Joe Whitcomb
This size standard determination appeal case of Lost Creek Holdings, LLC (SBA No. SIZ-5831) concerns the Small Business Act of 1958. Recognizing the importance of free enterprise and competition, the Small Business Act requires the U.S. Government to assign a fair portion of contracts and purchases to small businesses. The Small Business Administration (SBA) and its Office of Hearings and Appeals (OHA) oversee the administration of the Small Business Act. The SBA uses size determinations and the North American Industry Classification System (NAICS) to define what qualifies as a small business.
Factual Background
The SBA Office of Government Contracting for Area V (Area V Office) is based in Dallas and covers the states of Arkansas, Colorado, Louisiana, New Mexico, Oklahoma, and Texas.
On April 18, 2017, the Area V Office delivered a formal size determination decision concerning LifeHealth, LLC (LifeHealth). The Area V Office determined that LifeHealth was under the $20.5 million threshold for the applicable size standard and qualified as a small business.
On May 1, 2017, Lost Creek Holdings, LLC, d/b/an All-STAR Health Solutions (Lost Creek) filed an appeal with the OHA, seeking to challenge the size standard determination of LifeHealth.
On May 10, 2017, SBA requested that the OHA remand the size determination of LifeHealth, returning it to the Area V Office for further review.
Legal Analysis
SBA regulations under 13 C.F.R. 134.314 provide that the appealing party shoulders the burden of proof to demonstrate that a “size standard determination . . . was based on clear error of fact or law.” In this case, this means that Lost Creek would be responsible for showing that the Area V Office made a clear mistake in determining the size standard for LifeHealth.
But before Lost Creek had a chance to prove its case, the SBA stepped in. Referring to its decision in Size Appeal of Newport Materials, LLC, SBA No. SIZ-5753 (2016), the OHA explained why that happened. When the SBA requests a remand for a size determination, it is essentially admitting to a mistake. In such a situation, the OHA allows the SBA a chance to correct the mistake in question.
As a result, the OHA granted the SBA’s request by eliminating the original size standard determination for LifeHealth and returning this case to the Area V Office for further review. In this way, the Area V Office has an opportunity to correct any errors in the size standard determination of LifeHealth.
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