Court Opinion

ID: 4288842
Source: CourtListenerOpinion
Date Created: 2018-06-27 12:01:25.232219+00
Date Added: 2024-06-11T14:37:42.161353
License: Public Domain

In the United States Court of Federal Claims
                                                     No. 17-1938
                                                 Filed: June 26, 2018
                                                 PUBLIC VERSION*
                                                                        5 U.S.C. § 706 (Administrative Procedure Act,
****************************************                                    Scope of Judicial Review);
                                       *                                15 U.S.C. §§ 632(a)(2)(A) (Establishment of Size
                                       *                                    Standards), 637(a)(1)(B) (Section 8(a)
                                       *                                    Program);
                                                                        28 U.S.C. § 1491(b)(1) (United States Court of
                                       *                                    Federal Claims Bid Protest Jurisdiction);
IDEOGENICS LLC,                        *                                13 C.F.R. §§ 121.103(a)(1)–(5) (General Principles
                                       *                                    Of Affiliation), (h)(4) (“Ostensible
      Plaintiff,                       *                                    Subcontractor Rule”), 121.1003 (Where Should
                                                                            A Size Protest Be Filed?), 121.1008(d),
                                       *                                    121.1009(b) (Basis For Determination), (c)
                                       *                                    (Burden Of Persuasion), (d) (Weight Of
v.                                     *                                    Evidence), (e) (Formal Size Determination),
                                                                            134.205 (The Appeal File, Confidential
                                       *                                    Information, And Protective Orders) 134.225
                                       *                                    (The Record), 134.306 (Transmission Of The
THE UNITED STATES,                     *                                    Case File And Solicitation), 134.108(a)
                                       *                                    (Limitation On New Evidence), 134.314
                                                                            (Standard Of Review);
      Defendant,                       *                                48 C.F.R. §§ 9.103(a)–(b) (Policy), 9.104-1
                                       *                                    (General Standards), 9.104-2 (Special
                                       *                                    Standards), 52.219-14 (Limitations On
and                                    *                                    Subcontracting), 52.222-17 (Nondisplacement
                                                                            Of Qualified Workers);
                                       *                                Exec. Order. 13495, 74 FED. REG. 6,103 (Feb. 4,
                                       *                                    2009);
EQUITY MORTGAGE SOLUTIONS, LLC, *                                       Federal Acquisition Regulation; Nondisplacement
                                       *                                    of Qualified Workers Under Service Contracts,
                                                                            77 FED. REG. 75,766 (Dec. 21, 2012);
      Defendant-Intervenor.            *                                Rules Of The United States Court Of Federal
                                       *                                    Claims 5.4(b) (Length), 24(a) (Intervention Of
                                       *                                    Right), 52.1 (Motion For Judgment On The
                                       *                                    Administrative Record);
                                                                        Service Contract Act of 1965, Pub. L. No. 89-286,
                                       *                                    79 Stat. 1034 (codified as amended at 41
****************************************                                    U.S.C. §§ 6701–6707 (2012).

Jerry Alfonso Miles, Deale Services, LLC, Rockville, Maryland, Counsel for Plaintiff.
Joshua Ethan Kurland, United States Department of Justice, Civil Division, Washington, D.C.,
Counsel for the Government.
Matthew Thomas Schoonover, Koprince Law LLC, Lawrence, Kansas, Counsel for Defendant-
Intervenor.

         *
           On June 20, 2018, the court forwarded a sealed copy of this Memorandum Opinion And Final Order to the parties
to redact any confidential and/or privileged information from the public version and note any citation or editorial errors that
required correction. On June 25, 2018, Plaintiff filed a Motion To Redact, together with proposed redactions. Neither the
Government nor Defendant-Intervenor proposed any redactions. After considering the proposed redactions, the court made
the redactions that appear in this Memorandum Opinion And Final Order.
 MEMORANDUM OPINION AND FINAL ORDER DENYING PLAINTIFF’S MOTION
         FOR JUDGMENT ON THE ADMINISTRATIVE RECORD

BRADEN, Chief Judge.

        On December 13, 2017, Ideogenics LLC (“Ideogenics”) filed a Complaint (“Compl.”) in
the United States Court of Federal Claims to protest a November 16, 2017 decision by the Small
Business Administration’s Office of Hearings and Appeals (“SBA OHA”). Therein, the SBA
OHA ruled that Ideogenics’ affiliation with two subcontractors disqualified it from being awarded
a contract as a “small business,” under a United States Department of Housing and Urban
Development (“HUD”) procurement. For the reasons discussed herein, the court has determined
that the SBA OHA’s decision was not arbitrary, capricious, contrary to law, or without a rational
basis.

        To facilitate review of this Memorandum Opinion and Final Order, the court has provided
the following outline:

I.     Factual Background.
       A.     On November 16, 2016, The Department Of Housing And Urban Development
              Issued A Solicitation For Home Equity Conversion Mortgage Loan Servicing
              Support.
       B.     On December 27, 2016, Ideogenics LLC Entered Into Subcontracts With
                                       and                          .
       C.     On December 28, 2016, Ideogenics LLC Submitted A Final Proposal To Provide
              Home Equity Conversion Mortgage Loan Servicing For The Department Of
              Housing And Urban Development.
       D.     On June 6, 2017, The Department Of Housing And Urban Development Awarded
              A Contract To Ideogenics LLC, Under The November 16, 2016 Solicitation.
       E.     On August 8, 2017, A Small Business Administration Area Office Found That
              Ideogenics LLC Was Not Affiliated With                                Or
                                         .
       F.     On August 23, 2017, Equity Mortgage Solutions, LLC Filed An Appeal Of The
              Small Business Administration Area Office’s Size Determination.
       G.     On November 16, 2017, The Small Business Administration’s Office Of Hearings
              And Appeals Reversed The Small Business Administration Area Office’s Size
              Determination.
       H.     On November 22, 2017, The Department Of Housing And Urban Development
              Terminated The Contract Awarded To Ideogenics LLC.

II.    Procedural History.

III.   Discussion.
       A.     Subject Matter Jurisdiction.
       B.     Standing.
       C.     The Relevant Standards Of Review.

