The Office of Hearings and Appeals (OHA) is an independent office of the Small Business Administration (SBA) established in 1983 to provide an independent, quasi-judicial appeal of certain SBA program decisions. Specifically, OHA hears appeals of: size determinations; contracting officer designations of North American Industry Classification System (NAICS) codes on Federal contracts; eligibility determinations for Service-Disabled Veteran-Owned Small Business Concerns (SDVO SBC), Women-Owned Small Businesses (WOSB), Economically Disadvantaged WOSB (EDWOSB); and 8(a) BD eligibility determinations, suspensions, and terminations. More information regarding OHA’s jurisdiction can be found at 13 C.F.R. § 134.102.
Sometimes the Small Business Administration (SBA) disagrees with decisions made by their own Office of Hearing and Appeals (OHA). SBA thinks that OHA has placed too much emphasis on making agencies demonstrate why someone is not disadvantaged instead of making the person apply for 8(a) status and show they actually were discriminated against or otherwise disadvantaged in their life. As a result, SBA may amend its 8(a) regulations to make it harder for 8(a) applicants to be admitted into the program.
On 20 Apr 15, A. J. Nesti (reference A.J. Nesti Materials, SBA No. BDPE-551 (2015)) appealed an SBA determination where they were denied entry into the 8(a) program. On 30 Apr 15, SBA filed a motion to dismiss due to a lack of jurisdiction. This motion was based on the fact that Nesti was denied entry into the 8(a) program “based on grounds other than a negative finding of social disadvantage, economic disadvantage, ownership or control”. SBA further stated that the entity denied entry could only appeal on one of those grounds and that OHA did not have jurisdiction if the appeal was based on any other grounds.
The SBA decision was “based on (1) failure to prove gender-based disadvantage experienced by its owner; and (2) failure to show the potential for business success. The second basis does not relate to social or economic disadvantage, ownership, or control. Accordingly, this Court does not have jurisdiction to hear this appeal.”
The Court concurred and found that it did not have jurisdiction and Nesti’s appeal was denied.
It appears that as long as even a small part of the denial is based upon one of the non-appealable items (any other than socio-economic grounds, ownership, or control) the 8(a) applicant loses the ability to appeal to OHA.
If you are trying to decide whether to apply for 8(a) program status, be aware that 8(a) may soon change their regulations to make it even harder to be admitted to the program. And if denied entry, make sure any appeals are based ONLY on those items over which OHA has jurisdiction.
Shelley, just to clarify, Is the reason it’s harder now to qualify as an 8(a) company (as apposed to several years ago) because small businesses could simply claim they are disadvantaged and the BURDEN WAS ON AGENCIES to prove that an entity is not really disadvantaged, therefore the BURDEN HAS NOW BEEN SHIFTED TO SMALL BUSINESSES to prove they are in fact disadvantaged? When (what year) were the rules changed? (I’d like to research this further). Is that why there has been a major drop in 8(a) certifications? Thanks in advance for the clarification. (Sorry about the bold font, didn’t see a way to bold, italicize, or underline).
Mona,
The new guidance seems to be shifting the responsibility from the agency to the small business to prove it qualifies under the 8(a) parameters. This decision was made in May 2015. Currently, there has not been any formal change to the USC, but rather a shift in OHA’s interpretation of the rules. I was not aware that there had been a major drop in 8(a) certifications. Can you provide me some info on where you saw this info? My thoughts would be that (like many other things in federal contracting) more rigorous monitoring and tighter application requirements are leading to this trend.