In the legal profession, some firms are known to encourage a workaholic culture.  I have heard tales of associates spending multiple nights sleeping (a couple hours) on office couches, being called away from the Thanksgiving dinner table to work, or awoken by the proverbial “3 a.m. phone call” by a partner demanding immediate attendance at the office.  The funny thing is that most of these stories come from the associates themselves—bragging about how much they work!

I work hard for my clients, but with a wonderful wife and daughter in my life, I am of the mind that some of the most important things are found outside the office.  However, one small business owner, who was the subject of a recent SBA Office of Hearings and Appeals decision, might feel right at home in one of those workaholic law firms.  This business owner was able to convince SBA OHA that he worked full time both for his 8(a) company and his separate service-disabled veteran-owned small business—by putting in a whopping 95 hours per week.

Let’s back up a second and discuss why the veteran’s workaholic schedule was so important.  In order for a company to qualify as either a SDVOSB or 8(a), the veteran (or disadvantaged individual) must manage the company on a day-to-day basis.  Typically, working more than nominal hours for another company will negate the control requirement, because the SBA will find that the individual in question does not put in sufficient hours to run the company’s day to day business.

In SDVOSB Appeal of MED Trends, Inc., SBA No. VET-198 (2010), a competitor filed a service-disabled veteran-owned small business eligibility protest against a Department of Labor award, under a SDVOSB set-aside solicitation, to MED Trends, Inc.  The competitor’s protest alleged that MED Trends’ service-disabled veteran owner could not control MED Trends because he was also the owner and principal of Jen-esis Communications, Inc., a participant in the SBA’s 8(a) Business Development Program.  The competitor noted that under the 8(a) program’s regulations, the veteran was required to manage Jen-esis full time.

In response, the veteran submitted a declaration stating that he worked approximately 95 hours per week—more than 40 hours for each of the two companies.  In the absence of any evidence to the contrary, the SBA OHA held that the declaration established that the veteran met the control requirements for MED Trends.  It held that “there is nothing” in the regulations that prevents a service-disabled veteran from controlling an 8(a) company and service-disabled veteran-owned small business at the same time.

MED Trends won the battle, but its victory may have come at Jen-esis’s expense.  SBA OHA noted that although MED Trends remained eligible for service-disabled veteran-owned small business contracts, veteran had apparently failed to comply with a regulation applicable to the 8(a) program, which requires a disadvantaged owner of an 8(a) company to obtain the SBA’s permission before working outside the company.  Although MED Trends remained eligible for SDVOSB set-asides, Jen-esis might find its 8(a) eligibility called into question as a result of its owner’s outside employment.

MED Trends establishes that it is theoretically possible for a service-disabled veteran to work fulltime at another company and still retain “control” over the service-disabled veteran-owned small business.  But unless the veteran wants to work the equivalent of two fulltime jobs (or one legal associate job at some law firms), it remains wise to limit any outside employment.