                                               2
       D.      Whether The Small Business Administration’s Decision That Ideogenics LLC
               Was Not A “Small Business” Was Contrary To Law, Not Rational, Or Arbitrary
               And Capricious.1

               1.     Because It Misapplied Precedent And Considered “Other Indicia” Of
                      Unusual Reliance (Count VI).
                      a.    Ideogenics LLC’s Argument.
                      b.    The Government’s Response.
                      c.    Equity Mortgage Solutions, LLC’s Response.
                      d.    The Court’s Resolution.

               2.     Because It Misapplied Executive Order 13495 (Count I).
                      a.    Ideogenics LLC’s Argument.
                      b.    The Government’s Response.
                      c.    Equity Mortgage Solutions, LLC’s Response.
                      d.    Ideogenics LLC’s Reply.
                      e.    The Government’s Reply.
                      f.    Equity Mortgage Solutions, LLC’s Reply.
                      g.    The Court’s Resolution.

               3.     Because It Failed to Consider Ideogenics LLC’s Past Performance
                      Information (Count II).
                      a.     Ideogenics LLC’s Argument.
                      b.     The Government’s Response.
                      c.     Equity Mortgage Solutions, LLC’s Response.
                      d.     Ideogenics LLC’s Reply.
                      e.     The Government’s Reply.
                      f.     Equity Mortgage Solutions, LLC’s Reply.
                      g.     The Court’s Resolution.

               4.     Because It Misinterpreted Ideogenics LLC’s Agreements With
                                             and                        (Count III).
                      a.    Ideogenics LLC’s Argument.
                      b.    The Government’s Response.
                      c.    The Court’s Resolution.

       1
         The SBA OHA’s November 16, 2017 decision analyzed whether Ideogenics violated the
“ostensible subcontractor rule,” in light of SBA OHA precedent. Tab 44, AR 2775. Therefore,
the court begins its analysis with Count VI of the December 13, 2017 Complaint, that challenges
the SBA OHA’s application of this precedent. Next, the court considers Counts I, II, III, and V,
as they relate to specific factors discussed in that precedent for determining whether a contractor
is “unusually reliant” on a subcontractor. Finally, the court considers Count IV, regarding the
SBA OHA’s exclusion of the                       from the record and ruling that Ideogenics was
“unusually reliant” on a subcontractor for facilities.

                                                3
            5.      Because It Incorrectly Assessed Ideogenics LLC’s Management Control
                    (Count V).
                    a.     Ideogenics LLC’s Argument.
                    b.     The Government’s Response.
                    c.     Ideogenics LLC’s Reply.
                    d.     The Government’s Reply.
                    e.     Equity Mortgage Solutions, LLC’s Reply.
                    f.     The Court’s Resolution.

            6.      Because It Excluded Evidence On Appeal And Ruled That Ideogenics LLC
                    Was “Unusually Reliant” On A Subcontractor For Facilities (Count IV).
                    a.    Ideogenics LLC’s Argument.
                    b.    The Government’s Response.
                    c.    Equity Mortgage Solutions, LLC’s Response.
                    d.    The Court’s Resolution.

IV.   Conclusion.

                                           4
I.     FACTUAL BACKGROUND.2

       A.      On November 16, 2016, The Department Of Housing And Urban Development
               Issued A Solicitation For Home Equity Conversion Mortgage Loan Servicing
               Support.

        On November 16, 2016, HUD issued Solicitation No. DU208WR-17-R-0002 (the
“Solicitation”) for a follow-on home equity conversion mortgage (“HECM”) loan servicing
support contract to “obtain support for performing nationwide comprehensive reverse mortgage
loan servicing activities according to mortgage industry loan servicing standards.” Tab 1, AR 13.
The Solicitation was set aside for competition among Section 8(a)3 small businesses, classified
under the North American Industry Classification System (“NAICS”) Code 522390, with a size
standard of $20.5 million.4 Tab 1, AR 1, 77, 82.

       The Solicitation provided that offers would be evaluated using a “Best Value Tradeoff
process that [would] entail a qualitative evaluation of proposals,” based on four factors: (1)
“Technical Approach;” (2) “Management;” (3) “Key Personnel;” and (4) “Past Performance.” Tab
1, AR 141. Under the “Technical Approach” factor, offerors were required to demonstrate: (1)
“logical and feasible methods for meeting the requirements” described in the Solicitation; (2) a
“clear understanding of the required operations and HUD requirements;” and (3) a “proposed
approach [that] delineates the technical responsibilities between the prime and the
subcontractor[s.]” Tab 1, AR 128.

        Under the “Management” factor, offerors were required to address, inter alia: “Key
Personnel and responsibilities;” “subcontracting arrangements and reporting relationships of all
subcontractors;” and “clear lines of authority from the top of the organization to all those working
on this effort.” Tab 1, AR 129.

      Under the “Key Personnel” factor, offerors were required to submit resumes that
“demonstrate[d] sufficient relevant prior experience, qualifications, education, and certification[,]”

       The facts discussed herein were derived from the Administrative Record (“Tabs 1–51,
       2

AR 1–2883”).
       3
          Section 8(a) of the Small Business Act of 1958, Pub. L. No. 85-536, 72 Stat. 384 (1958)
(codified as amended at 15 U.S.C. § 637(a)) authorizes the Small Business Administration
(“SBA”) to provide business development opportunities and assistance by “arrang[ing] for the
performance of . . . procurement contracts by negotiating or otherwise letting subcontracts to
socially and economically disadvantaged small business concerns[.]” 15 U.S.C. § 637(a)(1)(B).
       4
         Federal Acquisition Regulation (“FAR”) 52.219-1, cited in the Solicitation, provided that
the proper NAICS Code should have been 531311, with a size standard of $15 million. Tab 1, AR
121. Amendment 0001 corrected this mistake. Tab 1, AR 312. NAICS Code 531311 concerns
“Residential Property Managers,” and “comprises establishments primarily engaged in managing
residential real estate for others.” See North American Industry Classification System, U.S.
CENSUS BUREAU, https://www.census.gov/eos/www/naics/index.html (Under “NAICS Search,”
enter “531311” and select “2017 NAICS Search”).

