For small government contractors, SBA size and eligibility issues are of critical importance.  Recognizing this, the SBA provides an independent forum–the SBA Office of Hearings and Appeals–to review potential mistakes made by the SBA Area Offices, which decide SBA size protests.

Small government contractors must remember, however, that SBA OHA exists to evaluate the decisions made by SBA Area Offices, not to evaluate new allegations raised for the first time in the course of a SBA OHA appeal.  Case in point: SBA OHA’s recent decision in Size Appeal of In & Out Valet Co., SBA No. SIZ-5354 (2012), in which the protester apparently attempted to “file” a SDVOSB protest with SBA OHA during the course of its SBA size appeal.

The In & Out Valet SBA size appeal decision involved a VA SDVOSB set-aside solicitation for parking lot and garage services at a VA Medical Center.  After evaluating proposals, the VA announced that VetPride Services, Inc. was the apparent successful offeror.

An unsuccessful competitor, In & Out Valet Company, filed a SBA size appeal.  In & Out alleged that VetPride was not a small business because it was affiliated with a large company, U.S. Logistics Inc.

VetPride was owned 51% by Roger Pierce, its founder, who served as the CEO.  David Pierce owned 49% and served as the company’s President.  Based on this arrangement, the SBA Area Office concluded that both Roger Pierce and David Pierce controlled the company, rendering VetPride affiliated with any other company controlled by either man.  However, although Roger Pierce had previously served as a consultant to U.S. Logistics Inc., that arrangement had been terminated, and no other relationships between the Pierces and U.S. Logistics existed.  Accordingly, SBA OHA found no affiliation between VetPride and U.S. Logistics, and determined that VetPride was an eligible small business.

In & Out filed a size appeal with SBA OHA–but I use the term “size” appeal loosely.  In & Out’s appeal alleged that David Pierce, not Roger Pierce, controlled VetPride.  Although SBA OHA did not specifically state why In & Out made this argument, the logical conclusion is that In & Out did not believe that David Pierce was a service-disabled veteran.  In other words, In & Out appeared to be protesting VetPride’s SDVOSB eligibility.

Not surprisingly, SBA OHA dismissed the size appeal.  SBA OHA wrote, “Appellant’s appeal fails to address the Size Determination or dispute any of the Area Office’s factual findings or legal conclusions.  There is no allegation that the Area Office committed any error at all, let alone a clear error of fact or law.”  SBA OHA continued, “OHA is not a forum to reargue one’s case or the place to raise new allegations.”

Assuming that In & Out wanted to protest VetPride’s SDVOSB status, it made two mistakes.  As SBA OHA’s decision demonstrates, its first mistake was that it simply waited too long–until the appeals process began–before raising the matter.  By then, it was too late.

But VetPride might not  have succeeded even if it had included the argument in its initial size protest.  Because this was a VA SDVOSB set-aside, the VA–not the SBA–had exclusive authority to determine whether VetPride was an eligible SDVOSB.  If VetPride believed that David Pierce improperly controlled the company, its recourse was to file a SDVOSB eligibility protest with the VA.  Had it done so, it is possible that the VA would have found VetPride ineligible.  As it is, we (and In & Out) will never know.