Baig Associates, Inc., No. MSB-606 (March 24, 1998)
Docket No. MSBT-97-7-21-18

                    UNITED STATES OF AMERICA
                  SMALL BUSINESS ADMINISTRATION
                 OFFICE OF HEARINGS AND APPEALS
                        WASHINGTON, D.C.
                                

_______________________________
                               )
IN THE MATTER OF:              )   Docket No. MSBT-97-7-21-18
                               )
Baig Associates, Inc.          )   Decided:  March 24, 1998
______________________________ )

                           APPEARANCES
                                
Usman M. Baig, P.E., pro se, for Petitioner Baig Associates, Inc.

David  Fishman, Esq., John T. Spotila, Esq., for Respondent Small
Business Administration.

                             DIGEST

If  an  8(a) program participant, which is a sole proprietorship,
reports  to  the SBA that its proprietor now owns  only  51%  and
another individual owns 49% of the business, it is reasonable for
the  SBA  to request information and documents to reevaluate  the
program participant's continued eligibility for the 8(a) program.

If  the  SBA  was  unable  to reevaluate a program  participant's
program  eligibility because the participant did not comply  with
the  SBA's  requests  for information and documents,  it  is  rea
sonable  for  the  SBA to conclude, absent that  information  and
those  documents, that the program participant did not  establish
its continued eligibility for the 8(a) program.

It  is  reasonable  for  the  SBA to conclude,  from  information
supplied by the program participant, that an individual has a 49%
ownership  interest  in  the program participant,  regardless  of
whether the information was erroneous, if the program participant
fails  to  correct the error prior to the time the SBA  made  its
decision to terminate the participant from the 8(a) program.

Regardless  of whether, as a practical matter, a 51%  stockholder
continues  to  manage  an 8(a) program participant  to  the  same
extent  as  when it was a sole proprietorship, a legally  signifi
cant  change  occurred  in the status  of  the  concern  when  it
incorporates.  A corporation is not the same legal  entity  as  a
sole proprietorship.

Regardless  of  whether  an individual  may  be  presumed  to  be
socially disadvantaged under SBA regulations, that individual  is
considered  nondisadvantaged unless the  individual  applies  for
disadvantaged status and the SBA determines that individual to be
both socially and economically disadvantaged.

                         FINAL DECISION
                                
ARKOW, Administrative Law Judge:

      Petitioner Baig Associates, Inc. (Baig) appeals a  decision
by the Respondent Small Business Administration (SBA) terminating
it  from the 8(a) program.  The SBA found that Baig violated  SBA
regulations  by  failing to provide the SBA  with  documents  and
information   concerning   the   incorporation   of   the    sole
proprietorship  originally accepted into the  8(a)  program,  the
disadvantaged status of the wife of Baig's principal stockholder,
and  other  documents.  Baig claims the decision to terminate  it
from  the 8(a) program is arbitrary, capricious, and contrary  to
law.  I find the claim to be without merit.

                          Jurisdiction
                                
      Jurisdiction  to decide this appeal is proper.   15  U.S.C.
Section  637(a)(9); 13 C.F.R. parts 124 and 134.  The  appeal  is
timely.  13 C.F.R. Sections 124.210(b), and 134.202(a).

                              Issue

     Whether the action of the SBA terminating Baig from the 8(a)
program is arbitrary, capricious, or contrary to law.  15  U.S.C.
Section 637(a)(9)(C); 13 C.F.R. Section 124.210(h)(1).

                              Facts

      Baig Associates, Usman M. Baig (Mr. Baig), Proprietor,  was
admitted into the 8(a) program as a sole proprietorship on May 2,
1994.  SBA Response to Order of Feb. 24, 1998, Ex. 1.  On May 12,
1993,  Mr. Baig signed an 8(a) participation agreement, in  which
he,  as the proprietor of Baig Associates, acknowledged that  his
concern could be terminated from the
8(a)  program  if it: (1) failed to obtain written approval  from
the SBA for any changes in its ownership, management, or control;
(2)   failed  to  disclose  to  the  SBA  the  extent  to   which
nondisadvantaged   persons  or  concerns   participate   in   its
management;  and  (3) demonstrated a pattern of failing  to  make
required submissions or responding to the SBA in a timely manner,
including  a  failure to provide documents or  certifications  of
continuing  eligibility, or otherwise responding to requests  for
information from the SBA within the time frames provided  for  in
the requests.  AR at Ex. 12, Paragraphs 3(d)-(f).