                                                  5
together with letters of commitment for all key personnel. Tab 1, AR 129. The Solicitation
identified the following as “Key Personnel:” the “Contract Manager;” the “Alternate Contract
Manager;” the “Cash Manager;” the “Loan Servicing Manager;” the “Quality Control Manager;”
and the “Title Attorney.” Tab 1, AR 15.

        Under the “Past Performance” factor, offerors were required to provide “all relevant past
performance performed in the three year period immediately preceding submission of the proposal
and all work currently being performed.” Tab 1, AR 129–30 (bold and italics in original). Offerors
that intended to “subcontract (or use joint ventures/ partners, or other entities other than the prime
[c]ontractor to perform) more than 20% of the contract value” were required to submit separate
past performance information for the proposed subcontractors. Tab 1, AR 130.

       B.      On December 27, 2016, Ideogenics LLC Entered Into Subcontracts With
                                           and                        .

        On December 27, 2016, Ideogenics entered into separate but identical agreements with
                                            and                                            .5 Tab
2, AR 510–42. Each agreement was entitled                    and defined the maximum value of
each as “ % of the total not to exceed value” of any contract awarded to Ideogenics. Tab 2, AR
510, 527. Each agreement also provided that the subcontractors collectively would perform no
more than % of the work under the contract, but that the subcontractors’ combined personnel
costs would not exceed % of the contract value. Tab 2, AR 511, 528. In addition, Ideogenics,
       , and            were prohibited from employing “each other’s employees who are directly
or indirectly associated with the work covered by this Subcontract,” without the employer’s prior
written consent (the “non-employment provision”). Tab 2, AR 516, 533. Significantly, all parties
agreed that the “Subcontractor’s personnel who are to perform the services shall be under the
employment, and ultimate control, management, and supervision of the subcontractor.” Tab 2,
AR 518, 535. Moreover, no “party shall have the right, power, or authority to obligate or to bind
the other in any manner whatsoever, except as agreed to in writing by the [p]arties.” Tab 2, AR
519, 536. And, each                 agreed to perform
as agreed upon in [Attachment A.]” Attachment A required that the
                                            Tab 2, AR 512, 523, 529, 540.

       C.      On December 28, 2016, Ideogenics LLC Submitted A Final Proposal To
               Provide Home Equity Conversion Mortgage Loan Servicing For The
               Department Of Housing And Urban Development.

        On December 28, 2016, Ideogenics submitted a final proposal in response to the
Solicitation. Tab 2, AR 398–575. The cover page identified Ideogenics as the offeror, but the
Executive Summary disclosed that the contract would be performed by “Team Ideogenics,” i.e.,
Ideogenics,       , and          , as explained in a               identifying    Ideogenics

       5
         Beginning in 2014,                                                provided HECM
loan servicing support to the HUD, pursuant to Contract No. DU208WR-14-C-01 (the “incumbent
contract”). Tab 1, AR 386, 468.

                                                  6
employees and     employees         for         and            . Tab 2, AR 398, 408, 431–32, 435.
Other than the Contract Manager and Alternate Contract Manager, all managers and supervisors
were to be employed by          and             . Tab 2, AR 431–32; see also Tab 2, AR 438
                                                                           . In fact, “all of Team
Ideogenics[’] proposed [k]ey [p]ersonnel . . . currently [were] working in the same or similar roles
on the [incumbent contract].” Tab 2, AR 435. Commitment letters from key personnel also were
included providing that, “[s]hould Ideogenics, LLC be selected as the awardee for the subject
contract, I am committed to joining Team Ideogenics[.]” Tab 2, AR 446, 449, 452, 455, 458, 460.
“[K]ey personnel management and supervision roles and responsibilities” also were described.
Tab 2, AR 435–36.

       HUD also was advised that

       Ideogenics has fully executed teaming agreements and subcontracting agreements
       in place . . . for defining the relationship we expect during the contract, identifying
       the types of work expected for each teammate, the roles of their staff, and
       contractual requirements. Upon contract award, the terms will be incorporated into
       formal subcontractor agreements that flow down the requirements in Ideogenics[’]
       prime contract[.] Ideogenics is submitting these agreements in our . . . [p]roposal.

Tab 2, AR 436.

        In addition, Ideogenics represented that it would “take[] immediate corrective action, such
as replacing the person involved or other appropriate action,” in the event an employee of either
        or             failed to perform emphasizing that “Ideogenics takes full responsibility for
the performance of our subcontractors.” Tab 2, AR 436.

       As required by the Solicitation, Ideogenics’ proposal provided that

       Ideogenics is a

                    .    We offer expertise in
                                                                                         . . .

                including business process re-engineering, loan and financial analysis, and
       housing/mortgage counseling. Additionally, Ideogenics has a deep understanding
       of the [information technology] systems that support
                         .                                                           ...

Tab 2, AR 462.

                                                 7
      Past performance information about              and             also was included. Tab 2, AR
465–72. As to      ,

Tab 2, AR 465; see also Tab 2, AR 464–68.

       Ideogenics’ proposal described                 as

Tab 2, AR 469; see also Tab 2, AR 469–72.

   D. On June 6, 2017, The Department Of Housing And Urban Development Awarded A
      Contract To Ideogenics LLC, Under The November 16, 2016 Solicitation.

       On June 6, 2017, HUD awarded a contract under Solicitation No. DU208WR-17-R-0002
to Ideogenics; on that same day, Ideogenics accepted. Tab 3, AR 579.

       On June 8, 2017, Equity Mortgage Solutions, LLC (“EMS”) filed a size protest with the
Contracting Officer,6 complaining that Ideogenics was not a “small business” under the applicable

       6
          SBA regulations require that, to file a size protest with the SBA, an entity must first file
the protest “with the contracting officer for the procurement or sale, who must forward the protest
to the SBA . . . Area Office serving the area in which the headquarters of the protested concern is
located, regardless of the location of any parent company or affiliates.” 13 C.F.R. § 121.1003.

                                                  8
NAICS Code, because it was affiliated7 with two “ostensible subcontractors,”8                     and
       . Tab 5, AR 583.

