January 30, 2019 - 9:45am
What Should You Do If You've Been Denied SWaM Certification or Recertification? Posted by: Shayn A. Fernandez

In a previous post, we discussed what it means to be SWaM certified, how SWaM certification can help your business obtain work with the Commonwealth of Virginia, which paid nearly $9.8 billion to private contractors in fiscal year 2018, and the hurdles of obtaining certification. In this post, however, we discuss a very different topic—what do you do when you have been denied certification or recertification?

Denial of Certification

The Virginia Department of Small Business and Supplier Diversity (SBSD), the SWaM certifying agency, may deny an application for certification or recertification for a variety of reasons—often on grounds of insufficient ownership and control. In addition to the failure of an applicant to demonstrate the requisite ownership and control requirements, when an applicant fails to furnish the necessary information or knowingly provides false or misleading information, the SBSD may also deny certification. If the SBSD finds that any of these circumstances exist, it will send the applicant a written notice of denial setting forth the grounds for denial within 15 days of its decision. Notably, an applicant may be SWaM certified for some categories (e.g., small) and be denied for other categories (e.g., minority-owned).

Options Upon Denial

Depending on whether an applicant is denied certification or recertification, it generally has a few options: (1) appeal the decision, (2) reapply after the 12-month waiting period, and (3) request a waiver of the 12-month waiting period.

Appeal

An applicant whose application has been denied recertification has the right to an informal fact-finding proceeding before a designated department representative to present why it believes it was wrongfully denied recertification. Read that last sentence very closely. The SWaM regulations only provide a right to an informal fact-finding proceeding for applicants whose “recertification has been denied by the department, or a certified business whose certification has been revoked by the department.” Interestingly, the plain language of the regulation is silent on whether applicants denied initial certification have a right to an informal fact-finding proceeding.  The SBSD, however, has published a policy document stating that “Non-Virginia based applicants that were denied certification or re-certification under the VA SWaM Program are eligible to appeal the agency’s decision under the Administrative Process Act.”[1]  Similarly, in the past, the SBSD has granted fact-finding proceedings to Virginia based applicants that were denied initial certification.

For applicants denied recertification (or whose certification was revoked), a request for an informal fact-finding proceeding must be submitted to the SBSD within 10 days after the date on which the notice of denial was sent by the SBSD. In an applicant’s request for an informal fact-finding proceeding, the applicant must include a clear and brief summary of the factual errors and legal grounds establishing why its appeal should be granted. Importantly, an applicant has a right to be represented by counsel in this proceeding. The SBSD’s initial decision will be reversed only if the applicant can demonstrate that a “material mistake of fact formed the basis for the department’s review of the application . . . or if the department’s decision was not in accordance with applicable laws and regulations.”[2] The applicant must show that the SBSD made a mistake in interpreting, or misunderstood, its application as submitted or must show that the SBSD misapplied its rules and regulations and cannot simply correct the mistake that was grounds for its appeal and state that the mistake has been corrected. 

Within 30 days of an applicant’s timely request for an informal fact-finding proceeding, the SBSD will issue a notice stating the date and time of the proceeding. The proceeding must be within 7-45 days of the date of the notice. The SBSD must issue a written notice of its decision to the applicant within 60 days of the date of the proceeding.

Reapplying

If an applicant has been denied, then it may reapply for the same category of certification 12-months after the date on which it received its notice of denial. Interestingly, the timeline is triggered by the date the notice is received as opposed to the date that the notice is sent for appeal rights. This waiting period applies to denials both of certification and of recertification.

Waiver of Reapplication Period

If you believe that there has been a mistake or misunderstanding regarding your application, then, instead of pursuing an appeal, an applicant may request a waiver of the 12-month waiting period. An applicant may request such a waiver by submitting a written request for reconsideration to the director along with a reasonable basis for why the waiver should be granted. When an appeal is unavailable (or appears to be unfruitful) applicants may consider requesting a waiver. Like an appeal, a waiver will not be granted when the applicant simply fixes the problem that was grounds for the denial. Instead, the grounds for the waiver should be based upon a mistake or misunderstanding by the SBSD in denying the application. For instance, if the SBSD denied an applicant applying for minority-owned status claiming the minority owner did not have the necessary experience for an industry (e.g., construction), but it turned out that the applicant was engaged in another industry (e.g., equipment leasing) in which the minority owner had extensive experience, persuasive grounds for granting the waiver may exist. Once a waiver request is submitted, the director must respond with a decision to deny or grant the waiver within 30 days. The decision to grant or deny a waiver request cannot be appealed.

Conclusion

Given the value of a SWaM certification, it is imperative that applicants for certification or recertification take great care in making sure that their governing documents satisfy the SWaM ownership and control requirements before applying. When an applicant has been denied, however, it is important to know when and how an informal fact-finding proceeding can be obtained and when it is better to seek a waiver of the 12-month waiting period.
 

For more information, please contact Shayn A. Fernandez, an attorney in Williams Mullen’s Government Contracts practice. He can be reached at (757) 629-0713 or sfernandez@williamsmullen.com.
 

[1] Department of Small Business and Supplier Diversity, Policy for Process, Certification Applications from Non-Virginia Based Businesses, (rev. Aug. 30, 2018) available at https://www.sbsd.virginia.gov/wp-content/uploads/2018/08/Out-of-State-Policy-Revised-August-30-2018.pdf.

[2] 7 Va. Admin. Code 13-20-230.