Everyone knows the old phrase, “if it walks like a duck, quacks like a duck, and swims like a duck, it must be a duck.” Something akin to this must have crossed Lori Skaggs’s mind when she applied for the Small Business Administration’s (SBA) 8(a) BD Program for socially and economically disadvantaged small businesses on behalf of her construction company, Arrow S. Company, Inc. (Arrow). The recent decision, Arrow S. Company, Inc., SBA No. BDPE-546, (Mar. 19, 2105) (Arrow) demonstrates that applicants should provide specific details establishing social and economic disadvantage in their 8(a) BD applications, regardless of what they consider to be the obvious magnitude of discrimination or disadvantage.
The case arose when Arrow appealed SBA’s denial of Arrow’s 8(a) BD application. In its appeal to the Office of Hearing and Appeals (OHA), Arrow argued that SBA (i) had acted arbitrarily in disregarding Arrow’s evidence of social and economic disadvantage and (ii) did not properly apply the applicable standard of proof.
OHA agreed, finding that SBA‘s conclusions regarding Skaggs’ lack of disadvantage were contradicted by evidence. For example, in her application Skaggs claimed she was denied business opportunities while employed at CL Skaggs Trucking because of her gender and offered a letter from the owner of CL Skaggs Trucking to support this claim. Without any evidence contradicting the letter, SBA determined, seemingly out of thin air, that factors other than gender must have played a role in the disparate opportunities and benefits received by a male employee at CL Skaggs Trucking. SBA also minimized evidence of social disadvantage such as an e-mail alluding to the sexual fantasies of a contractor’s project manager about Ms. Skaggs and comments made by a contracting officer about Ms. Skaggs’s appearance. Though there are no circumstances in which such comments are appropriate in the business world, SBA found the evidence “unpersuasive” and concluded that comments made were simply “compliments” rather than evidence of gender bias.
But the noteworthy lesson in Arrow is the importance of having a detailed 8(a) BD application. OHA repeatedly remarked that Arrow’s application would have benefited from greater specificity and reminded us that the burden is on the applicant to provide adequate detail to establish eligibility for the 8(a) BD program. Arrow withheld certain details because Skaggs feared publication would damage her future business opportunities. This strategy backfired. If the sensitive information Skaggs subsequently had to include in her appeal to OHA had been included in the 8(a) BD application, Skaggs may have avoided both the adverse finding by SBA and the disclosure of the sensitive information in OHA’s published opinion on appeal.
The bottom line? Applicants for the 8(a) BD program cannot afford to leave any room for doubt concerning their evidence of disadvantage. Failure to provide explicit details in an application about social and economic disadvantage may lead to SBA’s mischaracterization of the evidence and even to rejection of the application. Rather than relying on inferences, don’t be afraid to actually show SBA the “duck.”
Lara Nochomovitz is responsible for the contents of this Article.
© Jackson Kelly PLLC 2015