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Published on August 23, 2019 • Law

Contractor’s Failure to Adequately Document Change in Ownership Results in Loss of SDVOSB Status; CVE Appeal of RealSims, LLC, SBA No. CVE-129-A

Jonathan Weiss | Shutterstock

Appeal of the cancellation of a contractor’s SDVOSB status is denied where the company either failed to provide, or furnished incomplete versions of, documents the VA needed to verify a change in the company’s ownership.

For several years, RealSims, LLC was a verified Service-Disabled Veteran Owned Small Business (SDVOSB). But in 2019, RealSims notified the Department of Veterans Affairs Center for Verification and Evaluation (CVE) that it had a change in ownership. CVE requested documents from RealSims to verify the change. RealSims provided some but not all of the requested documents.

Unsatisfied, CVE notified RealSims that it was preparing to cancel the company’s SDVOSB status. RealSims submitted some additional documents, but they did not address CVE’s concerns. CVE cancelled RealSims SDVOSB status, and RealSims appealed the cancellation to SBA’s Office of Hearings and Appeals.

OHA noted that under VA regulations an SDVOSB may loses its status if fails provide CVE with requested information. Here CVE, asked RealSims to provide a signed transfer of membership agreement, signed meeting minutes, and resumes of new LLC members. RealSims did not submit resumes for the new members and claimed it could not get the minutes signed because the new members were traveling.

After CVE notified RealSims that it was preparing to cancel the company’s SDVOSB status, RealSims furnished meeting minutes that were not signed by all the members and a Purchase Agreement that conflicted with the company’s Operating Agreement and with other information RealSims had provided to CVE. The company did not provide resumes for the new members. OHA had no problem finding that RealSims failed to satisfy its obligation to provide requested documentation.

RealSims argued that CVE did not adequately describe the information it wanted. OHA rejected this, noting the CVE requests specifically identified the documents needed to approve the change in ownership. What’s more, RealSims never indicated these requests were unclear; indeed, the company promised multiple times to provide the documents.

RealSims asked to submit new evidence as part of its appeal, but OHA found the company had not articulated a good faith reason to supplement the case file.

RealSims is represented by the company’s CEO, Robert W. McGraw.

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