Barnes-Williams-Anser, Inc., No. MSB-512 (June 20, 1995)
Docket No. MSBE-94-10-20-48

                    UNITED STATES OF AMERICA

                  SMALL BUSINESS ADMINISTRATION

                 OFFICE OF HEARINGS AND APPEALS

                        WASHINGTON, D.C.


______________________________
                              )
IN THE MATTER OF:             )
                              )  Docket No. MSBE-94-10-20-48
Barnes-Williams-Anser, Inc.   )
______________________________)


                           APPEARANCES

For the Petitioner:                For the Agency:

A. Francis Vitt, Jr., Esq.         John T. Spotila, Esq.
Altmann and Vitt                   General Counsel
1616 H Street, N.W.                John W. Klein, Esq.
Washington, DC 20006               Agency Representative
                                   Small Business Administration
                                   409 Third Street, SW
                                   Washington, DC 20416

                             DIGEST

When the Agency requests additional materials from an 8(a)
program applicant in order to support the applicant President's
assertion that he is engaged full-time for the applicant concern,
and the applicant does not submit sufficient additional evidence
to support such an assertion, the Agency's conclusion that the
applicant's President is not employed full-time to satisfy the
requirement of 13 C.F.R. Section 124.104(a)(2) is reasonable.

When the Agency has determined that the applicant concern's 
President does a considerable amount of work for another
business, hindering the amount of time available for managing the
applicant concern, a finding by the Agency that the President,
who owns 100 percent of the applicant concern, is not a full-time
employee of the applicant concern is reasonable.

If the Agency finds that an 8(a) applicant does not have at least
one socially and economically disadvantaged full-time manager who
holds the position of President or Chief Executive Officer, then
the Agency's determination that the applicant concern is not
eligible for admission into the 8(a) program is not arbitrary and
capricious.

                         FINAL DECISION

                          June 20, 1995

ARKOW, Administrative Law Judge:

     Petitioner Barnes-Williams-Anser, Inc. (BWA) is appealing a
decision by the Respondent U.S. Small Business Administration
(SBA) denying it entry into the 8(a) Program [1] because the
individual who owns and controls the firm, BWA's President,
A. Anthony Serdula, has not satisfactorily established he is the
full-time manager of the firm.  The basis for the SBA's
conclusion is that Mr. Serdula is also the President of Anser
Construction Corporation and his duties at Anser conflict with
the management of BWA.[2]   BWA claims the SBA's conclusion is
arbitrary, capricious, and contrary to law.  I disagree.

                          Jurisdiction

     Jurisdiction on appeal is properly based on 15 U.S.C.
Section 637(a)(9) and 13 C.F.R. Parts 124 and 134 and was timely
filed under 13 C.F.R. Sections 124.210(b) and 134.11(a)(7).

                             Issues

     Whether BWA established by a preponderance of the evidence
that Mr. Serdula is a full-time manager and that his outside
business or employment interests do not conflict with the
management of the firm or hinder it in achieving the objectives
of its business development plan.  13 C.F.R. Sections
124.104(a)(1)-(2), 134.31(a).

     Whether the proposed action of the SBA denying BWA entry
into 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

     In July 1993, BWA applied for admission into the 8(a)
Program.  The basis for the application is that the BWA is owned
and controlled by Mr. Serdula, a socially and economically
disadvantaged individual--a Hispanic American.  The SBA denied
the application on May 18, 1994.  One of the grounds for denial
was that Mr. Serdula did not devote full-time to the management
of BWA.  The basis for that conclusion was that Mr. Serdula owned
other businesses, Anser Construction, a building inspection
service, and a real estate construction and management firm.[3]  
On June 20, 1994, BWA requested reconsideration of its denial and
submitted additional evidence supporting its request.  The SBA
denied BWA's request for reconsideration on September 6, 1994. 
The only ground for denial, on reconsideration, was that BWA did
not establish that Mr. Serdula devotes full-time to the applicant
concern.[4] 
  
     The rationale for the SBA's denial of the reconsideration
request was:

     [Y]ou have not provided evidence that you are engaged
     full-time in the management of the applicant concern. 
     The documentation you provided on reconsideration
     further substantiates the fact that you are involved in
     the operation of the applicant concern, as well as
     serving as President of Anser Construction.

     Your outside business interest conflicts with the
     management of the applicant concern, and prevents the
     firm from achieving the business development objectives
     of the 8(a) program.

Reconsideration Denial Letter at 2.

     In its application for admission into the 8(a) Program, BWA
states that Mr. Serdula works one hour per week as President of
Anser Construction Corporation.  The record contains considerable
information about Anser Construction Corporation, which is
relevant in determining whether Mr. Serdula's involvement in
Anser Construction detracts from his ability to manage BWA.

     BWA provided the names, addresses, and phone numbers of
seven individuals who it contends could provide information to
support its contention that Mr. Serdula works full-time for BWA
and suggests that if the SBA had any doubts about the issue it
could contact those individuals.  BWA did not include any
statements or other evidence from these individuals.  Mr. Serdula
stated that as President of both corporations "I do all hiring,
firing, and administrative work to run the businesses" and
"negotiate subcontracts, contracts and purchases" and "sign all
banking documents."  Mr. Serdula also indicated that the
personnel, office space, and most equipment are the same for both
BWA and Anser.  Request for Reconsideration at 2. 