       On June 9, 2017, the size protest was referred to a SBA Area Office. Tab 15, AR 780–81.
In response, HUD stayed performance of the contract. Tab 6, AR 585.

         On June 13, 2017, the SBA Area Office sent a letter (the “June 13, 2017 SBA Area Office
letter”) to Ideogenics requesting: (1) a response to the allegations and any supporting evidence; (2)
a completed Form SBA 355;9 (3) IRS Form 4506;10 (4) Ideogenics’ technical, cost, past
performance, and other proposals submitted in response to the Solicitation; (5) a list of the specific
tasks to be performed by Ideogenics and each subcontractor; (6) resumes for all key personnel; (7)
information regarding past relationships with the subcontractors; (8) all agreements with
subcontractors; and (9) information regarding Ideogenics’ past experience in providing the
services and tasks required by the Solicitation. Tab 18, AR 798–99.

       On June 17, 2017, Ideogenics submitted IRS Form 4506. Tab 19, AR 802.

       7
         SBA regulations define an “affiliate” as an entity where “one controls or has the power
to control the other, or a third party or parties controls or has the power to control both. It does
not matter whether control is exercised, so long as the power to control exists.” 13 C.F.R. §
121.103(a)(1).
       8
           SBA’s “ostensible subcontractor rule” provides that a

       contractor and its ostensible subcontractor are treated as joint venturers, and
       therefore affiliates, for size determination purposes. An ostensible subcontractor is
       a subcontractor that is not a similarly situated entity, as that term is defined in §
       125.1 of this chapter, and performs primary and vital requirements of a contract, or
       of an order, or is a subcontractor upon which the prime contractor is unusually
       reliant.

13 C.F.R. § 121.103(h)(4).
       9
         Form SBA 355, entitled “Information For Small Business Size Determination,” requests
the following information from a company whose “small business” status has been challenged:
NAICS Codes within which the company works; the company’s major products and services;
owners, partners, and stockholders, as well as percent ownership of voting stock or other interests;
annual revenues; number of employees; and other information about possible affiliates. Tab 20,
AR 804–11 (Ideogenics’ Completed Form SBA 355).
       10
         IRS Form 4506, entitled “Request for Transcript of Tax Return,” is used to request a
copy of a previously filed tax return from the Internal Revenue Service. Tab 19, AR 801–03
(Ideogenics’ Completed IRS Form 4506).

                                                  9
     On June 19, 2017, EMS also filed a bid protest with the Government Accountability Office
(“GAO”) challenging HUD’s technical and past performance evaluations of Ideogenics’
December 28, 2016 proposal. Tab 10, AR 616–28.

       On June 20, 2017, Ideogenics submitted a completed Form SBA 355 showing that: (1)
Ideogenics’ primary business activities were conducted under NAICS Code 541511; (2)
Ideogenics’ major products and services included financial and accounting services under NAICS
Code 541211 and software development under NAICS Code 541210;11 and (3) these services
together comprised % of Ideogenics’ sales or receipts for fiscal year 2016. Tab 20, AR 805–06.
The form did not include information about the remaining % of Ideogenics’ business. On June
20, 2017, Ideogenics also submitted a response to EMS’s small business size status protest and
attached other information requested. Tab 21, AR 812–92.

       On July 28, 2017, GAO dismissed EMS’s June 19, 2017 bid protest, because HUD
represented that it would take voluntary corrective action that included: completing new
evaluations; reconsidering the Independent Government Cost Estimate; determining whether
discussions or proposal revisions were necessary; and completing a new award determination. Tab
12, AR 690, 707; Tab 13, AR 709.

        On August 1, 2017, the SBA Area Office found that Ideogenics,         , and            ,
respectively, would incur    %,    %, and      % of the total contract labor costs. Tab 24, AR
1620. The SBA Area Office also found that Ideogenics,           , and            , respectively,
would receive      %,     %, and    % of money paid by HUD under the contract. Tab 24, AR
1621.

   E. On August 8, 2017, A Small Business Administration Area Office Found That
      Ideogenics LLC Was Not Affiliated With                                Or
                             .

       In determining whether two entities are affiliated, the SBA Area Office is requested to:

               consider the “totality of the circumstances,” 13 C.F.R. § 121.103(a)(5);

       11
           According to the NAICS Code description, “541210” is not a “valid” NAICS Code. See
North American Industry Classification System, U.S. CENSUS BUREAU, https://www.census.
gov/eos/www/naics/index.html (Under “NAICS Search,” enter “541210” and select “2017 NAICS
Search”). The NAICS Manual states that “software development” can be classified under NAICS
Code 541511 (Custom Computer Programming Services), and that “software publishers,” i.e.,
entities that “carry out operations necessary for producing and distributing computer software,
such as designing, providing documentation, assisting in installation, and providing support
services to software purchasers,” are classified under NAICS Code 511210. See North American
Industry Classification System, U.S. CENSUS BUREAU, https://www.census.gov/eos/www/
naics/index.html (Under “NAICS Search,” enter “541511” and select “2017 NAICS Search.”
Repeat for “511210.”). It is unclear which, if either, of these NAICS Codes Ideogenics intended
to include on the Form SBA 355.

                                                10
             base a formal size determination “primarily on the information supplied by the
              protestor or the entity requesting the size determination and that provided by the
              concern whose size status is at issue,” id. § 121.1009(b);

             evaluate information submitted by “[t]he concern whose size is under
              consideration” placing the burden of proof on the applicant to establish that it is a
              “small business,” id. § 121.1009(c);

             “give greater weight to specific, signed, factual evidence than to general,
              unsupported allegations or opinions,” id. § 121.1009(d); and

             “base a formal size determination upon the record, including reasonable inferences
              from the record, and . . . state in writing the basis for its findings and conclusions,”
              id. § 121.1009(e).

