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ARTICLE · 26 FEBRUARY 2015

SBA Disqualifies 8(a) Small Business Based On Too Close Ties

Fox Rothschild LLP
Fox Rothschild LLP
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There are unprecedented opportunities for small businesses in today’s federal marketplace.

United StatesGovernment, Public Sector
Nicholas Solosky
Nicholas Solosky
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There are unprecedented opportunities for small businesses in today's federal marketplace.  But what can you do if your business is losing contracts to another business that you do not believe is really "small"?

In a recent decision, the SBA's Office of Hearings and Appeals affirmed the SBA's disqualification a small business contractor from the 8(a) Business Development Program based on an anonymous "tip" concerning the business's size.

The decision was based on the SBA's conclusion that the small business – DESA Group – was too closely tied to another business to qualify for the Program.  Specifically, the SBA learned that DESA Group's owner, Dionne Fleshman, worked for a DESA Inc., which in turn was owned by Fleshman's mother.  DESA Inc. is itself a former 8(a) participant, having graduated from the program in 1997.

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