Veteran Elevated Solutions v. U.S.: Court Remands SDVOSB Protest to SBA OHA

Veteran Elevated Solutions, LLC (VES) challenged the Department of Veterans Affairs’ (VA) decision to award a contract for elevator upgrades at the Central VA Health Care System in Richmond, Virginia, to Armstrong Elevator Company (AEC). The VA had designated the solicitation as a Service-Disabled Veteran-Owned Small Business (SDVOSB) set-aside and required bidders to be certified under the Small Business Administration’s (SBA) Veteran Small Business Certification (VetCert) program. After the award, VES filed a protest with the SBA’s Office of Hearings and Appeals (OHA), asserting that AEC’s owner did not sufficiently control the company to qualify as an SDVOSB.

OHA Proceedings

VES alleged that Roy Armstrong, AEC’s service-disabled veteran owner, had other business commitments that prevented him from exercising day-to-day control of the company, as required by SBA regulations. The protest claimed Armstrong divided his time among multiple businesses, including Potcake Cellars and Potcake Aviation, and his management of a municipal airport. AEC responded that Armstrong maintained control of AEC, provided affidavits from associates attesting to his role, and explained that his other businesses did not interfere with his management of AEC.

OHA denied the protest and upheld AEC’s SDVOSB eligibility, finding that the company had proven control by a service-disabled veteran. VES then filed suit in the U.S. Court of Federal Claims, arguing that the OHA’s decision was arbitrary and lacked evidentiary support.

Court Proceedings

The court reviewed two main issues: whether the VA improperly waived material requirements in evaluating AEC’s proposal, and whether OHA’s decision upholding AEC’s SDVOSB status was supported by substantial evidence. VES argued that AEC’s proposal failed to identify subcontractors as required by the solicitation, and that OHA’s determination relied on outdated evidence and failed to evaluate AEC’s eligibility as of the date of its offer.

The court found that the VA reasonably evaluated AEC’s proposal and did not waive any material solicitation requirement. The solicitation required information on subcontractors only if such subcontractors were necessary to complete the work. Because the VA’s own specifications stated that fire alarm programming and qualified elevator inspections would be handled by VA personnel or separate contractors, AEC’s limited use of subcontractors was acceptable. The VA identified minor weaknesses in AEC’s proposal but concluded these did not affect its eligibility for award.

However, the court determined that OHA’s review of AEC’s SDVOSB status was deficient. The OHA decision referenced evidence from AEC’s 2022 certification file and Armstrong’s 2023 disability confirmation but failed to cite or analyze the specific documents and affidavits submitted during the 2024 protest. OHA’s written decision lacked discussion of how the evidence supported its conclusion that Armstrong controlled AEC as of April 29, 2024—the date of the company’s offer.

Court’s Analysis

The court noted that under 13 C.F.R. § 134.1007, OHA must base its determination on all information submitted by both the protestor and the protested concern and explain its rationale in sufficient detail to permit judicial review. The absence of specific references to the record, or discussion of how AEC’s evidence overcame the protestor’s allegations, made it impossible for the court to determine whether the decision was supported by substantial evidence.

The court granted the government’s motion for voluntary remand, directing OHA to reconsider its decision and fully explain its reasoning. It instructed OHA to review all evidence submitted during the protest, assess AEC’s SDVOSB eligibility as of April 29, 2024, and provide a clear rationale linking its findings to the record.

Court’s Ruling

The U.S. Court of Federal Claims granted in part and denied in part the motions for judgment on the administrative record. The court upheld the VA’s evaluation of AEC’s proposal but remanded the matter to the SBA’s OHA for 45 days to reevaluate AEC’s SDVOSB eligibility and to explain its findings with greater clarity. The VA was ordered to stay contract performance during the remand period.

Assistance with SDVOSB Certification Matters

If your business is navigating SDVOSB or CVE certification issues, protests, or compliance reviews, Whitcomb, Selinsky PC assists with SDVOSB and CVE certification matters. Contact our team to learn how we can help protect your certification and eligibility for federal contracting opportunities.