       On August 8, 2017, the SBA Area Office issued Size Determination No. 2-2017-102,
finding that Ideogenics’ relationships with  and           did not violate the “ostensible
subcontractor rule,” because

      Ideogenics is managing and performing the majority of the primary and vital
      requirements of the subject procurement. This finding is supported by the proposed
                         contained in Ideogenics’ proposal[.] . . . The        also reveals that
      Ideogenics staff will make up the majority of the contract staff[.] Only the
      [discrete] task areas of                        and             are devoid of Ideogenics
      staff. Additionally, the          shows that the ultimate supervisory roles for contract
      performance, the Contract Manager and Alternate Contract Manager, will both be
      Ideogenics employees as well. However, the mid-level supervisory staff . . . are all
      assigned to             [and]            . . . . Ideogenics takes ultimate responsibility
      over all subcontractor action . . . and may take corrective action to remedy [poor
      performance]. It further stipulates that the Ideogenics Contract Manager
                                                                                  Furthermore,
      Ideogenics’ proposed subcontracting agreements with both                  and
      state that any and all communication regarding the contract shall be through
      Ideogenics. Accordingly, the mid-level managers employed by                           and
                     are subordinate to the Ideogenics Contract Manager who in turn
      reports . . . directly to [the] Ideogenics CEO. . . . Thus, the record supports a finding
      that Ideogenics will manage contract performance.

Tab 25, AR 1625, 1629–31.

      The SBA Area Office also explained that:

      Notwithstanding a finding that the prime contractor will manage and perform the
      primary and vital requirements of a contract, the ostensible subcontractor rule may
      still be violated where there is evidence of the prime contractor’s unusual reliance
      on the subcontractor(s). DoverStaffing[ Inc., SBA No. SIZ-5300, 2011 WL
7101064] at [*]7 [(Dec. 14, 2011)]. . . . While analysis of this inquiry, is intensively

                                                 11
       fact-specific, a line of [SBA] OHA cases following DoverStaffing have identified
       four “key factors” that contribute to a finding of unusual reliance:

               (1) the proposed subcontractor is the incumbent contractor and is
               ineligible to compete for the procurement; (2) the prime contractor
               plans to hire the large marjority of its workforce from the
               subcontractor; (3) the prime contractor’s proposed management
               previously served with the subcontractor on the incumbent contract;
               and (4) the prime contractor lacks relevant experience and must rely
               upon its more experienced subcontractor to win the contract.

       Charitar Realty[, SBA No. SIZ-5806, 2017 WL 542185,] at [*]13 [(Jan. 25,
       2017)]. . . . However, “[w]hen these factors are present, violation of the ostensible
       subcontractor rule is more likely to be found if the proposed subcontractor will
       perform 40% or more of the contract.” [Id.]

Tab 25, AR 1631 (some internal citations omitted) (alteration in original).

        In considering the first and third DoverStaffing factors, the SBA Area Office found that:
(1)         and            were the incumbent contractors and not eligible to compete under the
Solicitation; and (2) Ideogenics’ proposed management previously worked with             on that
contract. Tab 25, AR 1631. Nonetheless, the SBA Area Office concluded that

       the record does not suggest that the employees [Ideogenics] plans to hire from its
       subcontractors are . . . indicative of unusual reliance. Ideogenics’ plans to hire these
       employees were made pursuant to Executive Order [13495], “Nondisplacement of
       Qualified Workers Under Service Contracts,” (Executive Order). 74 Fed. Reg.
       6103 (Feb. 4, 2009). . . . [The SBA] OHA has stated that in light of the Executive
       Order, “the hiring of incumbent non-managerial personnel cannot be considered
       strong evidence of unusual reliance.” . . . [The SBA] OHA has also held a prime
       contractor’s plans to hire incumbent managerial personnel alone to be insufficient
       to establish unusual reliance where the prime has sufficient experience on its own
       to win and perform the contract. . . . Furthermore, [the SBA] OHA has found no
       unusual reliance where the prime contractor plans to hire incumbent personnel on
       an individual basis, where such personnel bear the right of first refusal. Spiral [Sols.
       & Techs., SBA No. SIZ-5279, 2011 WL 5009339], at [*]28–29[ (Sept. 15, 2011)].

       Ideogenics’ proposal stipulates that the incumbent managerial staff will be retained
       on an individual basis pursuant to the Executive Order. . . . Ideogenics has executed
       employment agreements for all key personnel. Furthermore, the proposal contains
       letters of commitment from each of the key personnel stating that, should
       Ideogenics be awarded the subject procurement, they are committed to joining
       Team Ideogenics. While the mid-level managers will continue as employees of
               and            , [the SBA] OHA has held that a subcontractor may supply
       such personnel without violating the ostensible subcontractor rule so long as the
       managers remain subordinate to the prime contractor. . . . [T]he proposed
       management approach and subcontractor agreements . . . make clear that Ideogenics

                                                 12
       will not only manage the contract, but will be ultimately responsible for
       performance by both its employees and those of its subcontractors. Furthermore,
       all contract staff, regardless of their employer, are subordinate to Ideogenics’
       Contract Manager. Therefore, Ideogenics is not unusually reliant upon         or
                   with regard to staffing or managing contract performance.

       Similarly, . . . nothing in the record suggests that the decision to award to Ideogenics
       was due to the experience of its proposed subcontractors. . . . Ideogenics’ past
       performance discusses the successful performance of two contracts for financial
       portfolio management and reconciliation services. One of these contracts also
       involved loan support services. While the past performance statements of both
               and                evidence extensive experience in mortgage loan servicing,
       nothing in the record suggests that the [Contracting Officer’s] decision to award to
       Ideogenics was based on the experience of its proposed subcontractors. Absent
       such a finding, the [Contracting Officer’s] decision to award to Ideogenics
       constitutes a determination that it has the relevant experience necessary to win the
       contract. . . . Thus, Ideogenics is not unusually reliant upon            or
       with regard to its relevant experience in performing similar contracts.

Tab 25, AR 1631–33.

   F. On August 23, 2017, Equity Mortgage Solutions, LLC Filed An Appeal Of The Small
      Business Administration Area Office’s Size Determination.

        On August 23, 2017, EMS filed an appeal of the SBA Area Office’s size determination
with the SBA OHA. Tab 26, AR 1641. Thereafter, the SBA OHA sent the HUD Contracting
Officer a “Fax-Back Memo” that requested information regarding the Solicitation and the
applicable NAICS Code. Tab 27, AR 1674. On August 24, 2017, the SBA OHA instructed the
Contracting Officer to provide a copy of the Solicitation, with all amendments, and complete the
Fax-Back Memo.12 Tab 28, AR 1675–76. In addition, the Contracting Officer was invited to file
a substantive response to the appeal. Tab 28, AR 1676.

