Tribal 8(a) contractor wins round 1 of its suspension fight, but remains sidelined

The Small Business Administration’s Office of Hearings and Appeals has found the agency fell short of several requirements when it suspended ATI Government Solutions from the 8(a) program.

ATI was suspended from federal business after an employee was caught on a hidden camera saying that the company, owned by the Susanville Indian Rancheria tribe, acted merely as a pass-through front to funnel 8(a) contract dollars to non-8(a) companies.

The suspension covered both the 8(a) program and all federal contracting under the Federal Acquisition Regulation.

In a May 18 ruling of ATI's appeal, the judge said that SBA did not provide enough evidence to justify the suspension. The judge’s decision was first reported by GovConIntelligence.com.

However, the judge did not lift the suspension of ATI. He instead sent the case back to SBA and set a June 12 deadline to resubmit a complete record of ATI’s suspension.

What the agency submitted originally was woefully inadequate, the judge found.

After ATI filed its appeal, the judge ordered SBA to submit all documents the agency relied on when making the suspension. But the only document SBA submitted was the FAR suspension letter.

SBA's submission to the judge included no certification by an agency official and no copy of the 8(a)-suspension notice.

When pressed on this, SBA changed its story. The original FAR suspension letter said the move was based on what an ATI employee said to undercover agents working for conservative activist and video producer James O’Keefe.

But in its legal response to the judge, SBA said that ATI should be out of the 8(a) program because it was already suspended under the FAR contracting rules.

“The agency response here does not mention these statements [by the employee] and makes no effort whatever to substantiate them or to rely upon them as reasons for the suspension,” the judge wrote. “The agency has thus stated on appeal a completely different justification for its action.”

SBA argued that it is allowed to make the change, but the judge said it is “settled law” that the agency cannot do that.

In its appeal, ATI said the person captured by the hidden camera was a temporary employee who was not privy to how the company operated. ATI argued that SBA would have learned this if it conducted its own investigation.

The judge seems to agree: “SBA conducted no such investigation and instead relied on a video that does not establish the individual had any personal knowledge of the facts underlying her statements.”

While the judge’s ruling is a victory for ATI, it is not a full vindication yet. The judge has essentially said that the record SBA submitted is such a mess, that he cannot determine whether a suspension is warranted.

SBA has a chance to rectify that with its June 12 filing. ATI must file objections by June 22 and then file an amended response by June 29.