The U.S. Small Business Administration (SBA) runs four socioeconomic programs aimed at providing equal opportunity to participate in federal contracting. And one would think that all of them have similar options if a contractor is denied certification. One would be wrong. SBA’s Office of Hearings and Appeals (OHA) recently dismissed an appeal for lack of jurisdiction, showcasing the different options in the various programs. The contractor was decertified from the Women Owned Small Business Program (WOSB). Its owners ran afoul of an important distinction in OHA’s appeals jurisdiction, particularly the substantial difference between appealing a competitor’s protest of a contractor’s SBA certification and the government’s initial denial of a program certification. This provides an excellent opportunity to assess the regulatory differences in appellate jurisdiction between the four programs, with an eye toward successfully navigating future encounters with the OHA.
Editor’s Note: Special thanks to our law clerk Will Orlowski for his immense help in drafting this post.
As demonstrated in Woods Peacock Engineering Consultants, Inc., SBA No. WOSB-121, contractors cannot appeal a denial by the SBA of WOSB certification. 13 C.F.R. § 134.102 details what kind of cases OHA can hear, and thus necessarily prohibits the OHA from reviewing anything not delegated to it by regulation. Part 134 contains many provisions on various appeals processes for all manner of SBA decisions, including WOSB protests, but crucially, no provision for appealing a WOSB eligibility denial. Section 127.304(i) explicitly states “the decision of the [SBA’s Director for Government Contracting] to decline certification is the final agency decision.” While a failed applicant may reapply for certification ninety days after the date of denial, there is no alternative route to achieving certification following that initial declination. Protests of WOSB status may be appealed to OHA, but an initial eligibility denial is final and unappealable.
Which Certification Decisions Can You Appeal?
So, this begs the question, when can a contractor appeal a SBA certification decision? Below, we walk through the appeal rights for each of the SBA’s four socioeconomic programs.
WOSB. As noted above, you can appeal a WOSB protest related to a specific procurement, but not a WOSB certification decision (denial or termination).
HUBZone. The historically underutilized business zone (HUBZone) program lacks the ability to appeal an initial denial of certification for much the same reason as WOSB. Section 134.102 similarly grants appellate jurisdiction to the OHA for HUBZone protests, but HUBZone certification denials are conspicuously absent. Like the WOSB program, HUBZone regulations contain similar language regarding the ninety-day reapplication timeline and leaves out any mention of an appeals process. As we’ve discussed, a HUBZone protest decision can be appealed. Combined with the allowance for HUBZone protest appeals, it becomes clear that HUBZone is another SBA program certification whose initial denial may not be appealed to OHA.
On the other end of the spectrum lies the Service-Disabled Veteran Owned Small Business (SDVOSB) program, which does allow for the appeal of an initial denial of program certification. SBA rules under § 134.102(v) grant OHA jurisdiction over appeals of denial of certification in the Veteran Small Business Certification Program, and §§ 128.304 and 134.1102 each allow for an applicant to appeal the SBA’s decision to deny certification. The only caveat is that a denial based on the failure to provide sufficient evidence of the qualifying individual’s status as a service-disabled veteran, is not subject to appeal to OHA. As usual, it is essential to follow regulatory requirements closely to avoid tripping over this pitfall, but assuming an applicant satisfies the standard evidentiary requirements, OHA will hear an appeal. OHA will also directly hear SDVOSB protests. 13 CFR § 134.1001.
Falling somewhere between WOSB and SDVOSB programs, 8(a) program certification denials or terminations can be appealed to OHA, but only under certain circumstances. Applicants may appeal denial of program admission to OHA if that denial is “based solely on a negative finding of social disadvantage, economic disadvantage, ownership, control, or any combination of these four criteria. A denial decision that is based at least in part on the failure to meet any other eligibility criterion is not appealable and is the final decision of SBA” (emphasis added). 13 C.F.R. §§ 124.206, 134.401. One of the most important requirements an applicant must satisfy under 8(a) certification is “potential for success” (see our blog here) including assuring that an applicant is “able to perform 8(a) contracts and possess reasonable prospects for success in competing in the private sector.” 13 C.F.R. § 124.107. As the regulations make clear, denials based on failure to satisfy potential for success are not appealable, and those decisions represent the final decision of SBA. Only denials based on the four specific criteria listed in § 124.206 can be appealed to OHA. Interestingly, there is no way to protest 8(a) Program status, unlike the other programs.
Conclusion
In summary, there is some considerable variation between the four SBA socioeconomic certifications in what can and cannot be appealed to OHA. While SDVOSB denials can almost always be heard, and 8(a) denials may be appealed under limited circumstances, WOSB and HUBZone denials are never appealable to OHA under clear jurisdictional limitations. As demonstrated by this case, these distinctions are important to understand, if not always clear. Failure to comprehend OHA jurisdiction in the initial application for SBA certification can lead to frustrating results, and thus careful consideration and adherence to application requirements is essential. Be sure to consult an attorney if you are not sure.
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