       On September 7, 2017, EMS requested leave from the SBA OHA to file a supplemental
appeal adding that the SBA Area Office erred in concluding that Ideogenics would perform the

       12
           SBA regulations require that the Contracting Officer, in response to an appeal to the
SBA OHA of a SBA Area Office size determination, provide a copy of the Solicitation and all
amendments. See 13 C.F.R. § 134.306(b) (“[T]he procuring agency contracting officer must
immediately send to [the SBA] OHA an electronic link to or a paper copy of both the original
solicitation relating to that procurement and all amendments.”). In addition, SBA regulations also
provide that “[e]vidence not previously presented to the [SBA] Area Office [that] issued the size
determination being appealed will not be considered,” unless the SBA OHA sua sponte “orders
the submission of such evidence” or the party files and serves a motion “establishing good cause
for the submission of such evidence.” Id. § 134.308(a). In this case, the Administrative Record
does not include any response or completed copy of the Fax Back Memo. The SBA Area Office
file, however, includes a copy of the amended Solicitation. Tabs 22, 26–51.

                                                 13
      that Ideogenics also planned to hire from        . . . . Nor has Ideogenics identified
      any proposed employees that are not current employees of                or           .
      Accordingly, because Ideogenics proposed to staff Ideogenics’[] portion of the
      contract entirely with personnel hired from          and             , the Area Office
      clearly erred in concluding that the second factor is not met.

Tab 44, AR 2758, 2774.

      As to Ideogenics’ argument about Executive Order 13495, the SBA OHA observed:

      Ideogenics’[] proposal . . . does not refer to Executive Order [13495], but instead
      suggests that employees would simply
                     the incumbent contract, and thus would be
                                                                . . . Such an approach is
      equivalent to adopting the incumbent workforce en masse. Modus Operandi, SBA
      No. SIZ-5716, [2016 WL 921996,] at [*]12 [(Feb. 19, 2016)]. Moreover, [the SBA]
      OHA has repeatedly addressed Executive Order [13495] in the context of the
      DoverStaffing line of cases, and has explained that “the Executive Order does not
      apply to managerial personnel, and does not mandate that a successor contractor
      will rely upon the incumbent for its entire workforce.” Prof’l Sec. [Corp.], SBA
      No. SIZ-5548, [2014 WL 1743488,] at [*]9 [Apr. 14, 2014).] . . . Notwithstanding
      Executive Order [13495], then, a prime contractor may still run afoul of the
      ostensible subcontractor rule when – as here – it “proposes to rely [on a
      subcontractor] for virtually all staffing, including both managerial and non-
      managerial employees, and without contributing [the prime contractor’s] own
      employees or other value to the project beyond [its] small business status.” Id.

Tab 44, AR 2776.

       The SBA OHA, however, found that the SBA Area Office findings were clearly
erroneous, because it:

      did not request, or obtain, information as to what impact Ideogenics’[] past
      performance had on the source selection, or how the procuring agency evaluated
      Ideogenics’[] past performance relative to that of         and            . Given
      this absence of information, the [SBA] Area Office could only speculate as to
      whether         and               past performance played a significant role in the
      award decision, and [the SBA] OHA has made clear that an ostensible
      subcontractor analysis cannot be based on “mere speculation.” Automation
      Precision Tech.[, LLC], SBA No. SIZ-5850, [2017 WL 4127686,] at [*]18 [(Sept.
      6, 2017)]. Moreover, the [SBA] Area Office overlooked indications in the record
      that Ideogenics lacks relevant experience. Although the RFP directed offerors to
      submit “all relevant past performance performed in the three year period
      immediately preceding submission of the proposal and all work currently being
      performed,” Ideogenics provided two past performance references for itself, neither
      of which involved mortgage loan servicing. . . . Further, Ideogenics identified no
      additional relevant projects in response to the [June 13, 2017 SBA Area Office

                                               15
       letter.] According to Ideogenics’[] . . . SBA Form 355, Ideogenics’[] primary
       industry is in NAICS [C]ode 541511, Custom Computer Programming Services,
       and Ideogenics does not generate revenues under the NAICS [C]ode assigned to
       this procurement, 522390, or under other NAICS [C]odes within NAICS Sector
       52 – Finance and Insurance. . . . Further, Ideogenics’[] proposal repeatedly
       emphasized           and                 experience in performing the incumbent
       contract but did not state that Ideogenics itself brings such experience[.]
       Accordingly, the Area Office clearly erred in determining that the fourth factor in
       the DoverStaffing line of cases is not met. Although the record does not establish
       whether or not the subcontractors’ past performance played a major role in the
       award decision, the fourth factor of the test is nevertheless met because Ideogenics
       “lacks experience in the principal subject matter of this procurement.” Modus
       Operandi, [2016 WL 921996,] at [*]12; see also DoverStaffing, [2011 WL
7101064,] at [*]9.

Tab 44, AR 2774–75 (bold and italics in original) (some citations omitted).

       Next, the SBA OHA reasoned that, based on the non-employment provision,

       it is not evident that Ideogenics would be able to carry out its plan to hire its
       workforce from its subcontractors, raising the possibility that these personnel
       would remain subcontractor employees, and that no Ideogenics personnel would be
       involved in performing the contract. In this respect, the instant case is similar to
       [the SBA] OHA’s decision in . . . Four Winds Services, Inc., SBA No. SIZ-5260,
       [2011 WL 3159674,] at [*]5 ([Jul. 18,] 2011) . . . where [the SBA OHA] found that
       the challenged firm’s proposal was so ambiguous that it was “unclear whether [the
       prime contractor] proposed to provide any contract employees at all” and that “[i]f
       [the prime contractor] cannot provide contract employees, it cannot be performing
       the primary and vital contract requirements.” Likewise, in the instance case,
       Ideogenics has not explained how its plan to hire subcontractor personnel can be
       reconciled with the terms of the subcontracts.

Tab 44, AR 2775 (some alterations in original).