     Mr. Baig, on behalf of Baig Associates, submitted to the SBA
on  June 11, 1996, its 8(a) Annual Update, which lists U. Baig as
the  concern's  president and 51% owner, and E.  Baig  as  a  49%
owner.   Mr.  Baig  provided this information in  response  to  a
requirement  to  list  the  names of each  "proprietor,  partner,
officer, director, and each stockholder owning more than  10%  of
the stock of the company." AR at Ex. 8.

       Thereafter,   the   SBA  sought  clarification   of   that
information.  On July 18, 1996, it requested that "[i]f you  have
recently  changed your business structure and have  incorporated,
submit  all  information  such as Certificate  of  Incorporation,
Articles of Incorporation, minutes, resolutions, copies of  stock
certificates and stock ledger."  AR at Ex. 5, Att.  2.   On  July
22,  1996,  Mr.  Baig  provided  the  SBA  with  a  copy  of  its
certificate  of  incorporation, but did  not  provide  the  other
requested corporate documents.  AR at Ex. 5, Att. 6 and  Ex.  10.
The certificate of incorporation states: (1) Usman M. Baig is the
incorporator;  (2) the corporation is authorized to  issue  1,000
shares; and (3) the first board of directors consists of Usman M.
Baig  and  Linda  F.  Baig.  AR at Ex. 10.   The  certificate  of
incorporation was signed by Mr. Baig on May 22, 1996,  and  filed
with the New Jersey Secretary of State on May 31, 1996.  Id.

      The  SBA,  in  a certified letter dated November  7,  1996,
addressed to Mr. Usman Baig, President, Baig Associates,  advised
Mr.  Baig  that  he  had  not provided the requested  information
necessary to evaluate Baig's continued eligibility for  the  8(a)
program  following the incorporation of the sole  proprietorship,
the original business entity accepted into the 8(a) program.  The
letter  gave  Baig another opportunity to provide the information
needed  to  evaluate  Baig's continued eligibility  in  the  8(a)
program.  The letter requested copies of the concern's "Corporate
Kit,   which   include   Articles  of   Incorporation,   Minutes,
Resolutions, stock certificate[s] issued and stock ledger."   The
letter  also  requested Mrs. Baig complete SBA Forms 1010A,  413,
and  912,  relating  to her disadvantaged status.   Finally,  the
letter warned Baig that, if the SBA did not receive the requested
information  by  November  29, 1996, it would  begin  termination
proceedings  against Baig.  AR at Ex. 5, Att. 1.   Baig  received
the  letter  on  November  11, 1996.  Id.  (U.S.  Postal  Service
Domestic Return Receipt (PS Form 3811)).

      Baig  did  not  provide the information requested  and,  on
January  14,  1997,  the SBA notified Baig that  it  intended  to
commence  this  termination action.  The SBA included  among  the
proposed  grounds for termination, Baig's failure to comply  with
its  requests for information and documentation relating  to  the
incorporation and the extent of Mrs. Baig's participation in  the
new  corporation.   The letter again set forth in  detail  Baig's
alleged  deficiencies  and gave Baig yet another  opportunity  to
submit information which would eliminate the proposed grounds for
termination or to explain why the proposed grounds do not justify
termination.  AR at Ex. 9.  Baig received the letter  on  January
25, 1997.  Id. (PS Form 3811).

