Appeal of the SBA’s termination of a contractor’s participation in the 8(a) Business Development Program is denied, where the appellant failed to pay a subcontractor under a government contract, diverted the funds received from the agency to other business expenses, and failed to adhere to an arbitration agreement arranging repayment to the subcontractor.
Corporate Portfolio Management Solutions appealed the Small Business Administration’s decision to terminate its participation in the 8(a) Business Development Program for a lack of business integrity.
In its notice of termination, SBA explained that CPMS failed to comply with an arbitration agreement under which it was to pay subcontractor Procon Consulting LLC for work previously performed under a government contract with the General Services Administration. The notice also cited a judgment entered against CPMS by the D.C. Superior Court enforcing this arbitration agreement.
CPMS did not dispute that it failed to pay Procon for its services as a subcontractor, or that it had entered into an arbitration agreement, which it failed to fulfill. CPMS argued that GSA failed to timely process an invoice for work that had been performed under the contract, and as a result, it was unable to make timely payments to Procon. According to CPMS, GSA eventually paid the invoice, but by then the funds were needed for employee-related costs. CPMS further noted that it attempted to contact Procon’s attorney on numerous occasions to schedule a different payment plan before the judgment was entered in state court.
In response, SBA argued that OHA should reject jurisdiction over the appeal and dismiss the petition because CPMS failed to pay its subcontractor, which resulted in the entry of civil judgment, and failed to justify its withholding of payment.
OHA granted SBA’s motion to dismiss, finding that it had no jurisdiction over the appeal, as CPMS did not allege any facts justifying its position. OHA found that any payment delay by GSA did not excuse its failure to reimburse Procon after receiving full payment from GSA. OHA also determined that CPMS owed a contractual obligation to compensate Procon for performing the actual work on the contract and improperly diverted the funds it received to unidentified employee-related costs.
OHA determined that Procon was under no obligation to agree to a different payment plan with CPMS and Procon’s refusal did not excuse CPMS from repaying the obligation. Finally, OHA agreed with the SBA that CPMS’s conduct indicated a lack of business integrity and concluded that the SBA properly terminated CPMS for its failure to comply with the arbitration agreement and its subsequent civil judgment.
