SBA Expands OHA Jurisdiction to Include CVE Protests and Appeals

The jurisdiction of the Small Business Administration (“SBA”)’s Office of Hearings and Appeals (“OHA”) has been expanded to allow OHA to hear protests of eligibility for the Department of Veterans Affairs’ (“VA”) veteran-owned small business (“VOSB”) service-disabled veteran-owned small business (“SDVOSB”) program, known at the VA as the Center for Verification and Evaluation (“CVE”) Veteran Information Pages (“VIP”) database, as well as appeals for denials and cancellations of inclusion in the CVE/VIP database. The new rules affecting CVE protests and appeals become operative October 1, 2018.

These new rules have been long-anticipated and long-encouraged by the small business contracting community, especially veteran contractors, to bring uniformity to the two distinct contracting programs for SDVOSBs—the VA’s program and the SBA’s program.  The differences between the two programs coupled with the fact that the VA did not publish its eligibility determinations and thus did not develop precedent, led to a confusing mish-mash of rules for companies trying to maintain eligibility in both programs.

Under the VA’s program, VOSBs and SDVOSBs are be eligible for certain contracts according to the provisions of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (“Veterans Benefits Act”). In order to be eligible for a contract award a SDVOSB must be registered on the VA’s VIP database. The SDVOSB’s certifications are maintained on the VIP database by the CVE.

An SDVOSB can be removed from the VIP data base by CVE if CVE believes that an SDVOSB’s verified status should be revoked.  In such a case, CVE notifies the SDVOSB of the pending revocation and allows the business 30 days to respond. Once the decision of removal is finalized, the CVE will issue a notice of cancellation and the SDVOSB will be removed from the VIP database. Upon removal the business has a right to appeal the determination to the VA’s Office of Small and Disadvantaged Business Utilization and Center for Veterans Enterprise within 30 days of receipt of the notice of cancellation, or it can re-apply after it has met all eligibility requirements.

The SBA’s long standing program is more well known. It is a government-wide program, overseen by the SBA, whereby agencies set aside certain contracts for competition among SDVOSBs.

However, the SBA program does not require pre-certification and inclusion in a database as the VA CVE program does.  Instead the SBA relies on SDVOSB self-certification and permits fellow contract-bidders to protest the SDVOSB status of the competing small business concern.  The SBA’s Office of Government Contracting decides the initial protest and OHA hears any appeal of that protest.

Now, under these new rules, protests of an SDVOSB’s eligibility for the VA’s CVE program will be heard by SBA’s OHA.  Thus, contrary to its typical role as an appellate tribunal, OHA will have original jurisdiction over CVE protests.  OHA will also have appellate jurisdiction over appeals from a determination by CVE that an applicant is ineligible for the CVE program.  It is important to note that while SBA/OHA will now have jurisdiction over CVE protests and appeals, SBA will maintain its distinct set of rules for protests and appeals from the SBA’s SDVOSB program.

Thus, beginning October 1, 2018, 13 CFR part 134 will include a subpart “J” and “K.” Subpart J will provide new rules of practice for the protest of eligibility for inclusion in the CVE/VIP database. Subpart K will provide new rules for the appeal of denials and cancellations of verification for inclusion in the CVE/VIP database.  The rules governing protests and appeals under the SBA’s SDVOSB program will remain in 13 CFR part 125, subpart D.

Concurrent with these new SBA rules, the VA has amended its regulations to allow protest decisions by the SBA, or negative findings by the SBA, to result in the removal of a SDVOSB from the VA’s VIP database. This can cause issues because the VA and the SBA use different eligibility qualifications for their respective veteran preferred contracts.

While these new rules will bring a measure of uniformity to these two programs, it is important to remember that the two programs remain distinct and so contractors should still consult with an experienced practitioner to ensure compliance with the nuances of each program.

Some pertinent points of the new rules governing CVE Protests:

Who may file a CVE Protest? The Secretary of the VA, or “[i]n the case of a small business that is awarded a contract for a VA procurement, the contracting officer or an offeror.”

Grounds for filing a CVE Protest: Where “the protest is based on service-connected disability, permanent and severe disability, or veteran status,” the Judge will only consider a protest alleges the owner(s) cannot provide documentation showing they meet the definition of “veteran, service-disabled veteran, or service-disabled veteran with a permanent and severe disability.” If the protest is based on ownership and control, the Judge will only consider protests that produce evidence that the concern is not 51% owned and controlled by a veteran or service-disabled veteran. If the protest regards a procurement, a Judge will determine the concern’s “eligibility for inclusion in the CVE database as of the date of bid or initial offer, including price, and as of the date the CVE Protest was filed.” For those protests not relating to procurement, the Judge “will determine a protested concern’s eligibility for inclusion in the CVE database as of the date the CVE Protest was filed.”