     In  a  timely reply dated March 28, 1997, Baig alleged  that
all  the  proposed grounds for termination were false.  Regarding
the  alleged failure to provide the information and documentation
requested   concerning  the  incorporation,  Baig   stated:   (1)
incorporation is "a natural step" for the business; (2) it is not
required  to  change  the  structure  of  the  business  when  it
incorporates;  (3)  it  complied with  New  Jersey  law  when  it
incorporated and the SBA should not require more; (4) it did  not
change  anything  in  its organization to get  incorporated;  (5)
Mr. Baig verbally informed the SBA of its incorporation and, when
requested,  immediately  provided the SBA  with  a  copy  of  its
certificate  of  incorporation; (6) it does not have  a  nondisad
vantaged  person participating in the management of  the  concern
because  his  wife,  Ermelinda (Linda) Baig, is  a  disadvantaged
person  due to her Filipino origins; (7) it submitted its certifi
cate  of  incorporation, as requested by the SBA, and  was  never
told  it did anything wrong; and (8) the corporation is owned  by
both  Mr.  and Mrs. Baig. AR at Ex. 8.  Baig did not provide  the
articles of incorporation, minutes, resolutions, copies of  stock
certificates,  or the stock ledger with this submission,  or  the
requested information pertaining to Mrs. Baig.

     After considering Baig's submission, the SBA determined that
Baig should be terminated from the 8(a) program.  See AR at Ex. 2-
6.   On  June  5, 1997, the SBA notified Baig of its  termination
from the 8(a) program.  AR at Ex. 1.

     The SBA cited five reasons for Baig's termination:

     (1) Failure to obtain written approval from the SBA for
     any  changes  in ownership, management, or  control  of
     Baig,  in violation of 13 C.F.R. Section 124.209(a)(4);
     i.e.,  Baig did not request permission from the SBA  to
     incorporate  the  sole proprietorship  which  had  been
     accepted into the 8(a) program;
     
     (2)  Failure to disclose to the SBA the extent to which
     nondisadvantaged persons  participate in the management
     of     Baig,     in    violation    of    13     C.F.R.
     Section  124.209(a)(5); i.e., Baig failed  to  disclose
     the   extent  of  Mrs.  Baig's  participation  in   the
     corporation;
     
     (3)  A demonstrated pattern of failing to make required
     submissions  or responses to the SBA in timely  manner,
     including  failure  to  provide  documents  or  certifi
     cations   of  continued  eligibility  or  to  otherwise
     respond  timely  to  SBA requests for  information,  in
     violation  of  13  C.F.R. Section 124.209(a)(6);  i.e.,
     Baig  failed  to  submit  the requested  documents  and
     information  concerning  the new  corporation  and  its
     other stockholder, Mrs. Baig; [1]
     
     (4)   Failure   to  continue  to  maintain   its   8(a)
     eligibility,   in  violation  of  13   C.F.R.   Section
     124.209(a)(1); i.e., without the information concerning
     Baig's  incorporation,  the  SBA  could  not  determine
     whether  Baig  continues  to maintain  its  8(a)  eligi
     bility; and
     
     (5)   Failure  to  pursue  competitive  and  commercial
     business  in  accordance with  the  business  plan,  or
     failure   to   make  reasonable  efforts   to   achieve
     competitive  status, in violation of 13 C.F.R.  Section
     124.209(a)(9);  i.e.,  in  1993-95  Baig  generated  no
     revenues. [2]

AR  at  Ex.  1.   With  the exception of  the  fifth  ground  for
termination,  all  of the grounds relate to the incorporation  of
the  concern  originally accepted into the  8(a)  program.   Baig
appealed its termination on July 21, 1997.

