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SBA OHA Has Change of Heart Over Purple Heart (Heroes)

In a unicorn of a decision before the Small Business Administration Office of Hearings and Appeals (SBA OHA), Judge Chris Holleman overturned his own finding that a service-disabled veteran-owned small business (“SDVOSB”) did not meet the requirements of the Small Business Administration’s SDVOSB Program.

In this request for reconsideration decision, the protestor, Blue Cord DevGroup LLC, had originally successfully argued in its SDVOSB status protest that Purple Heart Heroes, LLC (Purple Heart), the awardee of a lease issued by the U.S. Department of Veterans Affairs, did not qualify as an SDVOSB. One reason alleged was that Purple Heart was not actually controlled by Zachariah Gore, the service-disabled veteran owner. In sustaining this protest ground, Judge Holleman found: “He (Gore) does not have managerial experience of the extent and complexity needed to run the concern, [and] Catalyst is so crucial to PHH’s business operations that Mr. Gore cannot exercise independent business judgment without great economic risk, and … he lives too far from PHH’s headquarters to adequately supervise the company.” In other words, the SBA OHA found three reasons that Purple Heart did not meet the control requirement.

Purple Heart moved for reconsideration on March 15, arguing that it had shown that Gore had the necessary managerial experience, pointing to his work both before and after his time in the military and his work with Purple Heart itself. Judge Holleman agreed on reconsideration that he had erroneously assessed Gore’s work record. While the information in Gore’s resume about his work experience prior to Purple Heart was “vague and unclear” and included several conflicting examples of jobs he had purportedly held at the same time, Gore’s work with Purple Heart itself was enough to show sufficient managerial experience by the time the company actually bid for the VA lease in March 2020. SBA OHA also found that Purple Heart had not been provided the opportunity to rebut the presumption that the veteran did not control the firm despite not being within close proximity. In its request for reconsideration, Purple Heart had provided ample evidence to overcome the presumption. Also, SBA OHA found that analogous case law supported Purple Heart’s arguments regarding its ability to exercise independent business judgment (and that the case relied on previously was not as similar to the facts of Purple Heart’s situation). Accordingly, the SBA OHA reversed its own decision and found Purple Heart eligible for the award.

As an attorney, I find this case fascinating. In general, while a party can request reconsideration of an SBA OHA decision, to actually prevail is extremely rare. One must file the request within 20 calendar days of having received the initial decision, and then convince the judge at SBA OHA that rendered the decision that s/he made “a clear error of fact or law.” As in, convince the judge to overrule himself or herself. That’s an extremely high hurtle, evidenced by the fact that almost all requests for reconsiderations at SBA OHA are denied. And in this case, Purple Heart had to show errors with respect to three separate eligibility findings. And it did!

Congratulations, Purple Heart. You are a legal unicorn.

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