       Therefore, the SBA OHA concluded that, since the subcontracts at issue did not

       prevent or restrict Ideogenics from managing and supervising its subcontractors’
       work, this is suggestive of unusual reliance. It is settled law that “[a]mong the main
       considerations in ostensible subcontractor analysis [is] which concern will be
       managing the contract.” DoverStaffing, [2011 WL 7101064], at [*]8. . . . Second,
       the subcontracts also provide that subcontractor employees “shall be under the
       employment, and ultimate control, management, and supervision of the
       Subcontractor.”

                                                16
                                         *       *       *
        [In fact, four] of the proposed six key personnel, as well as many of the mid-level
        managerial staff, will be subcontractor employees, and the terms of the subcontract
        agreements appear to restrict Ideogenics from directly managing its subcontractors
        or from hiring the proposed Contract Manager and Alternate Contract Manager,
        who are current           employees. . . . Ideogenics’[] CEO appears to be the only
        current Ideogenics staff member referenced in its proposal, but he has no major role
        on the contract beyond interfacing with the Contract Manager, Alternate Contract
        Manager, and the [ESG], which . . . is merely an advisory committee conforming
        to ordinary contractor meeting practices. Sections II.B and II.H[.] [The SBA] OHA
        has held that tangential involvement by the prime contractor’s senior leadership is
        insufficient to dissipate unusual reliance on a subcontractor.”

Tab 44, AR 2775–77 (some citations omitted) (some alterations in original).

       In light of the foregoing, the SBA OHA ruled that Ideogenics violated the “ostensible
subcontractor rule,” as it was “unusually reliant” on       and            to perform the contract,
was “affiliated” with           and             , and not a “small business,” under NAICS Code
522390. Tab 44, AR 2777 (citing DoverStaffing LLC, 2011 WL 7101064). In addition, the SBA
OHA denied Ideogenics’ September 18, 2017 motion for leave to submit the                 , because
“Ideogenics [did] not establish[] good cause to admit new evidence,” as it was not submitted to
the SBA Area Office nor relevant. Tab 44, AR 2772.

      H. On November 22, 2017, The Department Of Housing And Urban Development
         Terminated The Contract Awarded To Ideogenics LLC.

      On November 22, 2017, HUD terminated the contract awarded to Ideogenics, based on
convenience. Tab 9, AR 614.

II.     PROCEDURAL HISTORY.

        On December 13, 2017, Ideogenics filed, under seal, a Complaint in the United States
Court of Federal Claims. ECF No. 1. On that same day, Ideogenics also filed, under seal, a
Proposed Redacted Complaint. ECF No. 4. In addition, Ideogenics filed the following: (1) a
Motion For Temporary Restraining Order And Preliminary Injunction (ECF No. 5) and a
Memorandum In Support Of Motion For Temporary Restraining Order And Preliminary
Injunction (ECF No. 6); (2) a Motion For Leave To Exceed Page Limit Of Complaint, pursuant to
Rule of the United States Court of Federal Claims (“RCFC”) 5.4(b) (ECF No. 10); (3) a Motion
For Leave To File Under Seal the December 13, 2017 Complaint and the December 13, 2017
Memorandum In Support Of Motion For Temporary Restraining Order (ECF No. 8); and (4) a
Motion For Protective Order. ECF No. 9.

       On December 14, 2017, EMS filed an Unopposed Motion To Intervene, pursuant to RCFC
24(a). ECF No. 12. On that same day, a telephone status conference was convened. In addition,
the court granted Ideogenics’ December 13, 2017 Motion For Leave To File Under Seal and
denied, as moot, Ideogenics’ December 13, 2017 Motion For Leave To Exceed Page Limit. ECF
No. 14. The court also denied Ideogenics’ Motion For A Temporary Restraining Order And

                                                17
Preliminary Injunction (ECF No. 15), granted EMS’s Unopposed Motion To Intervene (ECF No.
16), and granted Ideogenics’ Motion For Protective Order. ECF No. 18. On that same day,
Ideogenics also filed a Motion For Leave To Amend/Correct The Proposed Redacted Complaint.
ECF No. 19.

     On December 21, 2017, the parties filed a Joint Status Report And Proposed Schedule.
ECF No. 23.

      On January 12, 2018, the Government filed a Motion For Leave To File Administrative
Record, together with a CD copy. ECF No. 27. On January 16, 2018, the court granted the
Government’s January 12, 2018 Motion. ECF No. 28.

        On February 5, 2018, Ideogenics filed a Motion For Judgment On The Administrative
Record. ECF No. 31. On February 27, 2018, the Government filed an Unopposed Motion
requesting an additional four (4) days to file a Response and Cross-Motion For Judgment On The
Administrative Record. ECF No. 32. On that same day, the court granted the Government’s
Unopposed Motion. ECF No. 33. On February 28, 2018, the court also issued another Scheduling
Order, that extended the deadlines for Ideogenics to file a Reply And Response to Cross-Motions
and for the Government and EMS to file any Reply. ECF No. 34.

        On March 5, 2018, EMS filed a Response and Cross-Motion For Judgment On The
Administrative Record (“Int. Resp.”). ECF No. 35. On that same day, the Government also filed
a Response And Cross-Motion For Judgment On The Administrative Record (“Gov’t Resp.”).
ECF No. 36. On March 15, 2018, the parties filed an Amended Joint Status Report. ECF No. 37.
On March 16, 2018, Ideogenics filed a Response And Reply to the Government’s and EMS’s
Responses and Cross-Motions (“Pl. Reply”). ECF No. 38. On March 27, 2018, the Government
filed a Reply to Ideogenics’ March 16, 2018 pleadings (“Gov’t Reply”). ECF No. 39. On that
same day, EMS also filed a Reply to Ideogenics’ March 16, 2018 pleadings (“Int. Reply”). ECF
No. 40.

III.   DISCUSSION.

       A.      Subject Matter Jurisdiction.

        Subject matter jurisdiction is a threshold issue that a court must determine at the outset of
a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998) (“The requirement
that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the
judicial power of the United States’ and is ‘inflexible and without exception.’” (quoting Mansfield,
C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884))).