                     Position of the Parties

     In its appeal, BWA contends, in pertinent part, that the SBA
erred in construing the regulations to mean that Mr. Serdula must
devote full-time to BWA; and the determination by the SBA that
BWA failed to submit sufficient evidence to conclude Mr. Serdula
devotes full-time to BWA is contrary to the facts in the record
and is an arbitrary and capricious decision.

     BWA argues that the phrase in 13 C.F.R. Section
124.104(a)(1), "managed on a full-time basis," does not mean that
a person devotes full-time to a firm, that is, forty hours a
week.  BWA reasons that full-time work occurs whether a business
requires its chief executive officer to work 15 hours a day or
four hours a day.  

     BWA points out that the SBA never requested proof of how
much time BWA needs from Mr. Serdula and "the only fact on the
record is that BWA is managed on a full-time basis by
Mr. Serdula."  Appeal Petition at 15.  BWA asserts further that
there "is no fact on the record that shows that BWA is receiving
less than full-time management by Mr. Serdula." Id.  It argues
that a person can satisfy the full-time requirements of one or
more businesses. 

     Finally, BWA asserts that, for all intents and purposes,
Anser Construction Corporation and BWA are one and the same--they
have the same President, the same employees, and the same
business contracts, vendors and independent contractors.  Thus,
it assumes that full-time management of one is full-time
management of the other.

     The SBA's Answer asserts that BWA has not established
Mr. Serdula is a full-time manager.  The SBA bases its assertion
on its analysis of:  the tax returns and financial statements of
BWA and Anser, their primary business activities, their organiza-
tional charts, the resume of Mr. Serdula, and the personal tax
returns of Mr. Serdula.  The Answer also asserts that because
Mr. Serdula's duties are identical for both BWA and Anser he
cannot be the full-time manager of BWA.

                           Discussion

     An applicant to the 8(a) Program must meet all of the
eligibility requirements set forth in 13 C.F.R. Sections 124.102-
124.109.  13 C.F.R. Section 124.101(a).  Among the elements of
proof is that a socially and economically disadvantaged full-time
manager must hold the position of President or Chief Executive
Officer which precludes any "outside employment or any other
business interest by the individual which conflicts with the
management of the firm or hinders it in achieving the objectives
of its business development plan)."  13 C.F.R. Section
124.104(a)(2).  This element must be proved by a preponderance of
the evidence.  13 C.F.R. Section 134.31(a).  See also Matter of
Westsun Petroleum Products, Inc., SBA No. 427 (1993).  

      The term "full-time" has not been defined in the
regulations.  Decisions addressing this issue have taken a number
of different approaches in trying to decide the term's meaning. 
Some of the cases hinged on a mathematical calculation of the
number of hours worked in outside employment (Matter of MSC
Electric, SBA No. 442 (1993); Matter of KRW, Incorporated, SBA
No. 379 (1991)); another on the amount of income earned at
another job (Matter of Allside Services Corporation, SBA No. 439
(1993)); and yet another on the credibility of the claims of
full-time employment (Matter of Allside, supra; Matter of MSC,
supra). 

     The SBA had to decide whether Mr. Serdula managed BWA on a
full-time basis and whether his outside business interest
conflicts with the management of the firm or hinders it from
achieving its objectives.  That decision could only be made by
analyzing all of the evidence presented, the credibility of the
evidence, and the rational conclusions drawn from the evidence. 
That analysis must recognize that BWA bears the burden of
establishing all of the above by a preponderance of the evidence. 
I must decide if that decision was arbitrary, capricious, or
contrary to law.

     In Steadman v. Securities and Exchange Commission, 450 U.S.
91 (1981), the Supreme Court noted that the preponderance of the
evidence standard is the traditional standard in civil and
administrative proceedings.  In interpreting the Administrative
Procedure Act, the Court cited legislative history which
demonstrated Congress wanted to impose a burden of proof higher
than the scintilla-of-evidence test.  Id. at n. 21.

     Preponderance of the evidence means evidence which is of
greater or more convincing weight, which makes the proposition
being asserted more likely than not to be true, given all
evidence in opposition.  Jones v. United States, 239 F.Supp. 474,
480-481 (E.D. La. 1966), Aff'd, 358 F.2d 309 (5th Cir. 1966).
Even where the evidence is in or near equipoise on an issue of
fact, the preponderance of the evidence burden of proof has not
been met.  Mayfield v. Aetna Life Insurance Co., 100 F.2d 199
(5th Cir. 1938).

     In reviewing an administrative decision, the reviewing body
need not weigh the evidence, but instead "only determine that
there is in the record such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion."  Pagel,
Inc. v. Securities and Exchange Commission, 803 F.2d 942, 945
(8th Cir. 1986). 

