Worst SBA Size Appeal Ever? Large Business Files Off-Topic Document with SBA OHA

“No, we’re not a small business, but we could really, really use that small business set-aside contract.”

That, in essence, was the content of a document recently filed with the SBA Office of Hearings and Appeals, which SBA OHA charitably treated as a formal size appeal.  Reading this case left me scratching my head and wondering: was this the worst SBA size appeal ever filed?

SBA OHA’s decision in Size Appeal of Allegheny Wood Products, Inc., SBA No. SIZ-5366 (2012) involved a U.S. Department of Agriculture invitation for bids for a timber sale contract.  The solicitation was a total small business set-aside with a 500-employee size standard.

Allegheny Woods Products, Inc. was the apparent successful awardee.  However, the contracting officer asked the SBA to review Allegheny’s size because the CO was aware that Allegheny had previously represented itself as having more than 500 employees.

During the SBA Area Office’s review, Allegheny acknowledged in writing that it did not meet the 500-employee size standard, and failed to provide any evidence suggesting that it qualified as small.  Not surprisingly, the SBA Area Office issued a size determination finding Allegheny to be ineligible for the contract.

Allegheny subsequently sent an unsigned letter addressed to the SBA Area Office, and copied SBA OHA.  Because the letter stated that Allegheny was appealing the Area Office’s decision, SBA OHA docketed it as a new appeal, even though the letter was addressed to the SBA Area Office.

The letter offered no argument or evidence that Allegheny was small.  Instead, the letter stated that Allegheny was located in a rural area, and “highlight[ed] the importance of the timber soured from ANF to Appellant’s profitability and efficiency.”  In other words, Allegheny asked the SBA to disregard the small business size standard, and award it the contract anyway.

Not surprisingly, SBA OHA refused to do so.  It dismissed Allegheny’s appeal, stating that Allegheny “has not asserted a valid basis for appeal.”  SBA OHA continued, “[t]he appeal fails to provide any explanation or argument as to why the size determination is in error.”  SBA OHA also noted that it was questionable whether Allegheny had timely filed its appeal, but stated that there was no need to address the timeliness issue because SBA OHA was dismissing the appeal on other grounds.

The Allegheny Wood Products size appeal is notable for two reasons.  First, of course, is the fact that Allegheny bid upon a small business set-aside contract even though it had previously represented itself as large under the same size standard.  Given the ineptness of Allegheny’s appeal, it is quite possible that Allegheny simply misunderstood the entire small business set-aside process, but it will nevertheless be interesting to see whether the SBA or Department of Agriculture seek any additional penalties as a result of the incorrect size certification.

I am also very surprised that a company of Allegheny’s size–more than 500 employees, by its own admission–would submit such a poorly thought-out document to the SBA.  When companies of Allegheny’s apparent size are involved in SBA protest issues, they often hire large national law firms at rates that would make most of my small business clients faint, and come out guns blazing with forceful and plausible-sounding SBA size appeals.  Not here.  There is no way to tell from the decision why a company like Allegheny submitted such an inept appeal, but it is notable nonetheless.

As for the question of whether Allegheny’s SBA size appeal was the worst ever, that’s a matter of opinion, but I think it would probably make my Top-10 list.

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