Commencement of CVE Protests: The VA may file a protest at any time. If the protest is connected to a VA procurement, an offeror must file the protest within five days of notification of the awardee’s identity. A contracting officer can file a protest at any time during the life of the VA contract. A protest filed untimely will be dismissed.

A contracting officer must forward every non-premature protest received to OHA, along with a referral letter. The referral letter must include the information that may be necessary for OHA to determine timeliness and standing.

Contents of the CVE Protest: Although there is no required format, a protest must be in writing and must include (1) the solicitation or contract number, if applicable, (2) allegations supported by evidence that the concern does not meet eligibility requirements for inclusion in the CVE database, (3) any other pertinent information the Judge should consider, (4) the contact information and signature of the protester or its attorney.

Processing a CVE Protest: If the protest is timely, sufficiently specific, and based upon protestable allegations, the Judge will issue a notice and order notifying the parties of the date the OHA received the protest and order a due date for responses. If the protest is premature, untimely, nonspecific, or is based on non-protestable allegations, the Judge will dismiss the protest. The dismissal is a final agency action. Any responses are due 15 days from the date the protest was filed.

The decision will be based on information given by the parties; however, the Judge may seek and use information outside of that provided by the parties. The decision is effective upon issuance. The contracting officer must update the Federal Procurement Data System to reflect the Judge’s decision.

Discovery and Oral Hearings: Discovery is not permitted in the protest proceedings. Oral hearings will be held only under extraordinary circumstances.

Standard of review and weight of evidence: The protested concern has the burden of proving its eligibility. The Judge will give greater weight to “specific, signed, factual evidence than to general, unsupported allegations or opinions.

Request for reconsideration: The Judge’s decision may not be appealed, however, the Judge may reconsider a decision. Any party that appeared in the proceeding may request a reconsideration by filing with OHA within 20 days after the decision. The request for reconsideration must show a clear error of fact or law material to the decision.

Some pertinent points of the new OHA rules for appeals:

Who may file a CVE Appeal? “A concern that has been denied verification of its CVE status or has had its CVE status cancelled may appeal the denial or cancellation to OHA.”

What are the grounds for filing a CVE Appeal? Denials and cancellations of verification of CVE status may be appealed to the OHA as long as the denial or cancellation is not based on a failure to meet any veteran or service disabled veteran eligibility criteria.

When must a concern commence a CVE Appeal? A concern whose CVE verification or status has been cancelled must file its appeal within 10 business days of receipt of the denial or cancellation.

What is the appeal petition comprised of? Although there is no required format for the appeal, it must be in writing and include (1) a copy of the denial or cancellation and the date the concern received it, (2) a statement of why the denial or cancellation is in error, (3) any other pertinent information the Judge should consider, and (4) the contact information and signature of the appellant or its attorney. The appellant must serve copies of the petition upon the Director, Center for Verification and Evaluation (“D/CVE”) and VA Counsel, and must attach a signed certificate of service meeting the requirements of §134.204(d).

Transmission of the case file: Once a CVE Appeal is filed, the D/CVE must deliver a certified and authenticated copy of the entire file relating to the denial or cancellation to the OHA.

Response to an appeal petition: The D/CVE will respond with its arguments to the CVE Appeal within 15 days of receiving the Judge’s “notice and order.” The D/CVE must also serve its response upon the appellant.

Discovery and oral hearings: There is no discovery and oral hearings will not be held.

New evidence: Evidence beyond the case file will not be admitted without showing good cause.

Standard of review and burden of evidence: The standard of review is based on whether the denial or cancellation was based on “clear error of fact or law.” The appellant has the burden of proof, “by a preponderance of the evidence.

The decision: As far as practicable, the Judge will have 60 days after close of the record to reach a decision. The decision will contain findings of fact and conclusions of law, the reasons for such findings and conclusions, and any relief ordered. The decision will be based on the evidence in the CVE file, arguments made on appeal, and the D/CVE response. Still, the Judge may consider issues beyond those raised in the pleadings. The decision is final and effective upon issuance, but a decision may be reconsidered. Any party that has appeared in the proceedings may request reconsideration by filing with the OHA within 20 days of the decision, “upon a clear showing of an error of fact or law material to the decision.”