     The starting point for the analysis is BWA's statement that
Mr. Serdula devotes full-time to the firm and only spends one
hour per week serving as President of Anser Construction.  BWA
presents little evidence to support this claim.  Even after being
informed by the SBA that it did not establish full-time
management, BWA did not come forth with other persuasive evidence
to support its position.  BWA, as part of its reconsideration
request, should have included additional information to overcome
the reasons for the denial.  See 13 C.F.R. Section 124.206(c)(1). 
By contending the SBA never asked how much time BWA needs from
Mr. Serdula and by identifying others who it claims would support
its contention, BWA loses sight of its burden to establish
eligibility.  The SBA is under no obligation to search out
evidence that would help BWA.  

     Perhaps Mr. Serdula can manage two businesses full-time and
correctly contends that full-time does not mean he must devote 40
hours per week to each business.  I need not decide that because
Mr. Serdula assumed the responsibility for managing two businesses.  This, of necessity, competes for his time during the
business day and creates an unhealthy tension which one can
conclude causes conflict which is adverse to BWA.[5] 

     This case is similar to Westsun, supra, in that Westsun's
President claimed he managed the firm on a full-time basis and
owned a 51 percent interest in two separate businesses.  But
unlike this case, Westsun's President presented evidence that he
managed Westsun on a full-time basis, merely possessed an owner-
ship interest in the other businesses, and performed little or no
work for them.  On those facts, the Administrative Law Judge
found that it was arbitrary and capricious to conclude he was not
the full-time manager of Westsun.  Here, unlike Westsun, there is
evidence Mr. Serdula performs significant duties, both qualita-
tively and quantitatively, for both Anser Construction and BWA.

     BWA's assertion that Anser Construction and BWA are one in
the same detracts rather than supports its position that
Mr. Serdula is its full-time manager.  The evidence shows that
Anser Construction is a business with over a million dollars in
gross revenue in 1992.  It also shows that Mr. Serdula's
responsibilities at Anser Construction are extensive.  It appears
he makes all of the major decisions at Anser.[6] 

     Mr. Serdula's performance of these duties at Anser bring
into serious question whether he spends only one hour per week on
Anser's business.  Based on the relative success of Anser, it is
reasonable for the SBA to conclude that Mr. Serdula spends
considerably more time than he claims on Anser's business and
that this necessarily detracts from the time required to run BWA. 
BWA claims Mr. Serdula does the same things for itself and for
Anser.  That is not a reasonable conclusion which the SBA must
accept because BWA is much smaller than Anser.  Absent a showing
to the contrary, it is reasonable for the SBA to conclude that
Anser demands more time than BWA and that those demands conflict
with Mr. Serdula's ability to manage BWA on a full-time basis.  


                           Conclusion

     Whether the demands of Anser Construction conflict with or
hinder BWA was a conclusion the SBA had to reach, based on all
the facts presented to it by BWA.  The SBA's conclusion, that it
does and Mr. Serdula cannot be a full-time manager of BWA, is not
unreasonable.  Lacking a showing of unreasonableness, I cannot
conclude the decision is either arbitrary, capricious, or
contrary to law.  Accordingly, BWA cannot prevail in its appeal.

     In sum, after a careful review of the entire written
administrative record, I find the SBA's denial of BWA's 8(a)
application is fully supported in the record and is reasonable. 
I further find 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. 
Accordingly, I conclude that BWA has not established its
eligibility by a preponderance of the evidence.  See Steadman v.
Securities and Exchange Commission, 450 U.S. 91 (1981).

     Respondent's September 6, 1994 determination denying 8(a)
Program entry to Petitioner, Barnes-Williams-Anser, Inc., 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. Section637(a)(9)(D),
13 C.F.R. Sections 124.210(i), 134.32(a)(4).[7] 



                              _________________________
                              Richard S. Arkow
                              Administrative Law Judge

____________________
[1]  Small Business Act of 1958, Section 8(a), 15 U.S.C. Section
     637(a) and 13 C.F.R. Parts 124 and 134.  "The 8(a) Program
     is intended to be used exclusively for business development
     purposes to help small businesses owned and controlled by
     socially and economically disadvantaged individuals. . . ." 
     13 C.F.R. Section 124.1(a).

[2]  The SBA also denied eligibility because Petitioner failed to
     establish Mr. Serdula was a Hispanic-American.  The SBA
     withdrew that reason for denial. 

[3]  BWA convinced the SBA that the building inspection service
     and the real estate construction and management business are
     no longer relevant to the issue of "full-time management."

[4]  BWA cured the other deficiencies noted in the initial
     denial.

[5]  This case is unlike most of the other "full-time" issue
     cases decided by the Office of Hearings and Appeals of the
     SBA.  Those cases addressed outside employment performed
     during nonbusiness hours.  See cases discussed supra.  That
     distinction is important.


[6]  See the discussion of Mr. Serdula's duties, supra.

[7]  Judge Benjamin Usher was assigned this case on October 24,
     1994.  He retired from the Federal service January 3, 1995. 
     I was assigned the case June 2, 1995.  The case was not
     decided within 90 days of the filing of the Petition because
     of the absence of an Administrative Law Judge and a heavy
     caseload at the SBA.  See 15 U.S.C. Section 637(a)(9)(F),
     13 C.F.R. Section 124.210(j).