CHARLES F. LETTOW, Judge.
This post-award bid protest features interactions between complex and divergent regulatory frameworks, giving rise to a harsh, even perverse, result. Plaintiff, Veterans Contracting Group ("Veterans"), was verified by the United States Department of Veterans Affairs ("VA") as a service-disabled veteran-owned small business ("SDVOSB"), and subsequently received a contract award from the U.S. Army Corps of Engineers ("the Corps contract") in January 2017 that was set aside for SDVOSBs. Another bidder, intervenor-defendant, Williams Building Company ("Williams"), protested the award before the Small Business Administration ("SBA"), which ultimately determined in July 2017 via a ruling by SBA's Office of Hearings and Appeals ("OHA") that Veterans did not qualify as an SDVOSB under the SBA's rules and was therefore ineligible for the award. Williams was then awarded the contract. Shortly thereafter, the VA informed Veterans that it was being removed from the VA database for qualified SDVOSBs, based on the SBA's ruling.
Veterans challenges OHA's decision as arbitrary, capricious, and contrary to the SBA's regulations and has moved for judgment on the administrative record. Veterans requests that the court enter a permanent injunction on its behalf, compelling SBA to reconsider Veterans' eligibility as an SDVOSB and to award Veterans the Corps contract. The government has opposed that motion and filed a cross-motion for judgment on the administrative record.
"In an effort to encourage small businesses, Congress has mandated that federal agencies restrict competition for some federal contracts." Kingdomware Techs., Inc. v. United States, ___ U.S. ___, ___, 136 S.Ct. 1969, 1973 (2016). Congress particularly sought to improve the position of "small business concerns owned and controlled by socially and economically disadvantaged individuals." 15 U.S.C. § 637(d)(1). To that end, it has required "each agency to set an annual goal that presents, for that agency, the maximum practicable opportunity for contracting with small businesses, including, [relevant here,] those small business concerns owned and controlled by service-disabled veterans." Kingdomware Techs., 136 S.Ct. at 1973 (internal quotation marks omitted) (citing 15 U.S.C. § 644(g)(1)(B)); see also 38 U.S.C. § 8128(a) ("In procuring goods and services pursuant to a contracting preference under this title or any other provision of law, [VA] shall give priority to a small business concern owned and controlled by veterans . . . ."). The task of promulgating regulations "set[ting] forth procedures . . . to set aside contracts for" SDVOSBs has been assigned to at least two distinct agencies, SBA and VA. See Kingdomware Techs., 136 S. Ct. at 1973 (internal quotation marks omitted); see also 15 U.S.C. § 657f (SBA); 38 U.S.C. § 8127(a), (e) (VA).
VA and SBA have established separate but overlapping regulatory frameworks for these set-asides. Compare 38 C.F.R. Part 74 (VA), with 13 C.F.R. Part 125 (SBA). Both initially relied on self-certification to determine the eligibility of bidders, but the programs have materially diverged, both in terms of the standards for eligibility and the process for confirming or rejecting qualification.
Congress authorized the VA to set aside certain contracts for "small business concerns owned and controlled by veterans with service-connected disabilities," through the Veterans Benefits, Health Care, and Information Technology Act of 2006 ("Veterans Benefits Act"), Pub. L. No. 109-461, tit V, 120 Stat. 3403, 3425 (codified in relevant part at 38 U.S.C. §§ 8127-28). See 38 U.S.C. § 8127(a), (e). The Act and, a fortiori, the regulations it authorizes apply only to VA procurements. See Angelica Textile Servs., Inc. v. United States, 95 Fed.Cl. 208, 222 (2010) ("The [VA] is responsible for implementing the Veterans Benefits Act; indeed, it is the only federal department or agency to which the Act's requirements apply."); see also 48 C.F.R. § 819.7002 (explaining that the VA's implementing regulations apply only to "VA contracting activities and to its prime contractors" and "to any government entity that has a contract . . . or other arrangement with VA to acquire goods and services for VA") (emphasis added).