                     Position of the Parties
                                
      Baig  asserts the SBA's decision to terminate it  from  the
8(a)  program is arbitrary, capricious, and contrary to law; thus
it should not be terminated. [3] Baig's Appeal Petition addresses
the five grounds for its termination and argues: (1) approval  of
a  change  of ownership from the SBA is not necessary because  13
C.F.R. Section 124.103(i) only requires written approval from the
SBA  if  the  change involves a transfer of 10%  or  more  of  an
ownership
interest;  (2)  Mrs.  Baig's participation  in  the  business  is
"almost  0%,"  she  is  not interested in  the  business  or  its
management, and her ownership interest is only 2.5%; (3) Baig has
submitted  everything requested by the SBA, including  copies  of
Baig's  stock  certificates,  which establish  that  Mrs.  Baig's
interest  in the concern is only 2.5% (975 shares issued  to  Mr.
Baig  and  25  shares issued to Mrs. Baig); [4] (4) there  is  no
requirement to obtain SBA approval for a transfer of less than  a
10%  interest in an 8(a) concern; and (5) it executed  orders  of
$1.5  million in the year ending December 31, 1996.  In asserting
these  arguments Baig contends the termination action "is without
any  basis,  and is brought about by SBA, only because  of  their
misunderstandings  and  miscommunication  between  SBA  and  Baig
Associates, caused by some typographical error[s] in the  papers,
and  communication  breakdown, due to some  SBA's  internal  mail
problems, where the papers were either lost or delivered to [the]
wrong place."

     SBA  argues Baig failed to timely submit the information the
SBA  requested  of  Baig and that Baig has produced  no  evidence
which  shows  the  actions  of the SBA to  have  been  arbitrary,
capricious,  or  contrary to law.  The SBA requests  that  Baig's
Appeal Petition be denied.

                           Discussion
                                
                                I
                                
      The SBA may terminate participation in the 8(a) program for
good  cause.  13 C.F.R. Section 124.209(a).  Good cause includes:
(1)  failure of the concern to maintain its eligibility  for  pro
gram  participation (Section 124.209(a)(1)); (2) failure  by  the
concern  to obtain written approval from the SBA for any  changes
in ownership, management, or control (Section 124.209(a)(4)); (3)
failure by the concern to disclose to the SBA the extent to which
nondisadvantaged individuals participate in the management of the
concern (Section124.209(a)(5)); and (4) a demonstrated failure to
make  required submissions or responses to the SBA  in  a  timely
manner,  including a failure by the concern to provide  documents
or  certifications of continued eligibility or otherwise  respond
to requests for information relating to the 8(a) program (Section
124.209(a)(6)(iii)).

      The  generalized allegations, that Baig failed to  maintain
program  eligibility  and  failed to make  required  reports  and
submissions  to the SBA, stem from the specific allegations  that
Baig  failed  to  comply  with  the  SBA's  regulations  when  it
incorporated and changed its ownership from a sole proprietorship
to that of a corporation with two stockholders and two directors,
and failed to disclose to the SBA the extent of the participation
in  the  concern of an individual not found disadvantaged by  the
SBA.   The  specific  allegations will be  discussed  with  their
generalized counterparts.

                               II

     An 8(a) program participant must obtain the written approval
from  the  SBA  prior to changing its ownership,  except  if  the
change  involves  a transfer of less than a 10% interest  in  the
concern.   In the latter case, a program participant must  notify
the  SBA  of the change as soon as possible.  In both cases,  the
SBA  is  required to reevaluate the continued eligibility of  the
concern.  13 C.F.R. Sections 124.103(i), 124.111(d); see also  13
C.F.R. Section 124.101(b).  Failure to comply with this provision
is a ground for termination from the 8(a) program.

       Baig  was  accepted  into  the  8(a)  program  as  a  sole
proprietorship.  SBA Response to Order of Feb. 24, 1998,  Ex.  1.
On  June  11, 1996, Baig reported to the SBA, in its 8(a)  Annual
Update,  that  Mr. Baig owned 51% of the concern  and  Mrs.  Baig
owned 49%.  AR at Ex. 8.  Because the Annual Update suggested Mr.
Baig  had incorporated his sole proprietorship, the SBA requested
Baig  furnish it with copies of its certificate of incorporation,
articles   of   incorporation,   corporate   minutes,   corporate
resolutions, stock certificates, and ledger.  AR at Ex. 5, Att. 2
(July  18,  1996 letter).  Baig promptly provided the certificate
of  incorporation,  but  did not provide  the  other  information
despite  the SBA's repeated requests.  AR at Ex. 5, Att. 1  (Nov.
7,  1996);  AR at Ex. 9 (Jan. 14, 1997).  While that  constitutes
notification  "as  soon  as  possible,"  it  does  not  meet  the
requirement for prior written approval for a change in  ownership
of over 10%.
     
