An adverse inference is a penalty that the Small Business Administration (SBA) can enforce as part of a size protest. During a size protest determination, SBA will ask the protested company lots of questions. Sometimes, a protester will not answer those questions, either on purpose or due to oversight. Depending on the circumstances, SBA can apply an adverse inference if a protested company fails to respond to questions. If SBA applies an adverse inference, that means that the SBA Area Office will determine that the information that was not provided would prove that the company is not a small business. A recent decision reminds us about this penalty. If you are in a similar situation, reach out to a firm like ours to help think of a way to respond to SBA.
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OHA: Respond to SBA Size Determination Questions, or Risk an Adverse Inference
SBA’s size protest rules contain a stick to force companies to respond to SBA as part of size determination. That stick is called the adverse inference rule. The adverse inference rule says that, if SBA requests specific information and a protested company refuses to provide it, SBA may assume that the missing information would show that the company is not a small business. In a recent decision, SBA’s Office of Hearings and Appeals (OHA) upheld the use of the adverse inference.
Continue readingFailure to Send: Protester Loses Size Determination Due to Lack of Response on Tax Returns
In federal procurement law, it is often the case that decisions on protests and other cases come down to tough questions of law that could go either way, requiring the judge to carefully weigh the reasons for making ruling one way or another. Unfortunately, there are also cases where the decision can rest entirely on responding to a request, even one that gives the contractor little time to respond. Regardless of the situation, it can’t be overstated how crucial it is to respond timely to any requests, and make sure your company’s agents and representatives make the response their priority. In this case, this lesson was learned the hard way by one contractor.
Continue readingSize Protests: Ignorance Doesn’t Excuse Failure to Respond
If you’ve ever responded to an SBA size protest, you know that the process is quite involved: SBA will require your company to provide a complete response to the protest (including production of corporate, financial, and tax records for all implicated concerns) within only a few business days. The consequences for not providing all of the requested information can be quite severe, as the SBA can presume that the responsive information would demonstrate that the concern is not a small business (through its “adverse inference” rule).
A recent OHA appeal shows the dangers of failing to adequately respond to a size protest. In Size Appeal of Perry Johnson & Associates, SBA No. SIZ-5943 (2018), the OHA affirmed the SBA’s reliance on an adverse inference and, as a result, found the protested company was not an eligible small business.
Busy Employee “Skims” SBA Size Protest Email–What Could Go Wrong?
A contractor’s “frantically busy” employee, who was listed as the firm’s contact in SAM, skimmed through an email from the SBA containing a size protest, and took no action to respond.
In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the SBA had properly issued an adverse size determination against the contractor in question after receiving no reply to the size protest–and the fact that the employee who received it was “frantically busy” was no excuse.
Late SBA Size Protest Response Sinks Contractor’s Small Business Eligibility
No matter a company’s actual size, the company will be deemed an ineligible large business if it fails to timely respond to a SBA size protest.
Just ask American Blanching Company, which was recently found ineligible for a small business set-aside contract because it did not respond to a SBA size protest within the short size protest response window.
No Sick Notes at the SBA: Illness Doesn’t Extend SBA Filing Deadlines
Like many others who went to school in the 1980s, Ferris Bueller was one of my personal heroes. Ferris took the idea of faking sick from school and turned it into an art form, complete with a moving mannequin in the bed, canned messages playing when the doorbell rang, and even a before-its-time hacking of the school computers to change his attendance records. And of course, Ferris spent his day off tooling around in a Ferrari, attending a Chicago Cubs game (nice taste, Ferris!), and bringing The Beatles back into style. What kid wouldn’t want to skip school for that?
Sick days–whether real or not–are a time-honored part of school. Unfortunately, as one contractor learned the hard way, sick notes may not work at the SBA.