VA implemented the Veterans Benefits Act through the "Veterans First Contracting Program," established in 2007. See AmBuild Co. v. United States, 119 Fed. Cl. 10, 19 (2014). "At the Program's commencement, SDVOSB . . . entities were permitted to self-certify . . . for registration in the VetBiz VIP database." Id. But the authorizing statute was subsequently amended, requiring the Secretary of Veterans Affairs to maintain the database and certify contracting entities through the VA's Center for Verification and Evaluation ("CVE"). Id. (citing 38 U.S.C. § 8127(e), (f)); see also 48 C.F.R. § 804.1102. A business must be included on the VA's VIP database to qualify as an eligible SDVOSB for a contract award. See 38 U.S.C. § 8127(e), (f); 48 C.F.R. § 804.1102. The CVE now certifies participating entities and maintains such certification by performing examinations that "review . . . a[t] a minimum . . . all documents supporting the application, as described in [38 C.F.R.] § 74.12." See 38 C.F.R. § 74.20(b). These "examination[s] may be conducted on a random, unannounced basis, or upon receipt of specific and credible information alleging that a participant no longer meets eligibility requirements." Id. § 74.20(a).
"When CVE believes that a participant's verified status should be cancelled prior to the expiration of its eligibility term," CVE notifies the small business concern and allows 30 days for the concern to respond. See 38 C.F.R. § 74.22(a)-(b). Upon a determination that cancellation is warranted, the director of the CVE will issue a reasoned notice of cancellation, and the concern will be removed from the VetBiz VIP Database. See id. § 74.22(c)-(d). The concern then has a right to appeal the determination to the Office of Small and Disadvantaged Business Utilization and Center for Veterans Enterprise "within 30 days of receipt of [the] cancellation decision" or to "re-apply after it has met all eligibility criteria." Id. § 74.22(c), (e).
To qualify for CVE certification as an SDVOSB, "[a] small business concern must be unconditionally owned and controlled by one or more eligible . . . service-disabled veterans." 38 C.F.R. 74.2(a) (emphasis added). When the small business concern is a corporation, "at least 51 percent of each class of voting stock outstanding and 51 percent of the aggregate of all stock outstanding must be unconditionally owned by one or more . . . service-disabled veteran." Id. § 74.3(b)(3). VA has defined unconditional ownership:
Id. § 74.3(b) (emphasis added). As to control of a SDVOSB, the veteran must have "both the day-to-day management and long-term decision-making authority." Id. § 74.4(a). More specifically, he or she is required to have "both the strategic policy setting exercised by boards of directors and the day-to-day management and administration of business operations." Id. § 74.4(b). "Control is not the same as ownership, although both may reside in the same person." Id.
This court previously interpreted and applied these regulations in Miles Constr., LLC, v. United States, 108 Fed. Cl. 792 (2013), and AmBuild, 119 Fed. Cl. 10. In Miles, the VA had removed Miles Construction from the VIP database because there was a restriction on the service-disabled veteran's ownership interest, allegedly rendering his ownership conditional. 108 Fed. Cl. at 800-01. The company's Operating Agreement granted a right of first refusal to "the company, or the remaining members of the company if the company declines . . . to purchase a member's shares, should he or she decide to sell." Id. at 801. The government asserted that that provision of the Operating Agreement was an executory agreement that violated 38 C.F.R. § 74.3(b) "because it prevent[ed the] owner from acting [unilaterally] upon his ownership interest." Id. This court disagreed because the right-of-first-refusal provision was "not presently executory" as it had not been triggered by the veteran "choos[ing] to sell some of his . . . stake" and because it was "a standard provision used in normal commercial dealings." Id. at 803 (relying on 38 C.F.R. § 74.3(b)).
