Navigating the bureaucratic whims of the federal government can often feel like a labyrinthian task. For example, did you know that sometimes when the U.S. Department of Veterans Affairs makes a decision, the only way to get it overturned is to seek redress from a different agency?
It’s true. And it’s the result of little more than historical inertia. As detailed below, one poor veteran found this out the hard way.
The SBA and VA concurrently administer two different Service-Disabled Veteran-Owned Small Business (“SDVOSB”) programs. Unsurprisingly, this led to considerable confusion. At the urging of Congress, in 2018, the SBA and VA collaborated to develop a set of joint SDVOSB regulations that would govern both programs. The goal was to make administration of the programs more consistent and easier for participants. While progress has been made, a recent decision from the SBA’s appellate office highlights how the dual administration structure continues to challenge SDVOSB firms.
Historically, the VA and SBA SDVOSB programs operated largely independent of one another, despite sharing the same acronym. The VA was responsible for administering the SDVOSB program exclusively for VA procurements, and published regulations to govern its program. Separately, the SBA was responsible for administering an SDVOSB program for all executive agencies, except the VA. The SBA also published its own regulations. Importantly, the VA and SBA SDVOSB regulations were in no way the same.
One of the critical differences between the two programs was verification. The VA required SDVOSB’s to be verified before competing on SDVOSB procurements. To provide applications with due process, the VA implemented an appeal process within the VA to hear application denial challenges.
The SBA, on the other hand, did not require prior verification. Instead, offerors would self-certify their SDVOSB eligibility. To the extent the self-certification was subsequently found to be improper, the firm could appeal its eligibility to the SBA’s Office of Hearings and Appeals (“OHA”).
That was until the SBA and VA consolidated the SDVOSB regulations. Thereafter, both programs would be governed by the SBA’s updated regulations. Nevertheless, the VA would continue to verify SDVOSB firms, whereas the SBA would continue to allow for self-certification with a protest and appeals path to challenge the status of awardees. A substantial change, however, was that both the VA and SBA programs would have SDVOSB appeals heard by the SBA OHA—the VA’s appellate process was scuttled.
This came in to stark relief recently in Starblast, Inc., SBA No. CVE-164 (Sept. 9, 2020), which concerned the dismissal of an SDVOSB verification appeal by the VA. The company, Starblast had applied for SDVOSB verification from the VA, but was subsequently denied verification. The denial letter was sent on June 3 and notified Starblast that any appeal would need to be filed with OHA within 10 business days. The notification letter did not provide the contact information for OHA, however.
On June 5, Starblast attempted to appeal its denial. In what would become a disastrous error, Starblast sent its appeal to vip@va.gov and verificationfollowup@va.gov. Neither of these email addresses, however, route to OHA. Because of this mistake, the appeal petition was not submitted to OHA email until August 31—nearly three months after the denial.
OHA asked for an explanation considering that OHA’s rules state that a business “must file its appeal within 10 business days of receipt of the denial or cancellation.” OHA has no authority to provide an extension. Moreover, the OHA’s procedures make clear that “[f]iling is the receipt of pleadings and other submissions at OHA.”
Starblast tried to explain, but OHA’s hands were tied. As OHA explained, “although Appellant transmitted its appeal to VA within 10 business days after issuance of CVE’s decision to deny Appellant’s application, Appellant did not file the appeal with OHA until nearly three months after issuance of the decision.” OHA therefore concluded that the appeal was untimely, and the case was dismissed.
OHA’s decision in Starblast highlights the confusion that continues to surround the SDVOSB program. While both agencies are operating form the same set of regulations, there is still room for confusion because the SBA is responsible for processing VA appeals. OHA is certainly better equipped to serve this appellate function, but there can be little doubt that the arrangement is less than intuitive. As Starblast painfully learned, if you want to challenge the VA’s decision, the only venue is the SBA.