A participant in the SBA’s 8(a) program must obtain the SBA’s prior approval before switching its business structure–or else.
Case in point: recently, an 8(a) participant was terminated from the 8(a) program because it switched its corporate structure from a corporation to a limited liability company without the SBA’s prior approval.
The SBA’s claim that it could not access information provided by an 8(a) program applicant in DVD format was “not credible,” according to a recent 8(a) program appeal ruling issued by the SBA Office of Hearings and Appeals.
In Sunrise Staffing, SBA No. BDPE-499 (2013), the SBA OHA–in an unusually sharply-worded opinion–rejected the SBA’s excuses for not reviewing relevant information provided by the 8(a) program applicant, and granted the applicant’s 8(a) appeal.
An 8(a) firm’s failure to actively pursue its business has caused the SBA to terminate the firm from the 8(a) program.
Upholding the termination, the SBA Office of Hearings and Appeals noted that if an 8(a) firm’s fails to make substantial and sustained efforts to obtain business, the SBA is justified in kicking the firm out of the 8(a) program.
8(a) joint ventures are not 8(a) program participants, according to a recent (and commonsense) decision of the SBA Office of Hearings and Appeals.
In its decision, SBA rejected a joint venture’s argument that its 8(a) joint venture agreement was essentially an 8(a) program application, drawing a jurisdictional decision between 8(a) program certification and 8(a) joint venture agreement approval.
A participant in the SBA’s 8(a) Program was appropriately terminated because the company’s disadvantaged owner took another full-time job without the SBA’s permission.
The recent SBA Office of Hearings and Appeals decision upholding the termination is an important reminder of the limitations on outside employment for 8(a) owners–as well as a reminder of the importance to 8(a) firms of ongoing honesty and forthrightness with the SBA.
SBA 8(a) participants need not obtain the SBA’s prior approval of prime/subcontractor teaming agreements, according to an SBA statement made in a GAO bid protest case.
The SBA’s position makes sense, because the SBA’s regulations only call for prior approval of joint venture agreements. However, one former 8(a) company might be hopping mad over the SBA’s stated position, because that company was terminated from the 8(a) program for–you guessed it–failing to obtain the SBA’s prior approval of a teaming agreement.
A contractor was recently terminated from the SBA’s 8(a) Program for failing to comply with the subcontracting limits applicable to its 8(a) contracts.
The SBA Office of Hearings and Appeals upheld the termination, writing that the SBA had properly terminated the 8(a) contractor for “willfully violating SBA regulations.” SBA OHA rejected the contractor’s argument that it was exempt from the subcontracting limits under the so-called non-manufacturer rule.