PETITION FOR RECONSIDERATION: FHITO LOGISTICS, LLC, PETITIONER RE: CVE PROTESTS OF MARK SCHAIBL...

*1 On July 22, 2021, FHITO Logistics, LLC (Petitioner) filed the instant Petition for Reconsideration (PFR) of the U.S. Small Business Administration (SBA) Office of Hearings and Appeals (OHA) decision in the CVE Protests of Mark Schaible d/b/a Red Orange North America and Dunlap Governmental Solutions, LLC, SBA No. CVE-197-P (2021) (“Red Orange and Dunlap I”). In that decision, OHA sustained a protest filed by Mark Schaible d/b/a Red Orange North America and Dunlap Governmental Solutions (Red Orange and Dunlap) and concluded that Petitioner was not an eligible Service-Disabled Veteran Owned Small Business (SDVOSB) for the U.S. Department of Veterans Affairs (VA) Request for Quotations (RFQ) No. 36C26321Q0036

*1 OHA found that, according to the Case File produced by the VA Center for Verification and Evaluation (CVE), Petitioner's sole owner and principal, Demetrius Walker, resides in Ralph, Alabama, has no other office or job-site locations, has no employees beside Mr. Walker, and has no permits, licenses, or charters as a logistic provider. Red Orange and Dunlap I, SBA No. CVE-197-P, at 2, 12. In reviewing the documents from the Contracting Officer (CO), Petitioner submitted a Proposal for this RFQ with a teaming agreement between Petitioner and Coast2Coast Shredding, LLC (Coast2Coast) in response to this procurement. Id., at 5-8. The proposal also included Petitioner's only past performance as a subcontractor of Coast2Coast, and a Docu Shred Inc's National Association for Information Destruction (NAID) AAA Certification.

*1 On May 12, 2021, OHA issued an Order, directing that Petitioner produce additional information about the breakdown of work between Petitioner and its subcontractor, Coast2Coast; Petitioner's Past Performance; Petitioner's NAID Certification; and the role and identity of Docu Shred, Inc., and its relationship to Petitioner. The Order further stated that in the case of refusal or failure to furnish requested information within a required time period, OHA may assume that disclosure would be contrary to the interests of Petitioner failing to make disclosure. 13 C.F.R. § 134.1011. Petitioner, however, failed to respond. Subsequently, on June 9, 2021, OHA issued another Order sua sponte directing Petitioner, pro se, to respond to the protest and the request for information by June 18, 2021.

*2 On June 16, 2021, Petitioner did not offer any substantive response to the Order, and instead, maintained that it will perform the primary and vital requirements of the RFQ, and it is not obligated to subcontract any work to Coast2Coast. Petitioner submitted “a true and correct copy” of Petitioner's teaming agreement with Coast2Coast that purported to show it was not specific to this RFQ, despite the copy being different from the teaming agreement that was attached to its Proposal and specifically created for this RFQ. Id., at 5, 10-11 (quoting Petitioner's Response.) Further, Petitioner planned to lease Docu Shred, Inc.'s trucks and equipment for on-site shredding services and use the latter as a disposal agent and for off-site shredding requirements. Id., at 11. Finally, Petitioner questioned the standing of Red Orange and Dunlap in challenging the protests and their eligibility for this procurement on the grounds that they are not located near the job site locations, they do not have past performance in shredding services, and they appear to be controlled or affiliated by a larger non-SDVOSB business. Id., at 11-12.

*2 Because Petitioner made no substantive response to OHA's Order, OHA drew the inference, under 13 C.F.R. § 134.1011, that the missing information would have shown that Mr. Walker does not control Petitioner and would be unduly reliant upon its subcontractor, Coast2Coast, to perform the primary and vital requirements of the RFQ. Id. at 14-15. OHA further found that Petitioner did not rebut the presumption that the service-disabled veteran (SDV) does not control the concern because Petitioner is not located within a reasonable commute to the job site locations. Id., at 14. Thus, Petitioner failed to carry its burden of proving its eligibility as an SDVOSB by a preponderance of the evidence, as required by 13 C.F.R. § 134.1010. Id. at 15. For these reasons, OHA sustained the protest.

*2 Petitioner's PFR assigns three reasons why the Red Orange and Dunlap I was in error. First, Petitioner argues that the ostensible subcontractor rule does not apply in SDVO SB status protests, citing Matter of Michael Ogden Pratt, SBA No. VET-200 (2010) and FAR § 19.307(c). Therefore, the finding that Petitioner was in violation of the rule was in error. (PFR, at 2-4.)

*2 Petitioner further argues the findings in Red Orange and Dunlap I were in error by applying a rebuttable presumption that Petitioner's principal, Mr. Walker, does not control the firm. Petitioner claims 13 C.F.R. § 125.13(l) does not require Mr. Walker to live in close proximity to both the company's headquarters and every single one of its job locations. (Id., at 5, emphasis Petitioner's.) Petitioner explains, “[t]he rebuttable presumption only arises if the owner is not located within a reasonable proximity to the headquarters or any of its job locations, such that it can be properly presumed that the owner is not in control of the company.” (Id.) Because one of the job locations is over 1,200 miles from Mr. Walker's residence, OHA applied the presumption against Petitioner. (Id., citing Red Orange and Dunlap I, at 15.) However, Petitioner argues that OHA erred in focusing upon the job site location rather than Petitioner's headquarters, which is located at Mr. Walker's residence. (Id.)