     The  certificate of incorporation submitted to the SBA  does
not  identify the stockholders of the corporation. [5] AR at  Ex.
10.   However, Baig's 8(a) Annual Update appears to identify  Mr.
and  Mrs.  Baig as Baig stockholders, along with their respective
ownership  interests  of 51% and 49%.  Despite  this  submission,
Baig's Appeal Petition takes issue with the SBA's conclusion that
Mrs.  Baig  owns 49% of the corporation, and that Baig  needs  to
present additional documents addressing her ownership to the SBA.
Instead  Baig  asserts prior SBA approval of the change  was  not
required because Mrs. Baig owns less than 10% of the corporation.
     
     Baig's  assertion is without merit for two reasons.   First,
Mr. Baig informed the SBA that Mrs. Baig's ownership interest was
49%.    It   did  not  present  any  evidence,  such   as   stock
certificates, to establish that her interest was less  than  10%,
despite being given many opportunities to do so, until after  the
SBA  served  Baig with the final termination letter.   The  SBA's
letter  of  proposed termination advised Baig of  the  allegation
that  Mrs.  Baig  owned 49% of Baig's shares.  Baig's  March  28,
1997,  response to that letter does not dispute that  conclusion,
but  rather  states  that Baig "did not change  anything  in  our
organization  to  get  incorporated,"  "the  ownership   in   the
organization remains the same," and "we never changed anything in
regard to ownership."  AR at Ex. 8.  It is too late for Baig,  in
this  appeal,  to object to the SBA's conclusion and  to  present
evidence  that Mrs. Baig just owns less than 10%.  Only  evidence
submitted  to  the  SBA prior to reaching  its  decision  may  be
considered  in this appeal. [6] 13 C.F.R. Section  124.210(h)(1).
Accordingly, based upon the evidence the SBA had before  it  when
it  decided to terminate Baig, it was reasonable for the  SBA  to
conclude  that  Mrs.  Baig had a 49% ownership  interest  in  the
concern, regardless of whether the information Baig provided  the
SBA was erroneous.
     
        Second, in the final analysis, it does not matter whether
the  transfer of ownership was more or less than 10%.  Regardless
of  the  percentage  of  a  change of  ownership,  the  SBA  must
reevaluate  a  program  participant's  eligibility.   13   C.F.R.
Sections 124.103(i); 124.111(d).  The only difference is  whether
that  reevaluation is completed prior to or after Baig  made  the
change.   In both cases, the SBA was unable to reevaluate  Baig's
8(a)  program  eligibility because Baig did not comply  with  the
SBA's  requests  for  information  and  documents.   Without  the
requested information and documents, the SBA could not reevaluate
Baig's  program  eligibility.  Accordingly, the  only  reasonable
conclusion the SBA could draw, absent having the details  of  the
incorporation,  was  that  Baig did not establish  its  continued
eligibility for the 8(a) program.
     
     Baig   questions  whether  a  reevaluation  of  its  program
eligibility is necessary.  It contends, there was no real  change
in  Baig's  management as a result of the  incorporation.   As  a
practical  matter,  it  may be true that Mr.  Baig  continued  to
manage  the  concern to the same extent as when  it  was  a  sole
proprietorship.   However, a significant change occurred  in  the
status  of  the concern, because a corporation is  not  the  same
legal entity as a sole proprietorship.
     