In AmBuild, the question was, inter alia, whether a provision of an Operating Agreement that permitted the company to purchase the veteran-owner's ownership interest in cases of "bankruptcy, receivership, and transfer by court order or operation of law" rendered ownership conditional in violation of 38 C.F.R. § 74.3(b). 119 Fed. Cl. at 16, 23-24. The government argued that it did because "personal bankruptcy does not ordinarily result in the divesture of ownership." Id. at 24. But this court disagreed, noting that "the property of every business owner is automatically placed in custody of the court upon bankruptcy," and determining that the operating agreement reflected "a standard commercial arrangement in compliance with 38 C.F.R. § 74.3(b)." Id. at 25.
Congress has enacted, and committed to SBA's oversight, three separate government-contracting programs with eligibility requirements for small businesses: The Service-Disabled Veteran-Owned Small Business Concern ("SDVOSBC") program
Eligibility in each of the above SBA programs requires small business concerns to be "at least 51% unconditionally and directly owned [and controlled] by one or more" members of the relevant disadvantaged group. See 13 C.F.R. § 124.105 to 124.106 (8(a) program); Id. § 125.12 to 125.13 (SDVOSBC program); Id. § 127.201 to 127.202 (WOSB program). The regulations implementing the 8(a) and WOSB programs both include similar, though not precisely identical, definitions of "unconditional ownership," the former promulgated in 1998 and the latter in 2010. In the 8(a) program, unconditional ownership is defined as:
Id. § 124.3 (emphasis added). The WOSB program defines it as ownership that is:
Id. § 127.201 (emphasis added).
Contrastingly, the regulations for the SDVOSBC program, adopted in 2004, do not include a definition of unconditional ownership. See 13 C.F.R. § 125.11 (specifying definitions important to the SDVOSBC program, but omitting a definition of "unconditional ownership"). Instead, SBA has applied an interpretation by OHA in 2006 of what is now 13 C.F.R. § 125.12, as set forth in The Wexford Group Int'l, Inc., SBA No. SDV-105, 2006 WL 4726737 (June 29, 2006). There, with no applicable regulatory definition, OHA derived "the plain and ordinary meaning of the word" "unconditional" by looking to a dictionary. Wexford, 2006 WL 4726737, at *6 & n.2. From the dictionary definition, OHA determined that "in the context of 13 C.F.R. § 125.[12],"
Id. This absolutist interpretation is a sharp departure from the definitions promulgated via regulation in the 8(a) and WOSB programs. The definitions in those programs build in nuances virtually identical in effect to VA's definition, particularly the allowance to "follow normal commercial practices" common to each of them. See 38 C.F.R. § 74.3; 13 C.F.R. §§ 124.3, 127.201. For SDVOSBs, however, service-disabled veterans must have power over their businesses flowing from "an absolute right to do anything they want with their ownership interest or stock, whenever they want." See Wexford, 2006 WL 4726737 at *6. Such power, instead of assisting veterans, may impede their efforts to find others willing to take the risk of joining a business venture with them.
The contrast is even starker when one considers the close similarities between SBA's and VA's definitions of "control" in the SDVOSB programs. Pursuant to SBA regulations, the SDVOSBC is controlled when "both the long-term decision[-]making and the day-to-day management and administration of the business operations [are] conducted by one or more service-disabled veterans." 13 C.F.R. § 125.13(a). In the specific case of corporations, "service-disabled veterans . . . must control the [b]oard of [d]irectors of the concern." Id. § 125.13(e). They are in control of the board of directors when (1) "[o]ne [or] more service-disabled veterans own at least 51% of all voting stock of the concern, are on the [b]oard of [d]irectors and have the percentage of voting stock necessary to overcome any super majority voting requirements; or (2). . . comprise the majority of voting directors through actual numbers or . . . through weighted voting." Id. § 125.13(e)(1)-(2).
Congress has recognized the divergence of the SBA's and VA's SDVOSB programs and has sought to consolidate and reconcile them via amendments to their authorizing statutes. See National Defense Authorization Act for Fiscal Year 2017 ("2017 NDAA"), Pub. L. No. 114-328, § 1832, 130 Stat. 2000. The extensive pertinent section of the 2017 NDAA provides:
2017 NDAA § 1832. Congress has delayed the effective date of the reconciling Section until "the date on which the Administrator of the [SBA] and the Secretary of [VA] jointly issue regulations implementing" the new consolidated program. 2017 NDAA § 1832(e). No such implementing regulations have been promulgated.