*3 Petitioner also maintains that it submitted the information requested by the Administrative Judge. (Id., at 5-6.) The Judge had ordered a submission of the breakdown of work between Petitioner and Coast2Coast, Petitioner's Past Performance, Petitioner's NAID certification, and the role and identity of DocuShred, Inc. and its relationship to Petitioner. Petitioner maintains that its submission on June 16, 2021, of a declaration by Mr. Walker met the requirements of submitting this information. (Id.) Petitioner indicates the Judge erred in finding it had not submitted the requested information. First, the two firms had not executed a subcontract, there was no breakdown of work to submit, and that if Coast2Coast was to have a role, it would be as a consultant on project management. (Id., at 6.) Mr. Walker asserted in his submission that Petitioner would perform the contract and would be responsible for hiring and controlling employees, pickup and shredding of documents, and using shredding equipment leased from Docu Shred, Inc. (Id.)

*3 Petitioner asserts all that is required to perform this contract is to hire local employees, obtain a truck and shredding equipment, and send those employees to dispose of the documents. (Id., at 7.) Petitioner then revisits its former claims that Red Orange and Dunlap are also located at distances away from the places of performance. (Id.) While Red Orange and Dunlap I noted the solicitation required the contractor to be NAID certified or have on site mobile shredding equipment, Petitioner claims it meets the requirement by leasing equipment from a local vendor. Petitioner contends OHA erred in finding it did not submit the requested information. Further, OHA erred in applying the ostensible subcontractor rule. (Id.)

*3 A party seeking reconsideration of an OHA decision on a CVE Protest must file its PFR within twenty calendar days after issuance of the decision. 13 C.F.R. § 134.1013(a). Petitioner filed the instant PFR within twenty calendar days after issuance of Red Orange and Dunlap I, so the PFR is timely.

*3 To prevail on a PFR, a petitioner “must clearly show an error of fact or law material to the decision.” 13 C.F.R. § 134.227(c). This is a rigorous standard. A PFR must be based upon a showing of a manifest error of law or mistake of fact and is not an additional opportunity for an unsuccessful party to argue its position. CVE Protest of Alpha4 Solutions LLC d/b/a Alpha Transcription, SBA No. CVE-137-P (2019) (PFR). “A PFR is appropriate only in limited circumstances, such as situations where OHA has misunderstood a party or has made a decision outside the adversarial issues presented by the parties.” Size Appeal of Precision Asset Management Corp. and Q Integrated Cos., LLC, SBA No. SIZ-5801 (2016) (PFR) (citing Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988) (quoting Above The Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983)). Thus, “[t]he moving party's argument must leave the Administrative Judge with the definite and firm conviction that key findings of fact or conclusions of law of the earlier decision were mistaken.” Size Appeal of TKTM Corp., SBA No. SIZ-4905 (2008) (citing Size Appeal of Taylor Consultants, Inc., SBA No. SIZ-4775, at 11-12 (2006)); Size Appeal of KVA Elec., Inc., SBA No. SIZ-5057 (2009).

*4 Petitioner's first legal argument is meritless. Petitioner argues that the ostensible subcontractor rule is not applicable in SDVO SB cases, citing Matter of Michael Ogden Pratt, SBA No. VET-200 (2010). However, since Michael Ogden Pratt, the regulation has been revised, and the ostensible subcontractor rule has been made applicable in SDVO SB cases. 84 Fed. Reg. 65647, 65664 (Nov. 29, 2019), codified at 13 C.F.R. § 125.13(f).

*4 Petitioner's second argument, that OHA erred in applying the rebuttable presumption that Mr. Walker did not control Petitioner because of his distance from the job sites, also fails. The regulation provides that there is a rebuttable presumption that the service-disabled veteran upon whom the concern's claim of eligibility was based does not control the firm if that individual is not located within a reasonable commute of the locations of concern's “headquarters and/or job-sites.” The service-disabled veteran's ability to communicate electronically is not by itself a reasonable rebuttal. 13 C.F.R. § 125.18(l). Here, Mr. Walker's home and Petitioner's headquarters in Alabama are located more than 1,200 miles from the job locations in North Dakota and Minnesota. Mr. Walker's ability to adequately supervise the work is questionable, and he offers no real rebuttal to this problem, especially when his ability to communicate electronically with the job site is excluded as a rebuttal by the regulation, supra. Accordingly, Petitioner has failed to offer a rebuttal to overcome the presumption that Mr. Walker does not control the firm.

*4 Petitioner's third argument, that it did provide the information OHA requested, is not supported by the record. As I noted in the original decision:

*5 Red Orange and Dunlap I, at 14-15.

*5 As noted above, the information Petitioner provided in Red Orange and Dunlap I was general and conclusory and remains so in its PFR. Its response does not match the detail one would expect from reading the solicitation and is not consistent with its proposal, which included a teaming agreement with Coast2Coast precisely made for this procurement. As noted above, Petitioner had the burden of proof, and failed to meet it. 13 C.F.R. § 134.1013(a). Here, Petitioner has failed to establish a manifest error of law of fact.

*5 Finally, Petitioner's argument questioning the eligibility of the Protestors in Red Orange and Dunlap I is irrelevant. Their eligibility is not at issue here; only Petitioner's eligibility is at issue. Accordingly, I must deny this PFR.

*5 For the above reasons, I DENY the PFR and AFFIRM the decision in the CVE Protests of Mark Schaible d/b/a Red Orange North America and Dunlap Governmental Solutions, LLC, SBA No. CVE-197-P (2021).