Breaking: SBA Proposed Rule Gives OHA Jurisdiction over HUBZone Status Protests

The Small Business Administration (SBA) has proposed to amend the rules of practice for its Office of Hearings and Appeals (OHA) and the Historically Underutilized Business Zone (HUBZone) Program to “implement procedures authorizing appeals to OHA” from adverse status determination protests for certified HUBZone small business concerns. Currently, HUBZone status protest determinations are decided by the Associate Administrator of Government Contracting and Business Development per 13 C.F.R. § 126.805. But those appeals, in our experience, are fairly limited and SBA does not publish the appeal decisions, meaning they provide little help for companies and attorneys wishing to understand how SBA interprets its HUBZone This is a big step for SBA and will certainly bring consistency and insights to the protest process and regulatory interpretation for HUBZone participants, bringing that program more in line with other SBA programs.

The inclusion of HUBZone appeals was written into the the National Defense Authorization Act for Fiscal Year 2022, as we discussed. Congress required SBA to prepare rules for HUBZone appeals by by December 27, 2022.

Currently, if a company loses a HUBZone status protest, the only “appeal” process is to request a review by the SBA’s Associate Administrator, Office of Government Contracting & Business Development. There is no opportunity to seek a decision from an administrative judge, no way to review or cite to prior published decisions to use as precedent, and no ability to review any administrative record of the decision. These appeals are considered very quickly, within 5 business days of the filing, and there is no opportunity for additional briefing after the initial filing.

Status determinations happen when an offeror’s representation as a small business, service-disabled veteran owned small business (SDVOSB), woman-owned small business (WOSB), or HUBZone participant is challenged through a protest. If a challenge is made, SBA will evaluate the status of the concern, and make a formal determination which is binding. SDVOSB and WOSB and status determinations are reviewed by OHA, but HUBZone status determinations historically have not. While there are no 8(a) Program protests, certain 8(a) denials–not including based on potential for success–could be challenged at OHA. HUBZone, then, was the odd man out as there were no OHA decisions discussing HUBZone rules. (Our law firm did FOIA request past HUBZone decisions, but that is a more involved process than simply looking on SBA’s website.)

To implement this addition, SBA plans to add a new subpart, subpart M, to the OHA appeals regulations found at 13 C.F.R. § 134. In doing so, SBA will include language applying 13 C.F.R. § 134 subparts A (detailing the jurisdiction of OHA) and B (rules of practice for OHA appeals establishing timelines, deadlines, etc.) to HUBZone status determinations. These rules will be found in 13 C.F.R. § 124.1301 through § 134.1316 and will essentially mirror the rules already in place for SBA status appeals of SDVOSB, WOSB, and 8(a) participant decisions.

For instance, HUBZone “appeals must be filed within ten (10) business days after the appellant receives the protest determination.” Note that this is a different timeline than the 15-calendar day rule for size protest appeals found in 13 C.F.R. 134.304(a). In addition, a protester may appear in the appeal and file a response.

It is important to note that the  OHA appeals for HUBZone status determinations will still not include an avenue for appealing a denial of a HUBZone certification application.

For more information, and to read the entire proposed rule visit the Federal Register.

SBA is taking comments via through January 14, 2023, or 30 days after publication in the Federal Register. This rule is identified as RIN 3245-AH88.

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