A confounding aspect of these dueling regulatory programs arises from the VA's adoption of 38 C.F.R. § 74.2(e) in 2008. As explained above, VA has set out in its regulations the basis on which it may cancel the verified status of a small business concern, see 38 C.F.R. § 74.21, and the procedures by which it removes such concerns from the VetBiz VIP database, see id. § 74.22. 38 C.F.R. § 74.2(e) appears to circumvent that cancellation and removal process:
Id.
With this single provision, protest decisions by SBA, presumably applying SBA's own regulation, could potentially displace VA's cancellation and removal processes without accounting for the differences between the two underlying regulatory eligibility criteria. These differences are insignificant if and when the SBA protest giving rise to removal from the VIP database treats an area in which the regulations are the same or similar, e.g., size of the business; if SBA determines that an SDVOSB is not small then it would be justifiably disqualified from both programs. On the other hand, Subsection 74.2(e) requires an SDVOSB's immediate removal from the VIP database if the business fails to meet the SBA's Wexford definition of "unconditional" despite meeting the VA's definition of the term as set out at 38 C.F.R. § 74.3(b). This potential outcome is anomalous.
Veterans is incorporated in and has its principal offices in New York. Compl. ¶ 8. Ronald Montano, a service-disabled veteran, owns 51 percent of the company and Greg Masone owns the remaining 49 percent. Compl. ¶ 17; AR 31-633. Article 1.01 of the Veterans shareholder agreement designates Mr. Montano as the President and Vice President and Mr. Masone as the Secretary and Treasurer, "so long as the parties are [s]hareholders of the [c]orporation." Intervenor-Defendant's Mot. for Judgment on the Admin. Record and Resp. to Pl.'s Mot. for Judgment on the Admin. Record ("Intervenor's Mot.") at 10-11, ECF No. 24. "On July 17, 2013, the VA, acting through the [CVE], verified Veterans as a qualified SDVOSB on its [VIP] database." Veterans Contracting, 133 Fed. Cl. at 616. The VA then carried out subsequent annual site visits between 2014 and 2016, evaluating and reaffirming Veterans' eligibility to remain in the database as an SDVOSB. Id.
On December 1, 2016, the U.S. Army Corps of Engineers issued an invitation to bid on an SDVOSB set-aside, No. W912DS-16-B-0017, to remove hazardous material and carry out building demolition at the Veterans Affairs St. Albans Community Living Center Campus, Jamaica, New York. Compl. ¶¶ 10-11; AR 4-14. Both Veterans and Williams submitted bids, self-certifying as SDVOSBs. Compl. ¶ 12. On January 5, 2017, Veterans was determined to be the lowest bidder and awarded the contract; Williams, second in line for the award, filed a protest on January 11, challenging both Veterans' size and status as an SDVOSB. See Compl. ¶¶ 13-14; AR 31-632. The relevant SBA area office issued a size determination on February 2, concluding that Veterans was a small business. AR 31-632 to 36. Later that month, the area office also issued its status determination, addressing both control and ownership and concluding that Veterans "met the [SDVOSB] eligibility requirements at the time of its [bid]." AR 32-637 to 42.
