In the Matter of: SDV Solutions, Inc. re: Four Points Technology, LLC, appellant SDV Solutions, Inc., (“SDV”) protested the Service-Disabled Veteran-Owned Small Business Concern (“SDVO SBC”) status of Four Points Technology, LLC, (“Four Points”) after Four Points was awarded a contract by the U.S. Department of the Treasury, Financial Management Services (“FMS”). SDV’s protest challenged the SDVO SBC statutes of Four Points on grounds that Four Points was not “owned or controlled by” an eligible service-disabled veteran. The Small Business Administration (“SBA”) Director for Government Contracting (“DGC”) denied SDV’s protest and found Four Points met the SDVO SBC eligibility requirements at the time of its offer for the solicitation because a service-disabled veteran in fact owned and controlled Four Points under “the totality of the evidence” presented. SDV appealed. On appeal, the issues before the SBA’s Office of Hearings and Appeals (“OHA”) were: (1) whether the DGC’s status protest determination was based on clear error of fact or law, and (2) whether the DGC had authority to issue a size determination as part of an SDVO SBC status protest determination. The SBA OHA found that the status protest determination was based on clear error and that the DGC did not have authority to issue a size determination; accordingly, the OHA reversed the determination.
The OHA found that while Mr. Gilchrist was a service-disabled veteran and in fact owned 51% of Four Points as required for SDVO SBC status, there was no evidence in the record concerning Mr. Gilchrist’s experience or qualifications to “run” Four Points, such as a resume or curriculum vitae. The OHA found that the DGC committed clear error by failing to assess Mr. Gilchrist’s managerial experience in making its determination on Four Points’ SDVO SBC status.
The OHA’s decision was based on its interpretation of 13 C.F.R. § 125.10(b), which mandates a two-step process when a specific protest is made concerning control of an alleged SDVO SBC. Under this rule, the DGC must find: (1) the concern is controlled by the SDV; and (2) the SDV has “managerial experience of the extent and complexity needed to run the concern.” The OHA noted that the “requirement for dual or conjunctive finding contained in 13 C.F.R. 125.10(b) is understandable” because “if [the SBA] did not require SDVs to have experience sufficient to run a concern[,]” then the SBA would “have created an opportunity to establish a fiction designed to gain award of SDVO SBC set-aside contracts and that could weaken the integrity of the SDV program.” The OHA further found that only an Area Office within SBA’s Office of Government Contracting may issue a formal size determination. Accordingly, “it was clear error for the DGC to find Four Points to be a small concern under the applicable NAICS code.” Consequently, the OHA ordered that the FMS contracting officer may not count award of the contract to an SDVO SBC and Four Points cannot submit another bid as a SDVO SBC on future SDVO SBC procurement. SBA No. VET-116 (June 29, 2007).