     
     The SBA requires a reevaluation of program eligibility if  a
sole   proprietorship  incorporates,  because  the  disadvantaged
individual  who owns the sole proprietorship must establish  that
he  owns  and  controls the corporation.  See 13  C.F.R.  Section
124.103(i).   Thus, Baig must establish that Mr.  Baig  owns  and
controls the corporation.  Baig must establish that Mr. Baig owns
at  least  51%  of the stock in the concern.  13  C.F.R.  Section
124.103(b).   This  may  be  shown by  the  presentation  of  the
corporation's  stock  certificates  and  stock  ledger.   As  the
individual upon whom eligibility is based, Mr. Baig must  control
the corporation's board of directors either in actual numbers  of
voting   directors  or  through  weighted  voting.    13   C.F.R.
Section 124.104(b).  This may be shown in either the articles  of
incorporation  or  the corporate by-laws.  Since  Baig  does  not
claim  to  have submitted either of those documents and  the  SBA
claims  they  were  not  submitted, Mr.  Baig's  control  of  the
corporation  cannot be determined from the AR.  Accordingly,  the
SBA  reasonably questions whether Mr. Baig controls  the  concern
and  its  board  of  directors.   Further,  the  certificate   of
incorporation states that both Mr. and Mrs. Baig are on the board
of  directors.  Absent a showing to the contrary, it  would  seem
that  both  have an equal vote.  If that is the case,  then  Mrs.
Baig,  who  is not an individual upon whom eligibility is  based,
can defeat any corporate actions by preventing a majority vote in
favor of such action.  This negative control is prohibited.   See
13 C.F.R. Section 124.104(d)(1).
     
     Further,    at   least   one   socially   and   economically
disadvantaged  full-time  manager  must  hold  the  position   of
President   or  Chief  Executive  Officer.   13  C.F.R.   Section
124.104(a)(2).  Without the corporate documents requested by  the
SBA,  it cannot determine whether Mr. Baig holds either of  those
positions.
     
     Therefore,  the  SBA reasonably found that  Baig  (1)  never
provided  the  documents and information it requested  concerning
its incorporation; (2) never received SBA approval for the change
in  ownership, either before or after the change took place;  and
(3) failed to maintain program eligibility.

                               III

      Individuals  who  have not been found to  be  socially  and
economically  disadvantaged by the  SBA  are  restricted  in  the
extent  that they may participate in the management  of  an  8(a)
concern.   13  C.F.R. Section 124.104(c).  If a  nondisadvantaged
individual's  participation  violates  those  restrictions,   the
concern no longer meets the requirements to continue in the  8(a)
program, and may be terminated.  13 C.F.R. Section 124.209(a)(1).
To  assess the participation of nondisadvantaged individuals, the
SBA  requires  that  8(a)  firms disclose  the  extent  to  which
nondisadvantaged individuals participate in the management of the
concern.   See  13  C.F.R. Sections 124.104(c),  124.111.   Also,
failure  to disclose the extent of participation is a ground  for
termination   from   the  8(a)  program.    13   C.F.R.   Section
124.209(a)(5).

      Among  the  restrictions on a nondisadvantaged individual's
participation in the management of an 8(a) concern  are  that  no
nondisadvantaged  director or stockholder of Baig  may:  (1)  own
more  than  a  10% interest in another concern  in  the  same  or
similar  line  of  business as Baig (Section 124.104(c)(2));  (2)
have  an  equity ownership interest of more than 10%  in  another
8(a)  concern  (Section  124.104(c)(5));  (3)  receive  excessive
compensation (Section 124.104(c)(3)); (4) be a former employer of
a  disadvantaged owner (Section 124.104(c)(4)); and  (5)  provide
critical    financial   support   to   the    concern    (Section
124.104(d)(3)).

     Baig believes that because Mrs. Baig is a Filipino American,
she   is  socially  and  economically  disadvantaged  and   these
restrictions  do  not  apply  to  her.   However,  Mrs.  Baig  is
considered to be nondisadvantaged until her disadvantaged  status
is established.  A nondisadvantaged individual is "any individual
who  does  not  claim disadvantaged status, does not  qualify  as
disadvantaged,  or  upon  whose  disadvantaged  status  applicant
concern   does   not   rely  in  qualifying  for   8(a)   program
participation."   13  C.F.R. Section  124.100.   A  disadvantaged
individual  is  "an  individual who  SBA  has  determined  to  be
socially  and  economically disadvantaged in  connection  with  a
concern's  application for or participation in the 8(a) program."
Id.

