Woerner v. United States Small Business Administration

739 F. Supp. 641, 37 Cont. Cas. Fed. 76,069, 1990 U.S. Dist. LEXIS 7503, 1990 WL 85090
CourtDistrict Court, District of Columbia
DecidedJune 15, 1990
DocketCiv. A. 89-2674
StatusPublished
Cited by3 cases

This text of 739 F. Supp. 641 (Woerner v. United States Small Business Administration) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woerner v. United States Small Business Administration, 739 F. Supp. 641, 37 Cont. Cas. Fed. 76,069, 1990 U.S. Dist. LEXIS 7503, 1990 WL 85090 (D.D.C. 1990).

Opinion

MEMORANDUM OPINION

JOYCE HENS GREEN, District Judge.

Presently pending before the Court is plaintiffs’ motion for preliminary injunction. Oral argument on the motion was heard on June 11, 1990. Having carefully considered the motion, defendants’ opposition, plaintiffs’ reply, the administrative record, the argument of counsel, and the entire record in this case, plaintiffs’ motion shall be granted in part and denied in part.

*642 I. BACKGROUND

Plaintiffs are Louise Woerner, and L. Woerner, Inc. d/b/a HCR (collectively, “HCR”). HCR is a participant in the Small Business Administration’s (“SBA”) 2[8](a) program for socially and economically disadvantaged small businesses. 1 HCR brought this action on September 26, 1989 and filed an amended complaint on December 22, 1989, alleging that SBA and certain of its officers and employees acted arbitrarily and capriciously and contrary to law in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701, et seq., violated the Business Opportunity Development Reform Act of 1988 and its implementing regulations, and intentionally discriminated against HCR in the administration of SBA's 2[8](a) program because of the race and sex of Louise Woerner in violation of the Small Business Act, SBA’s regulations, certain civil rights statutes, and the Constitution.

More specifically, HCR asserts that beginning in 1988, SBA engaged in a concerted attempt to injure HCR by (1) frustrating HCR’s self-marketing efforts to obtain 2[8](a) contracts from federal procuring agencies, (2) unduly delaying the processing of contract documents and modifications, and (3) refusing for an inordinate length of time to approve for HCR’s business plan additional Standard Industrial. Classification (“SIC”) Codes. Plaintiffs’ amended complaint seeks declaratory relief and an injunction granting HCR an additional year of eligibility in the 2[8](a) program, disqualifying certain SBA officials from participating in decisions relating to HCR, and requiring timely processing of SIC Code requests and other contract approvals.

Plaintiffs’ motion for preliminary injunction does not concern the discrimination claims, nor does it seek an order compelling defendants to grant plaintiffs an additional year of eligibility in the 2[8](a) program or the disqualification of certain SBA officials. Rather, by the instant motion, plaintiffs seek the following specific relief:

(1) an order requiring SBA to decide within 15 working days after receiving an offering letter identifying a requirement 2 on behalf of HCR whether it will accept or reject that requirement for the 2[8](a) program with an explanation of the basis for that decision;
(2) an order enjoining SBA from challenging reasonable SIC Codes designated by federal procuring agencies for requirements offered on behalf of HCR unless SBA
(a) makes a written finding that the SIC Code is clearly incorrect and explains the basis for that decision, and
(b) files an appeal to the head of the procuring agency within 15 working days after receiving the offering letter; and
(3) an order directing SBA to immediately accept into the 2[8](a) program two requirements recently offered to SBA on behalf of HCR (one by NASA and the other by the Department of Labor) because SBA has waived its right to challenge the SIC Codes for those requirements.

II. DISCUSSION

A preliminary injunction may be granted only when the plaintiff demonstrates (1) a substantial likelihood of suc *643 cess on the merits; (2) that irreparable injury will result in the absence of the requested relief; (3) that no other parties will be harmed if temporary relief is granted; and (4) that the public interest favors entry of a temporary restraining order. Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C.Cir.1977); accord, Virginia Petroleum Jobbers Ass’n v. Federal Power Commission, 259 F.2d 921, 925 (D.C.Cir.1958). This test is not a wooden one, for as our court of appeals has noted, relief may be granted “with either a high probability of success and some injury, or vice versa.” Cuomo v. United States Nuclear Regulatory Commission, 772 F.2d 972, 974 (D.C.Cir.1985) (per curiam) (emphasis in original). See also Holiday Tours, 559 F.2d at 843.

A. Likelihood of Success on the Merits

1. Challenges to SIC Codes

Under the Small Business Act, 15 U.S.C. §§ 632(a), 634(b)(6), SBA is authorized to determine which business enterprises are to be designated “small business concerns” within an industry. 13 C.F.R. § 121.102. SIC Codes, four-digit numbers which classify and define activities by industry category, 3 are used by SBA to determine whether a participating 2[8](a) firm can perform specific work under a requirement submitted to the 2[8](a) program by a procuring agency. Once admitted to the 2[8](a) program, a firm is only permitted to perform 2[8](a) contracts which are classified under the firm’s approved SIC Codes. 4 The SIC Codes also identify the maximum number of employees or annual receipts allowed for a firm to be considered “small.” If a firm grows too large for the limits of a particular SIC Code, it is deemed a large business for that code and is therefore ineligible for 2[8](a) contracts containing that specific SIC designation.

A requirement for possible award may be identified by SBA, a 2[8](a) firm, or the procuring agency. When a procuring agency offers a requirement to SBA for inclusion into the 2[8](a) program, it designates a SIC Code for the work to be performed. In order to accept a requirement into the 2[8](a) program, SBA must verify the appropriateness of the SIC Code designation assigned by the procuring agency.

Plaintiffs assert that SBA has repeatedly challenged the SIC Codes assigned to requirements offered on behalf of HCR by various federal procuring agencies. Plaintiffs contend that in so doing, SBA has violated its own regulation, 13 C.F.R. § 124.308(b), which provides:

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Bluebook (online)
739 F. Supp. 641, 37 Cont. Cas. Fed. 76,069, 1990 U.S. Dist. LEXIS 7503, 1990 WL 85090, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woerner-v-united-states-small-business-administration-dcd-1990.