Williams appealed the status determination to OHA on February 28, 2017, alleging "errors of law and fact." AR 34-646 to 61. Before OHA rendered a decision on Williams' appeal, SBA requested that the SBA area office's determination be remanded "for further review and investigation." AR 40-726 to 27. OHA granted that remand on April 3. AR 40-727. On remand, the SBA area office reversed itself both as to ownership and control, determining that Veterans was ineligible to bid as an SDVOSB. See AR 51-786 to 88. The SBA area office explained that, in light of Veteran's shareholder agreement, Mr. Montano did not unconditionally own Veterans because that agreement restricted his heirs' ability to convey or transfer Veterans stock. See Veterans Contracting, 133 Fed. Cl. at 617. On July 21, three days after the SBA area office determination, "VA informed Veterans that it was being removed from the VA VIP database in accordance with 38 C.F.R. § 74.2(e) based on the SBA area office determination that Veterans did not qualify as a SDVOSB." Id. (internal brackets and quotations marks omitted). Veterans filed a bid protest in this court on July 28, challenging that removal and seeking a preliminary injunction. Id. at 617-18. This court issued a preliminary injunction on August 22, ordering VA to reinstate Veterans to the database. Id. at 624.
While the related bid protest was pending, Veterans appealed the adverse area office determination to OHA, which, on August 31, 2017, affirmed the area office's determination as to ownership but reversed on the question of control. AR 51-785, 792 to 97. OHA's "unconditional ownership" analysis focused on Articles 9.01 and 9.02 of Veterans' shareholder agreement. See AR 51-793 to 95. Article 9.01 states:
AR 46-756. Article 9.02 states:
Intervenor's Mot. at 7.
OHA agreed with the area office's determination that under Wexford, Articles 9.01 and 9.02 "unacceptably limit [a service-disabled veteran] shareholder's unconditional ownership of his or her shares." AR 51-793. In reaching that result, OHA determined that this court's decisions in Miles and AmBuild were distinguishable because they featured interpretations of definitions of "unconditional" in VA's regulations that included an exception for "normal commercial practices," a phrase not in Wexford's controlling definition. AR 51-794 to 95.
On September 5, 2017, Veterans filed a complaint in this post-award bid protest. See generally Compl. Veterans challenges OHA's determination as arbitrary, capricious, and not in accordance with law and seeks a declaration from this court that it is "a valid SDVOSB and thus eligible for pending and future SDVOSB contract . . . awards." Compl. ¶¶ 50-56. Further, Veterans seeks an injunction ordering "SBA to reevaluate [its] determination" and ordering "the Corps to restore the status quo before it awarded" Williams the Corps contract, effectively reinstating the award to Veterans. Compl. ¶¶ 58-63. Finally, Veterans also seeks "attorneys' fees and expenses" and "such other and further relief as is equitable and just." Compl. ¶ 64.
Veterans has moved for judgment on the administrative record. See generally Pl.'s Mot. for Judgment on the Admin. Record ("Pl.'s Mot."), ECF No. 21. Williams and the government have also moved for judgment on the administrative record. See generally Def.'s Cross-Mot. for Judgment on the Admin. Record and Resp. to Pl.'s Mot. for Judgment on the Admin. Record ("Def.'s Cross-Mot."), ECF. No. 25; Intervenor's Mot. All issues have been fully briefed and argued and are now ready for disposition.
A provision of the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, governs the court's review of a challenge to an agency's contract award. See 28 U.S.C. § 1491(b)(4) ("In any action under this subsection, the courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5."). Under the APA, courts may set aside agency decisions that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A), subject to the traditional balancing test applicable to a grant of equitable relief. See PGBA, LLC v. United States, 389 F.3d 1219, 1224-28 (Fed. Cir. 2004). The question of whether the court would have applied the procurement regulations in a different manner than did the agency is irrelevant to this inquiry. See Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989). In short, the court may not "substitute its judgement for that of the agency." Miles, 108 Fed. Cl. at 798 (citing Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753, 755 (2004) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971))). The court may overturn an agency decision only "if `(1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.'" Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001)).
In contrast, when reviewing an agency's interpretation of law, "[i]t is emphatically the province and duty of the [court] to say what the law is." See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803). But where the agency is interpreting its own regulations and those regulations are ambiguous, the agency interpretation will control so long as it is not "plainly erroneous or inconsistent with the regulation." See Auer v. Robbins, 519 U.S. 452, 461 (1997) (internal citations omitted). Furthermore, "the fact that [an] agency has adopted different definitions in different contexts" does not diminish the court's obligation to defer to the agency. See Land of Lincoln Mut. Health Ins. Co. v. United States, 129 Fed. Cl. 84, 106 (2016) (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 863-64 (1984)). Rather, the current interpretation need only "reflect the agency's fair and considered judgment." See Auer, 519 U.S. at 462 (determining that a legal brief was a satisfactory vehicle for conveying the agency's fair and considered judgment).
