Opinion ID: 184812
Heading Depth: 3
Heading Rank: 2

Heading: DSE's Additional Claims

Text: 31 DSE's remaining challenges to the SBA's Third Size Determination are easily disposed of. First, DSE alleges that the SBA acted unlawfully in utilizing a full-time equivalency formula 3 to count the number of temporary workers used by AMTEC and its affiliates. The government conceded at oral argument that the SBA has always rejected the use of equivalency figures as inconsistent with its regulations requiring that a count include all individuals employed on a fulltime, part-time, temporary, or other basis, 13 C.F.R. § 121.106(a), and that [p]art-time and temporary employees are counted the same as full-time employees. 13 C.F.R. § 121.106(b)(2). See, e.g., Atlantic Plastic & Chemical Co., No. 1290 (SBA SAB 1979), aff'd on recons., No. 1299 (1979) (rejecting attempt to measure part-time employees by use of full-time equivalency formula) 4 ; Golden West Refining Co., No. 2132 (SBA OHA 1985) (A review of the OHA's and Size Appeals Board's [ ] decisions concerning 'number of employees' shows that: the concern cannot count employees on an equivalency basis but must count as employees all full-time, part-time and temporary employees....). It is a settled tenet of administrative law that an agency cannot depart from a long-standing policy without providing sufficient explanation of its rationale for altering course. See Simmons v. ICC, 829 F.2d 150, 156 (D.C.Cir.1987); Telecommunications Research & Action Ctr. v. FCC, 800 F.2d 1181, 1184 (D.C.Cir.1986). However, it is equally well settled that the principle of harmless error applies to judicial review of agency action. See 5 U.S.C. § 706 (In making the foregoing determinations [of whether agency action is arbitrary and capricious] ... due account shall be taken of the rule of prejudicial error.); Doolin Sec. Sav. Bank, FSB v. Office of Thrift Supervision, 139 F.3d 203, 212 (D.C.Cir.1998). 32 Under the APA, we will not set aside agency action unless the party asserting error [can] demonstrate prejudice from the error, Air Canada v. Department of Transp., 148 F.3d 1142, 1156 (D.C.Cir.1998), a burden that DSE has conspicuously failed to meet. In the Third Size Determination, the SBA determined that AMTEC and its affiliates had a total of 1413.19 employees for the twelve months preceding AMTEC's self-certification as small. See Third Size Determination at 12. Of these, only 44.54 were classified as temporary employees. See id. In the evidentiary hearings before the district court, AMTEC introduced additional testimony from its Deloitte & Touche accountant that counted temporary employees based on the actual number of individuals used--the same head count method used to measure the number of full-time and part-time employees. According to the accountant's testimony, AMTEC and its affiliates had 1428.30 employees during the relevant time period. See 6/15/98 Tr. at 10-13; DSE II at 26. In other words, an actual head count assigned fifteen additional employees to AMTEC, but left it well short of the 1500 allowed for this procurement under SIC Code 3483. Although this information was never presented to the SBA, DSE did have the opportunity to cross-examine AMTEC's witness, and to introduce any evidence to the contrary. DSE failed to provide us with any reason to believe that it could ever show this revised count to be erroneous. Accordingly, we find the agency's error to have been harmless. 5 Cf. State of North Carolina v. FERC, 112 F.3d 1175, 1191 (D.C.Cir.1997) (although FERC utilized erroneous data, error was harmless as petitioner could not show that revised data would alter the Commission's projection). 33 DSE next contends that the SBA was arbitrary and capricious in its failure to investigate whether the general partners of North American Company, Ltd.--a limited partnership--had other commercial interests that should have been considered affiliates of AMTEC. The record belies this assertion. As required by its regulations, see 13 C.F.R. § 121.103(a)(1), (4), the SBA examined all of the holdings of North American Company's managing general partner, the individual who controlled its activities. See Third Size Determination at 4-8. Quantrad Sensor, Inc., SBA No. 4255 (SBA OHA 1997), cited by DSE for the proposition that the SBA should have gone on to examine the holdings of the other partners as well, does not provide to the contrary. In Quantrad, the OHA held that the SBA could request information from a general partnership's general partners, not that it was under an obligation to do so. In fact, in Size Appeal of Interactive Resources, Inc., No. 3168 (SBA OHA 1989), relied upon by the Area Office in Quantrad, the OHA explicitly held that: 34 In a limited partnership, each partner's liability is limited, except that of the General Partner. A General Partner in a limited partnership has all the rights and powers of a General Partner in a General Partnership. Thus, a General Partner in a limited partnership is also presumptively in control of the limited partnership for purposes of the affiliation regulation. 35 (Emphasis added). Having examined the holdings of North American Company's general partner, the SBA was under no obligation to make any further inquiries. 36 Finally, DSE alleges that the SBA should have determined whether a joint venture between North American Company and another business, Allied Capital Commercial Corporation, received financial assistance from the SBA. We disagree. While 13 C.F.R. § 121.103(f)(1) provides that [p]arties to a joint venture are affiliates if any one of them seeks SBA financial assistance for use in connection with the joint venture, there was no evidence that any SBA funds had been used in connection with the North American-Allied Capital project. In testimony before the district court, which occurred prior to the Third Size Determination and at which the SBA was represented, the controlling partner of North American Company testified that the joint venture in question had no relationship whatsoever with the SBA. Given the SBA's general reliance upon the parties' voluntary disclosure of relevant information, see 13 C.F.R. § 121.405(a)-(b), policed by severe criminal penalties for knowingly misrepresenting the small business size status of a concern ... [or] for knowingly making false statements or misrepresentations to SBA, 13 C.F.R. § 121.108, we do not see how it had any obligation to investigate further. 37 Accordingly, we conclude that the SBA's Third Size Determination was not arbitrary and capricious. We also affirm the district court's interlocutory order dissolving the preliminary injunction against performance on AMTEC's contract with the Army. 6 See DSE II at 27. As our discussion well illustrates, the court properly concluded that DSE had little to no likelihood of prevailing on the merits of its claim. 38