     Mrs.   Baig   may  be  able  to  qualify  as  socially   and
economically disadvantaged under the SBA regulations. As a person
with  origins  in  the Philippines, she will be  presumed  to  be
socially  disadvantaged  if she claims that  status.   13  C.F.R.
Section  124.105(b).  But there is no presumption that a socially
disadvantaged individual is also economically disadvantaged.   An
individual   claiming   disadvantage  must   establish   economic
disadvantage  by presenting to the SBA evidence  that  meets  the
requirements of 13 C.F.R. Section 124.106.

      Baig  neither presented any evidence to the SBA nor  argues
that  Mrs.  Baig  ever claimed to be a socially and  economically
disadvantaged  individual. [7] On the contrary, Baig  argues,  in
its reply to the notice of proposed termination, that it does not
have   a   nondisadvantaged  individual  participating   in   the
management of the concern because Mrs. Baig is Filipino.   Baig's
argument  evinces a misunderstanding of the regulations governing
the  8(a)  program.   Mrs.  Baig is  nondisadvantaged  until  she
asserts  a claim of disadvantage with the SBA, and the SBA  finds
she meets the requirements for that status.

     When  the  SBA suspected that Mrs. Baig had a 49%  ownership
interest  in  the concern, it requested information  which  would
allow it to assess the extent of Mrs. Baig's participation in the
concern.   Baig  chose  not  to  provide  all  of  the  requested
information.   That failure to do so violates 13  C.F.R.  Section
124.209(a)(6)(iii),  and  led  to  one   of   the   grounds   for
termination.   Further, absent evidence to the  contrary,  Baig's
failure  to  provide the requested information can  appropriately
lead  to  the conclusion that Baig failed to establish that  Mrs.
Baig's  participation in the concern does not violate  the  SBA's
restrictions    on    the   participation   of   nondisadvantaged
individuals.  Accordingly, the SBA's conclusion that Baig  failed
to  disclose the extent of Mrs. Baig's participation in the  8(a)
program  was  reasonable  and cannot be found  to  be  arbitrary,
capricious, or contrary to law. [8]

                               IV

      The  decision  of the SBA to terminate Baig from  the  8(a)
program  must  be  sustained  unless  a  review  of  the  written
administrative  record  demonstrates the SBA  acted  arbitrarily,
capriciously, or contrary to law in concluding Baig did not  meet
the  requirements to continue in the 8(a) program.  Such a review
is  narrow  and does not permit me to substitute my own  judgment
for  that  of  the SBA.  My review must examine whether  the  SBA
considered  all of the facts presented as well as  the  laws  and
regulations  which guide the decision-making  process.   Then,  I
must determine whether there was a clear error of judgment by the
SBA  in  making  its  decision before I can find  the  SBA  acted
arbitrarily, capriciously, or contrary to law.  See Motor Vehicle
Mfrs.  Ass'n of the United States, Inc. v. State Farm Mut.  Auto.
Ins. Co., 463 U.S. 29, 43 (1983).

     A clear error of judgment can be found if the SBA:  fails to
properly apply the law and regulations to the facts of the  case;
fails  to consider an important aspect of the problem; offers  an
explanation  for  its  determination that runs  contrary  to  the
evidence;  or  provides an implausible explanation that  is  more
than a difference between my views and those of the SBA.  In sum,
the  SBA  must  articulate  a satisfactory  explanation  for  its
action,  including a rational connection between the facts  found
and its determination.  See id.