Veterans claims that SBA's determination that it was not eligible to participate in the SDVOSBC program and OHA's affirmation of that determination are arbitrary, capricious, and contrary to law because the Wexford approach to determining a veteran's ownership is indefensible. See Pl.'s Mot. at 14. Veterans supports that assertion with two arguments: (1) This court's opinions in AmBuild and Miles, "two decisions subsequent to Wexford," provide the relevant definition and analysis for determining the conditionality of Mr. Montano's ownership, see Pl.'s Mot. at 14-16; and (2) Even if AmBuild and Miles are not dispositive, Wexford remains inapplicable because "SBA failed to consider its own regulations," see Pl.'s Mot. at 8, 16-19.
Veterans' attempt to rely on this court's decisions in AmBuild and Miles is misplaced because both cases interpret VA's procurement regulations, not SBA's. The definitions in VA's procurement regulations apply only to VA procurements. See Angelica Textile, 95 Fed. Cl. at 222. As such, AmBuild and Miles are irrelevant to bid protests concerning solicitations from the U.S. Army Corps of Engineers or other non-VA agencies. Therefore, they do not bear on construing and applying SBA's divergent regulations relating to unconditional ownership.
Veterans' additionally contends that Wexford in and of itself is not controlling when considering only SBA regulations. See Pl. Mot. at 8. In another decision concerning SDVOSBs, OHA has looked to the 8(a) program definitions for "guidance [when] interpreting the control requirement of [SDVOSBC] eligibility." Artis Builders, Inc., SBA No. VET-214, 2011 WL 7277416 at *4 (Apr. 6, 2011). By analogy, Veterans avers, the 8(a) regulations provide a definition of `unconditional ownership' that allows for the succession planning outlined in Veterans' shareholder agreement." Pl.'s Mot. at 8. In Veterans' view, OHA acted arbitrarily and capriciously when it was not guided by the 8(a) definition to permit succession planning rather than applying the Wexford dictionary-definitional approach to derive the rule of decision applicable to Williams' protest. See id.
On examination, Artis Builders does not help Veterans in this case. There the basis for using the 8(a) definition of control as guidance when interpreting the SDVOSBC control requirement was that the two regulatory provisions were (and are) similar. See, e.g., Chevron Construction Services, LLC, SBA No. VET-183, 2010 WL 1576707 at *5 (Feb. 17, 2010) ("[T]he control requirements for the SDVOSBC program are similar to those requirements for the 8(a) . . . program."); Rush-Link One Joint Venture, SBA No. VET-228, 2012 WL 926949 at *5 (Mar. 16, 2012) (applying the Artis Builders principle because there were "analogous regulations applicable to the 8(a) programs"). Compare 13 C.F.R. § 125.13 ("Who does SBA consider to control an SDVOSBC?"), with 13 C.F.R. § 124.106 ("When do disadvantaged individuals control an applicant or [p]articipant [in the 8(a) program]?"). These similarities simply do not exist for unconditional ownership. While the VA definition interpreted and applied in AmBuild and Miles is nearly identical to SBA's definitions set out for its 8(a) and WOSB programs, there is no such definition in place for SBA's SDVOSBC program. This is not to say that OHA could not have applied by analogy in this case the definitions SBA adopted for its 8(a) and WOSB programs, but its choice not to do so has some basis in the regulations. Accordingly, the question is one of whether OHA's interpretation is entitled to deference by the court under Auer and its progeny.
