Earlier this year, SBA’s Office of Hearings and Appeal (“OHA”) released its first HUBZone status protest appeal decision. That decision, as you may recall was fairly straightforward, resulting in a dismissal of the appeal. About half a year later, OHA has issued its second HUBZone status appeal decision! This one is even more straightforward than the first one, but it is important nonetheless as it now gives us further insight into the HUBZone appeal system. Let’s take a little look.
In PAE Applied Techs. LLC, Appellant Re: Lynker Techs. LLC, SBA No. HUB-102, 2023 (Dec. 5, 2023), the appellant did correctly appeal a decision on a HUBZone status protest, as opposed to challenging a decision of SBA to decertify, as appeared to have been the case in that first decision, New Source Corp. back in June 2023. It cannot be emphasized enough how important following the procedures are if you want a chance of winning your appeal. We, of course, understand that many of these things seem very minor. For example, in New Source, one of the reasons the appeal was found deficient (and therefore was dismissed) was that it was unsigned and was not properly served to the required parties. But these procedures do have a foundation in real concerns. Signatures are evidence that the party is who they say they are, and service is important because it puts parties on notice that the matter is being challenged.
However, the biggest issue in New Source was that it was a challenge of SBA’s decision to decertify the company from HUBZone. It did not involve any HUBZone status protest. This is important. As we noted earlier this year, the HUBZone appeal system is only for appeals of HUBZone status protests. It is not a means to challenge any decision about whether a company is or is not HUBZone eligible. We are curious if the protest system may get expanded later, but for now, it’s just for challenging the results of HUBZone protests. Here, PAE indeed appealed a HUBZone protest decision, so OHA did have jurisdiction over the matter.
Unfortunately for PAE, they made a misstep as well in their appeal. PAE’s appeal challenged a decision dismissing its protest of the HUBZone status of another company, Lynker Technologies, LLC. It appears that PAE, however, did not give a sufficient argument as to why the original dismissal decision was erroneous. Since we lack access to what PAE filed, we do not know what actually was in their appeal. But, as it was, OHA basically gave PAE an ultimatum: Explain why the appeal shouldn’t be dismissed or OHA will dismiss it. PAE chose to withdraw the appeal. When one appeals an SBA status determination or size determination, it is not enough to simply say that one is challenging the decision. Even if SBA’s error is obvious, you have to spell out what the reason for the challenge is in your appeal and it has to have some base logic to it. This goes for essentially all appeals processes.
In itself, OHA’s decision here does not shed much light on how OHA will actually analyze HUBZone eligibility issues. However, some information can be gleaned. It is quite clear that HUBZone appeals to OHA are not common, at least not yet. In a six-month period, there have been just two, and both ended in dismissal. It is safe to assume that HUBZone appeals will not be common going forward either. We’ll keep our eye out, though. We hope to see a HUBZone appeal decision that actually discusses some of the eligibility requirements for the HUBZone program to help provide some needed clarity on the program.
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