SBA Improperly Evaluated Disabled Individual’s 8(a) Program Application, Says SBA OHA

The SBA failed to properly evaluate the 8(a) Program application of a small business owned by a disabled individual, according to a recent decision of the SBA Office of Hearings and Appeals.

SBA OHA’s decision in Striker Electric, SBA No. BDPE-465 (2013) comes on the heels of a December 2012 case in which SBA OHA held that the SBA had improperly evaluated the 8(a) Program application of a woman-owned business.  Together, the two decisions may suggest that SBA OHA is holding the SBA to a higher standard than may previously have been the case when it comes to the SBA’s evaluation of the “social disadvantage” factor.  If so, it is good news indeed for 8(a) applicants.

In March 2011, Striker Electric filed its initial 8(a) application.  Striker’s owner, Justin Nickle, apparently did not belong to any of the groups presumed to be socially disadvantaged under the SBA’s 8(a) regulations.  However, Striker stated that Mr. Nickle was socially disadvantaged because of his physical disability.

In support of its 8(a) application, Striker discussed three incidents of disability-related bias against Mr. Nickle.  In each case, a potential client made a statement or asked a question concerning the effect that Mr. Nickle’s disability would have on Striker’s ability to timely complete a project.  In each case, after being informed that Mr. Nickle could not complete the project as quickly as an able-bodied person, the client apparently elected not to hire Striker.

In November 2011, the SBA denied Striker’s 8(a) application.  The determination letter stated that Striker had not demonstrated that Mr. Nickle was socially disadvantaged.

Striker filed a request for reconsideration, in which it included additional testimonial evidence and two letters of corroboration supporting Mr. Nickle’s accounts.  In February 2012, the SBA denied the request for reconsideration, again finding that Mr. Nickle was not socially disadvantaged.  Striker then filed an appeal with SBA OHA.

Reviewing the record, SBA OHA determined that the SBA failed to address the three incidents presented in Striker’s application, either individually or as a group.  Instead, the SBA’s determination merely recounted the difficulties Mr. Nickle faces in his daily life due to his disability.  Because these difficulties “are not presented as examples of bias . . . [i]t is therefore no surprise” that the SBA did not consider them to be evidence of bias.

SBA OHA concluded, “[a] determination that fails to examine all relevant evidence is incomplete.”  Here, the SBA did not address the three incidents “or provide any explanation why those claims were disregarded.”  SBA OHA ordered the matter remanded to the SBA for its consideration of the three incidents.

The Striker Electric case is particularly troubling because it appears that even given two opportunities–the initial application and the reconsideration–the SBA simply ignored Mr. Nickle’s accounts of bias.  Hopefully, Mr. Nickle and his company will get a fair shake the third time around.  And hopefully, between this case and SBA OHA’s December ruling, the SBA will find the incentive to fix whatever flaws may exist in its evaluation of social disadvantage.

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