Respecting the Auer principles, Veterans' argument is that even where the agency has discretion, it still must "provide a coherent and reasonable explanation of its exercise of [that] discretion." Pl.'s Mot. at 15 (internal quotation works omitted). Here, SBA treats different programs differently, providing what amounts to the same definition for unconditional ownership in the 8(a) and WOSB programs while interpreting regulatory silence in the SDVOSBC program as leave to depart from that common definition. The regulatory history raises questions about that departure. The 8(a) definition was adopted in its current form in 1998. See Def.'s Notice of Statutory and Regulatory Authority ("Def's Notice") at 4, ECF No. 29. The SDVOSBC program regulations were promulgated in 2004, id. at 3, omitting any definition of unconditional ownership. The resulting silence was interpreted by the OHA in 2006 in Wexford, when it chose not to apply the 8(a) definition. The VA adopted its SDVOSB regulations and attendant definition of unconditional ownership in 2007, incorporating a definition of unconditional ownership nearly identical to that of SBA's 8(a) regulations. Still later, SBA adopted its regulations for the WOSB program and included a definition mirroring the definition in its 8(a) rules. Id.
SBA's departure in the SDVOSBC program could be understood in at least two different ways: The regulations for the SDVOSBC program could have inadvertently omitted a definition of unconditional ownership even though they were promulgated against the regulatory backdrop of the 8(a) program, and OHA was mistaken in adopting the decisional approach in Wexford. The fact that the WOSB program explicitly included its own definition indicates that SBA ordinarily would include such a definition respecting set-aside programs. The omission could also be understood as intentional, to make the SDVOSBC program more draconian by not including a clarifying definition of ownership. Even so, the former hypothetical does not account for why SBA would have left its SDVOSBC regulations unchanged after Wexford.
In short, SBA could have acted to conform its interpretation of the SDVOSBC regulations to those applicable to the 8(a) and WOSB programs, but it has not done so. In the face of such silence, the Supreme Court's reminder that courts should not "pursue the theory of the dog that does not bark" in aid of statutory (and regulatory) interpretation becomes pertinent. See Harrison v. PPG Indus., Inc., 446 U.S. 578, 592 & n.8 (1980) (referring to Sir Arthur Conan Doyle's famous Sherlock Holmes mystery, The Silver Blaze). There, the Court declined to draw any inferences about an otherwise unambiguous statutory provision on the basis of what "Congress did not say" in the relevant legislative history. Id. at 591-92. Similarly, it would not be appropriate for this court to draw any inferences from the silence of the regulatory history of SBA's SDVOSBC program in this case.
While it is true that OHA must act rationally, see Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983), the decision to apply its own precedent is inherently consistent with our common law legal system. It is not the place of the court to substitute its policy judgment for that of the agency. See id.
SBA's omission of a definition of unconditional ownership in the SDVOSBC program produces draconian and perverse results in a case such as this one. Nevertheless, without at least some indicia of SBA's intent or inadvertence regarding that omission, the court cannot remake the regulations in reliance on SBA's actions in the closely related contexts of the 8(a) and WOSB programs. Therefore, OHA's decision stands and Veterans is ineligible to participate in SBA's SDVOSBC program, even though it is eligible to participate in VA's correlative program.
Finally, Williams, as intervenor, challenges the OHA's determination that the service-disabled veteran, Mr. Montano, controls Veterans pursuant to 13 C.F.R. § 125.13. See Intervenor's Mot. at 10-11. It argues that according to Veterans' shareholder agreement, Mr. Montano does not have the ability "to hire or fire the company's Secretary or Treasurer" and this "prevents him from controlling the day-to-day and long-term decisions of the company." Id. at 11.
Nonetheless, due to the court's acceptance of OHA's ruling that Mr. Montano does not unconditionally own Veterans under SBA's regulations for the SDVOSBC program, it need not reach the question of control.
For the reasons stated above, the government's and Williams' cross-motions for judgment on the administrative record are GRANTED, and Veterans' motion for judgment on the administrative record is DENIED. The clerk is directed to enter judgment in accord with this disposition.
No costs.
It is so
