SBA OHA: SBA Cannot Belatedly Oppose Size Appeal

No matter your political persuasion, it’s hard to forget the image of Senator John Kerry windsurfing in the famous 2004 Bush-Cheney ad.  The ad attacked Kerry for supposedly changing his mind too often–“flip-flopping,” in political parlance.

It turns out that the dangers of flip-flopping are not limited to politics.  In a recent SBA size appeal decision of the SBA Office of Hearings and Appeals, SBA OHA held that if the SBA’s Office of Government Contracting, or OGC elects not to formally oppose a SBA size appeal, it cannot later change its mind and ask SBA OHA to revisit the size appeal decision.  Because the SBA OGC does not formally oppose most SBA size appeals, SBA OHA’s decision forces the SBA OGC to make up its mind quickly about whether it will play a role in the SBA size appeal process.

Before we discuss the SBA OHA decision at issue, Size Appeal of Goel Services, Inc. & Grunley/Goel JVD LLC, SBA No. SIZ-5326 (May 23, 2012), let’s back up and examine how the SBA size appeal process works.  A SBA size appeal is a challenge to a SBA size determination issued by one of the several SBA Area Offices located around the country.  After an appellant files a SBA size appeal, the SBA OGC has the opportunity to weigh in, typically by filing a legal brief supporting the decision of the SBA Area Office and opposing the SBA size appeal.

The SBA OGC will sometimes file a brief if an important issue of regulatory interpretation is at stake, and on occasion, the SBA OHA judges request SBA OGC’s opinion on a legal matter.  In most cases, however, the SBA OGC–which is a very busy office, dealing with many things other than SBA size appeals–does not enter an appearance in the case.  Instead, SBA OHA decides the case based on the SBA size determination (and supporting documents), the size appeal, and any argument provided by an intervenor.

Now, let’s get back to the Goel Services SBA size appeal, which involved an Army solicitation for construction.  The Army named Grunley/Goel JV, an 8(a) mentor-protege joint venture, as the apparent successful offeror.  After a SBA size protest was filed, the SBA Area Office issued a size determination holding that Goel, the 8(a) protege, was not a small business, and hence, the joint venture was ineligible for award.  Goel and the joint venture filed a SBA size appeal with SBA OHA.

As is often the case, the SBA OGC did not participate in the size appeal process.  In March 2012, SBA OHA issued a decision, Size Appeal of Goel Services, Inc. and Grunley/Goel Joint Venture D LLC, SBA No. SIZ-5320 (2012).  In this case, which I will call the “underlying Goel Services size appeal decision,” SBA OHA apparently reversed the SBA Area Office’s size determination, holding that once the SBA has approved an 8(a) mentor-protege joint venture for a particular procurement, the SBA Area Office lacks authority to revisit the matter as part of a SBA size determination.

(Side note: although it was issued nearly four months ago, the underlying Goel Services size appeal decision has yet to be publicly published.  I will address the case on SmallGovCon as soon as it is issued.  From what I can gather, the holding in the case, combined with other recent SBA OHA authority, may essentially ban size protests against 8(a) mentor-protege joint ventures, which would be a significant change in SBA size protest law).

The SBA OGC was none too pleased with SBA OHA’s decision, and filed a request for reconsideration asking SBA OHA to revist the matter.  SBA OHA dismissed the SBA OGC’s request, holding that under the size appeal regulations, only a party to the case has the right to request reconsideration.  SBA OHA wrote that the SBA OGC “is not necessarily a party in every size case,” but “must take the active step of intervening, no more than fifteen days after the close of the record,” in order to be a party.  Because the SBA OGC had not intervened in the underlying Goel Services size appeal, it was not entitled to file a request for reconsideration.

The Goel Services SBA size appeal decision likely caused some foul moods at the SBA OGC, which now knows that it cannot oppose a SBA OHA size decision unless it has actively intervened in the size appeal–something the SBA OGC often does not do.  Whether Goel Services will lead to increased participation by the SBA OGC in SBA size appeals remains to be seen, but SBA OHA has made one thing clear: the SBA OGC cannot belatedly change its mind about whether to become involved.

Leave a Reply

Your email address will not be published. Required fields are marked *