SBA 8a Termination and Appeals
8a Terminations
Watson & Associates are government contract attorneys that have a unique understanding of the SBA 8a Program. Our lawyers assist small business across the country from the early stages of termination proceedings all the way to appeal. Our services include:
- Responding to SBA letters of intent to terminate
- Reconsiderations of termination
- Preserving your rights on the record for appeal (very important)
- Appeals for 8a terminations
We also help you to:
- Respond with legal authority to support your position
- Provide appropriate documentation to support your position
- Address excessive withdrawals
- Dispute allegations of improper control
- Overcome issues in your participation agreement
- Appeal SBA termination decisions
Many government contractors have taken advantage of the SBA 8a Business Development Program due to the ability for sole source awards and other benefits. However, there is an increase in early graduation and terminations from the program. Understanding the process and how to reply to the SBA is key to your survival in the 8a Program.
SBA has Discretion to Terminate a Participant
The SBA, at its own discretion, can recommend a small business for 8a termination for various reasons. However, its actions are not exempt for checks and balances. Small businesses sometimes are surprised at such a recommendation. However, you simply have to deal with it or risk guaranteed termination. This is where the help of an experienced 8a termination attorney can be of benefit.
Proper Early Response is Critical
When the SBA sends you an initial termination recommendation letter, you must exercise great caution in how you respond. Your response MUST be timely and sufficient. Of importance is that the SBA is not required to keep asking you for information. Failure to respond within the 30 days can be itself a reason for actual termination. Although you might have a valid excuse, chances are that you will not prevail on appeal.
Reasons for the SBA 8a termination
(a) SBA may terminate the participation of a concern in the 8(a) BD program prior to the expiration of the concern’s Program Term for good cause. Examples of good cause include, but are not limited to, the following:
(1) Submission of false information in the concern’s 8(a) BD application, regardless of whether correct information would have caused the concern to be denied admission to the program, and regardless of whether correct information was given to SBA in accompanying documents or by other means.
(2) Failure by the concern to maintain its eligibility for program participation.
(3) Failure by the concern for any reason, including the death of an individual upon whom eligibility was based, to maintain ownership, full-time day-to-day management, and control by disadvantaged individuals.
(4) Failure by the concern to obtain prior written approval from SBA for any changes in ownership or business structure, management or control pursuant to §§124.105 and 124.106.
(5) Failure by the concern to disclose to SBA the extent to which non-disadvantaged persons or firms participate in the management of the Participant business concern.
(6) Failure by the concern or one or more of the concern’s principals to maintain good character.
(7) A pattern of failure to make required submissions or responses to SBA in a timely manner, including a failure to provide required financial statements, requested tax returns, reports, updated business plans, information requested by SBA’s Office of Inspector General, or other requested information or data within 30 days of the date of request.
(8) Cessation of business operations by the concern.
(9) Failure by the concern to pursue competitive and commercial business in accordance with its business plan, or failure in other ways to make reasonable efforts to develop and achieve competitive viability.
(10) A pattern of inadequate performance by the concern of awarded section 8(a) contracts.
(11) Failure by the concern to pay or repay significant financial obligations owed to the Federal Government.
(12) Failure by the concern to obtain and keep current any and all required permits, licenses, and charters, including suspension or revocation of any professional license required to operate the business.
(13) Excessive withdrawals, including transfers of funds or other business assets, from the concern for the personal benefit of any of its owners or any person or entity affiliated with the owners that hinder the development of the concern ( see §124.112(d).
(14) Unauthorized use of SBA direct or guaranteed loan proceeds or violation of an SBA loan agreement.
(15) Submission by or on behalf of a Participant of false information to SBA, including false certification of compliance with non-8(a) business activity targets under §124.507 or failure to report changes that adversely affect the program eligibility of an applicant or program participant under §124.204 and §124.112, where responsible officials of the 8(a) BD Participant knew or should have known the submission to be false.
The SBA 8a Termination Letter
If you receive notice of SBA recommendation for an 8a termination or for early graduation, you must act quickly and concisely. You must respond within 30 days of receipt of the letter.
A key aspect of the 30-day response is that you must respond with a thorough explanation to support your position. In addition, you must support your position with enclosed documentation. A simple and unsupported explanation will not suffice.
To protect your rights you should consider:
- Consider retaining an attorney
- Ensure that you respond with a detailed response (short letters will not suffice)
- Provide as much documentation to support your response
- Provide copies of checks, tax records, letters from your CPA (if applicable)
- You can also request reconsideration in addition to the above points
If you fail to provide a detailed and supported response, you can lose your 8a termination appeal very easily. This can result in actual termination. Alternatively, the SBA has an implied duty to act reasonably. The congressional intent of the SBA is to assist and help small businesses to succeed and not engage in arbitrary and capricious decisions.
In a perfect world the SBA should request additional information if your response to the termination letter lacks information. However, the case law suggest otherwise.
The bottom line is to “get it right the first time.” Consult with an experienced 8a termination lawyer to protect your rights.
Legal Authority is Key to an 8a Termination Challenge
The SBA does have the ability to make a ‘business judgment’ decision in the best interest of the public. It has a lot of latitude to take adverse actions. It is important to know that the standard on appeal is not to substitute the decision. Instead, an appellate court is charged to decide only if the SBA abused its discretion or acted contrary to law. The benefit of having experienced counsel cannot be overemphasized.
The 8a Termination Process
After you respond to the 30-day recommendation letter, the SBA may choose to move forward with its recommendation to Washington D.C. At the headquarters level, a final agency decision will be in the form of a termination letter from Washington D.C.
After receipt, you then can appeal the decision. Time is of the essence. Many businesses take on this complex task on their own only to find out that there also is a legal analysis that could save the day. Failure to strengthen your appeal with legal analysis can be disastrous.
If you are subject to early graduation or actual 8a termination from the SBA 8a certification program, seek help from a government contract law attorney quickly.
For more information, contact Watson & Associates, LLC at 720.941.7200 or Toll Free at 1-866-601-5518 for immediate assistance.
Tags: 8a lawyers, 8a program termination, 8a termination, 8a termination appeals, appeal 8a termination, termination from the 8a program
As a Denver business lawyer, I can say that I would certainly call Watson & Associates if I had any personal SBA 8a program issues. These people definitely sound like they know what they are doing.