There's much that can be learned from the Spartan Group, Inc's appeal of the Center for Verification and Evaluation's (CVE) decision regarding their Veteran owned small business status. In January 2019, Mr. Kyle Muller, a service-disabled Veteran and 100% owner of the Spartan Group, Inc., applied for his company’s inclusion in the U.S. Dept. of Veteran Affairs' (VA) VIP database. In his company’s application, Mr. Muller identified himself as both President and Secretary and Mr. Ray Douaire as the company’s Treasurer and as his personal mentor. He also included his resume in his application, which listed jobs as director of sales/project manager at Trusted Solutions Group, Inc.(TSG) where he purported to oversee a roofing contract, developed office buildout provisions, and “collaborated with other firms to procure contracts on behalf of TSG.” Mr. Muller listed other past work experience including warehouse manager at a large retail company and officer in the U.S. Navy. His educational background included a bachelor’s degree in criminal justice.
The CVE issued a Post-Review Findings (PRF) notice on March 26, 2019, stating in part “it would appear [Mr. Muller] does not have experience in [this] line of work.” The PRF instructed Spartan to either respond within two days of the notice or withdraw its application or failing this, it would be ineligible to reapply for verification for at least six months. Spartan elected to move forward with the PRF process and Mr. Muller submitted a letter stating that Mr. Douaire had taken him under his wing and continued to act as a mentor. Mr. Muller for further explained that he had overseen a roofing project during his employment at TSG and was working in conjunction with Merlino Construction Group.
The CVE rejected Mr. Muller’s explanation and stated that because Mr. Muller did not hold any position or perform any work related to the Industrial Building Construction industry that it could not find that he had “supervisory control” over Spartan Group. The CVE further determined that “[w]ithout at least two years of experience in the industry such as Industrial Building Construction, with a steep learning curve, CVE is not able to conclude that the [Service-disabled veteran] has the experience of the extent and complexity needed to run the concern.”
The CVE denied the Spartan Group’s application for inclusion in the VIP database on April 8, 2019.
In its appeal to the Small Business Administration's (SBA) Office of Hearings and Appeals (OHA), Spartan argued several points. First, Spartan argued that the CVE erred in failing to apply the “plain, but flexible” terms of 13 CFR §125.13(b), but rather applied arbitrary requirements including that Mr. Muller have at least two years of experience in Industrial Building Construction, NAICS code 236210. Spartan’s attorneys accurately pointed out that the controlling regulation required only that the service disabled veteran have “managerial experience of the extent and complexity needed to run the concern” and did not need to have a technical expertise to be found in control of the company so long as the veteran had the ultimate managerial and supervisory control over those who possessed the technical expertise.
Spartan’s lawyers further argued that Mr. Muller’s previous experience as a manager in both construction and non-construction arenas qualified him to manage Spartan Group. It was further pointed out that Mr. Muller was Spartan’s sole owner and only employee and therefore there was no threat of outside control.
In its July 16, 2019 denial of Spartan Group’s appeal, the SBA OHA affirmed the CVE’s determination that Mr. Muller lacked the requisite experience to run an Industrial Building Construction business. In its ruling, the OHA wrote “Mr. Muller’s resume though made no mention of experience in construction industrial buildings, or in designing or managing the construction of industrial buildings.” Elsewhere in the decision, the OHA wrote “here, both Mr. Muller’s resume and the response to the PRF offered only vague descriptions of Mr. Muller’s prior experience, without supporting facts or explanation… Thus, the resume did not clearly define Mr. Muller’s role on the roofing project, or explain the duration of the project or how much time Mr. Muller devoted to it.” The OHA further faulted Mr. Muller for “not describing the nature of his work, how many contracts he managed, the magnitude of the efforts, or even whether the contracts involved construction.”
Should the CVE Be Judging Your Qualifications?
The real questions for those who would have their companies verified with the CVE is: How up-to-date is your resume? And how comfortable are you having a Federal agency judge your ability to run the company you founded? After all, are the people reviewing your resumes qualified to do what you do for a living or a judge your abilities to do it? Whether you agree with the OHA’s determination in the Spartan case or not, unless the decision is challenged and overturned at the U.S. Court of Federal Claims, this is the state of the law. A veteran business owner who wishes to enter the Industrial Building Construction business must have at least two years of experience in that industry. We should all stay tuned to find out how many years of experience we need in order to run other types of businesses.
If your company is seeking CVE verification and you would like assistance, give Whitcomb, Selinsky, P.C. a call. We’d love to help. Please call (303) 534-1958 or complete a contact form on our website.