      After a careful review of the entire written administrative
record,  I  find  the  SBA's termination of Baig  from  the  8(a)
program  is  fully supported in the record and is reasonable.   I
conclude  that the SBA's decision is based on the entire  record;
that  it  considered all of the relevant regulatory and statutory
factors; and it made no clear error of judgment.  I further  find
Baig  failed  to  comply  with  the  requirements  for  continued
eligibility  in  the  8(a)  program  by  failing  to  submit  the
information  and  documents the SBA requested  concerning  Baig's
incorporation and the extent of Mrs. Baig's participation in  the
concern.   Accordingly,  the  SBA's decision  is  not  arbitrary,
capricious, or contrary to law. [9]

                           Conclusion

      Respondent  Small  Business Administration's  determination
terminating  Petitioner, Baig Associates,  Inc.,  from  the  8(a)
program is NOT ARBITRARY, CAPRICIOUS, OR CONTRARY TO LAW.  See 15
U.S.C. Section 637(a)(9)(C); 13 C.F.R. Section 124.210(h)(1).

       This   is   the  final  decision  of  the  Small  Business
Administration  and is binding upon all parties, including  those
within the employ of the Agency.  15 U.S.C. Section 637(a)(9)(D);
13 C.F.R. Section 124.210(i).

                              
                              ______________________________
                              RICHARD S. ARKOW
                              Administrative Law Judge

_________________________

        [1]   The  SBA  alleges  Baig  failed  to  submit   other
information,  either required or requested by  the  SBA.   It  is
unnecessary to address those allegations to decide this case.
       [2]  It is also unnecessary to address this allegation  to
decide this case.
       [3] Baig also requests that the SBA "provide extra efforts
to  enable Baig Associates to get 8(a) work" and other assistance
to  compensate it for the SBA's conduct.  I am not authorized  to
grant  such relief.  See 13 C.F.R. Section 124.210 and 13  C.F.R.
part 134.
       [4]  Baig enclosed with its Appeal Petition copies of  its
stock  certificates,  which  it  alleges  reflect  the  ownership
interests of its stockholders, and a financial statement for  the
year  ending  December 31, 1996, which it alleges  disproves  the
fifth  ground for termination.  I must decide this appeal  solely
upon the written administrative record before the SBA at the time
it  made  its  decision  to terminate Baig.   13  C.F.R.  Section
124.210(h)(1).   Accordingly,  I  may  not  consider  the   stock
certificates and any other new evidence submitted with the Appeal
Petition.
      [5] There is no requirement that the stockholders and their
ownership   interests   be  included  in   the   certificate   of
incorporation.
       [6]  Baig's contention that it informed the SBA that  Mrs.
Baig's  interest in Baig was less than 10% prior to its  decision
to terminate Baig is not credible, because Baig's submissions, as
reflected in the AR, failed to contest the SBA's conclusion.
       [7]  Mrs. Baig did not claim disadvantaged status  in  the
original  8(a) application.  SBA Response to Order  of  Feb.  24,
1998, Ex. 1.
        [8]  Baig  has  filed  numerous  motions  concerning  the
completeness  of the record.  The motions mainly consist  of  the
generalized  assertion  that  Baig  has  submitted  all  required
documents,  and the argument that if Baig had not  submitted  all
required  documents, the SBA would not have approved its business
plan.   I  have considered all of Baig's motions and,  except  as
discussed  in  the  Order of Feb. 24, 1998, I  find  them  to  be
without  merit  and irrelevant to the reasons for this  decision.
See  also  Dec.  2,  1997, Order Denying Motion (explaining  that
under  13 C.F.R. Section 124.210(h)(1) an appeal must be  decided
solely  on a review of the written administrative record the  SBA
had before it when the decision to terminate Baig was made).
       [9]  It is not necessary to discuss the other reasons  for
Baig's  termination.  If several reasons for termination are  set
forth  in the SBA's determination, and at least one has its basis
in  law  and  fact, the denial will not be considered  arbitrary,
capricious,  or  contrary to law, even  if  one  of  those  other
reasons is arbitrary, capricious, or contrary to law.  See Matter
of  Pride Technologies, Inc., SBA No. 557 at 13-14 & n.14  (1996)
(holding  if  SBA sets forth several reasons for denial  of  8(a)
eligibility, and at least one has its basis in the law and in the
facts  of  record,  the  denial is not arbitrary,  capricious  or
contrary to law).

                                                Posted: May, 1998