a) owner’s personal troubles made compliance more difficult.