Appeal of SBA’s decision denying a firm entry into the 8(a) Business Development program is denied, where the appellant—a service-disabled veteran—did not demonstrate that his difficulty obtaining jobs and promotions was due to his status as a veteran or disabled individual, and therefore could not show that he was socially disadvantaged for the purposes of the program.
Hruckus LLC appealed the Small Business Administration’s decision denying it entry into the 8(a) Business Development program, arguing the agency unreasonably concluded Hruckus did not establish that its owner is socially disadvantaged.
The petitioner is owned, controlled, and managed by Stephen Hrutka. Hruckus applied for entry into SBA’s 8(a) program based on Mr. Hrutka’s disability stemming from his service in the Navy and his veteran status. In his application, Hrutka described specific instances of bias connected to his veteran status and disability, including issues with job offers, promotions, and retention.
However, SBA concluded that Hruckus did not submit sufficient evidence showing bias, prejudice, and/or discrimination directed to Hrutka by others as a result of his status as a veteran with a service-related disability. More specifically, SBA concluded the submission did not establish that Hrutka suffered from “chronic and substantial social disadvantage because of his service connected disability.” The examples did not establish a pattern of chronic and substantial bias treatment, nor demonstrate how Hrutka’s ability to compete in the marketplace was impaired due to chronic discriminatory treatment.
For example, SBA did not find evidence for Hrutka’s claim that his PTSD was a factor in being offered positions junior to his qualifications, nor any support for his allegation that employers treated him with bias due to his veteran and disability status. SBA also concluded that Hrutka was not promoted at one job due to his teleworking and performance issues, not bias.
SBA also found the fact that Hrutka, while unemployed, depleted his savings and accumulated debt to support himself and start his firm, nearly ruining his credit, is not indicative of bias, but of his financial distress. SBA did conclude that one interviewer expressed bias towards Hrutka due to his veteran status and disability, but noted this was only one valid example of numerous allegations.
On appeal, Hruckus argued SBA ignored relevant evidence, focused on acts rather than results, and demanding corroborating evidence at a higher standard. Hrutka maintained that criticism of his job performance, personal attire, and need to telework were all tied to his status as a disabled veteran. Hrutka also argued he was penalized for taking advantage of teleworking as an approved accommodation for his disability, because he was not promoted despite meeting his work goals.
Hrutka also argued SBA erred in failing to consider his veteran status and disability separately. Because SBA focused solely on Hrutka’s service related disability, it “failed to use a consistent analytical thread” by assessing each example for bias based on both distinguishing features. SBA’s analysis failed to make clear whether it was assessing the episodes Hrutka related for bias based upon veteran status or disability or for both. Finally, Hrutka argued that SBA unfairly required him to produce evidence to show bias in his “education, employment, and business history” when bias in only one of those aspects will suffice to establish social disadvantage.
In response, SBA maintained that Hruckus is not owned and controlled by a socially disadvantage individual. SBA explained that Congress did not intend to bestow 8(a) BD program benefits to all individuals who have struggled to gain a competitive position in the business world. Instead, “the definition was predicated on Congress’s findings that certain individuals suffered the effects of snap judgment discrimination based solely on stigma or stereotype associated with an objective distinguishing feature, and without regard to individual qualities.” SBA noted that OHA has never recognized an individual’s claim of social disadvantage based on veteran status. Further, SBA argued that if any alleged inequality results from the nature of the disability itself, rather than society’s attitudes towards it, such inequity is not evidence of social disadvantage. However, the agency acknowledged that social disadvantage may be established where an individual suffers from incidents of bias “based solely on cultural perception and without regard to individual capabilities.”
SBA argued it properly concluded the evidence did not show that Hrutka experiences substantial and chronic social disadvantage based on third-party perceptions of his veteran status or his service-related disabilities. Further, SBA found no connection among his status as a veteran and disabled individual, the alleged instances of discrimination, and a negative impact as a result of these instances on his entry into or advancement in the business world.
OHA agreed that SBA’s determination was reasonable, finding that many of Hrutka’s allegations of bias were based on conclusory statements without sufficient evidence to prove bias. For example, while Hrutka alleged he was offered one job at a position junior to his qualifications and not commensurate to the type of job offered to others of his educational background, he also acknowledged he obtained this job during an economic downturn, when other jobs were not available. Hrutka’s claim that his PTSD was the underlying catalyst for his salary and position was merely conclusory, and OHA held SBA rightly discounted statements of this nature.
OHA also found SBA fully considered Hrutka’s allegations of bias during job interviews and job performance, and reasonably concluded they demonstrated normal disagreement in the course of doing business, not bias. SBA also reasonably concluded that performance issues resulted in a lack of promotion opportunities. While Hrutka credibly described one instance of bias during a job interview, OHA agreed that this one incident did not rise to the level of being chronic and substantial.
Because SBA carefully weighted Hruckus’ evidence and reasonably reached its conclusion that the firm was not eligible for entry into the 8(a) program, OHA denied the appeal.
Hruckus LLC is represented by Matthew P. Moriarty of Koprince Law, LLC. The government is represented by Mark R. Hagedorn, Agency Representative, Small Business Administration