        Pursuant to the Tucker Act, as amended by the Administrative Dispute Resolution Act,
Pub. L. No. 104-320 § 12, 110 Stat. 3870, 3874 (Oct. 19, 1996), the United States Court of Federal
Claims has jurisdiction

       to render judgment on an action by an interested party objecting to a solicitation by
       a Federal agency or proposals for a proposed contract or to a proposed award of a
       contract or any alleged violation of statute or regulation in connection with a

                                                 18
       procurement or a proposed procurement. . . . [T]he United States Court of Federal
       Claims . . . shall have jurisdiction to entertain such an action without regard to
       whether suit is instituted before or after the contract is awarded.

28 U.S.C. § 1491(b)(1).

       The United States Court of Appeals for the Federal Circuit has held that the United States
Court of Federal Claims has jurisdiction, pursuant to 28 U.S.C. § 1491(b)(1), to review SBA OHA
decisions. See Palladian Partners, Inc. v. United States, 783 F.3d 1243, 1254 (Fed. Cir. 2015).

        In this case, the December 13, 2017 Complaint alleges that the SBA OHA’s: (1)
interpretation of Executive Order 13495 is contrary to law, without a rational basis, and arbitrary
and capricious (Compl. ¶¶ 55–69); (2) evaluation of Ideogenics’ past performance is contrary to
law, without a rational basis, and arbitrary and capricious (Compl. ¶¶ 70–84); (3) interpretation of
Ideogenics’                        is contrary to law, without a rational basis, and arbitrary and
capricious (Compl. ¶¶ 85–99); (4) exclusion of evidence, despite good cause, is contrary to law,
without a rational basis, and arbitrary and capricious (Compl. ¶¶ 100–107); (5) assessment of
Ideogenics’ management control is contrary to law, without a rational basis, and arbitrary and
capricious (Compl. ¶¶ 108–121); and (6) application of SBA OHA precedent and consideration
“other indicia” of unusual reliance is contrary to law, without a rational basis, and arbitrary and
capricious (Compl. ¶¶ 122–134). If the SBA OHA’s decision is, in fact, contrary to law, without
a rational basis, or is arbitrary and capricious, Ideogenics may be eligible for contract award,
pursuant to the Solicitation.

       For these reasons, the court has determined that it has subject matter jurisdiction, under 28
U.S.C. § 1491(b)(1), to adjudicate the allegations in the December 13, 2017 Complaint challenging
the merits of the SBA OHA’s November 16, 2017 decision.

       B.      Standing.

        Standing is a threshold jurisdictional issue. See Warth v. Seldin, 422 U.S. 490, 498 (1975)
(“[Standing] is the threshold question in every federal case, determining the power of the court to
entertain the suit.”). The party invoking federal jurisdiction bears the burden of establishing
standing. See Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (“The plaintiff, as the party
invoking federal jurisdiction, bears the burden of establishing the[] elements [of standing].”); see
also Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (same). To meet this burden at the
pleading stage, the complaint must clearly and specifically set forth facts sufficient to satisfy the
standing requirements. See Spokeo, Inc., 136 S. Ct. at 1547 (“Where, as here, a case is at the
pleading stage, the plaintiff must ‘clearly . . . allege facts demonstrating’ each element.”); see also
McKinney v. U.S. Dep’t of Treasury, 799 F.2d 1544, 1557 (Fed. Cir. 1986) (“The facts alleged in
the complaint, taken as true for purposes of a standing analysis, must be sufficient to show that a
party has suffered, or is likely to suffer, an injury in fact.”); 15-101 MARTIN H. REDISH, MOORE’S
FEDERAL PRACTICE § 101.31 (2018), LEXIS (“To meet its burden at the pleading stage, the litigant
invoking federal jurisdiction must clearly and specifically set forth facts sufficient to satisfy the
standing requirement.”).

                                                  19
         The standing requirements of Article III of the United States Constitution also apply to the
United States Court of Federal Claims. See Anderson v. United States, 344 F.3d 1343, 1350 n.1
(Fed. Cir. 2003) (holding that the United States Court of Federal Claims, “though an Article I
court, . . . applies the same standing requirements enforced by other federal courts created under
Article III”). Therefore, to establish standing, a plaintiff must show: (1) it has suffered an “injury
in fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or
hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it
is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
See Figueroa v. United States, 466 F.3d 1023, 1029 (Fed. Cir. 2006) (“To establish standing, a
plaintiff must show that he suffered an injury-in-fact that is both fairly traceable to the challenged
conduct of the defendant and likely redressable by a favorable judicial decision.”).

        The December 13, 2017 Complaint alleges that Ideogenics was awarded a contract,
pursuant to HUD Solicitation No. DU208WR-17-R-0002. Compl. ¶¶ 1, 4, 23. HUD, however,
was compelled to terminate Ideogenics’ Contract, because the SBA OHA determined that
Ideogenics was not a “small business” and therefore was ineligible for an award under the
Solicitation. Compl. ¶¶ 7, 46. The SBA OHA’s November 16, 2017 decision caused Ideogenics
to “forfeit a business opportunity . . . worth $48,789,344.00.” Compl. ¶ 49. Accordingly,
Ideogenics suffered an injury in fact that is concrete, particularized, and actual, not conjectural or
hypothetical.

       Ideogenics’ injury also is fairly traceable to the SBA OHA’s decision, i.e., but for the SBA
OHA’s ruling that Ideogenics was “unusually reliant” on, and therefore “affiliated” with alleged
“ostensible subcontractors”           and              , Ideogenics’ contract would not have been
terminated. Compl. ¶¶ 46, 49.

        Ideogenics requests, as relief, that the court: (1) determine that the SBA OHA’s November
16, 2017 decision was arbitrary and capricious; (2) set aside the November 16, 2017 decision; and
(3) reverse and remand the size protest to the SBA OHA for a new decision. Compl. at 40–41.
Therefore, Ideogenics’ injury is redressable by a favorable decision remanding this case to the
SBA OHA.

        For these reasons, the court has determined that Ideogenics has standing to request that the
court adjudicate the claims alleged in the December 13, 2017 Complaint.

       C.      The Relevant Standards Of Review.

         The SBA OHA reviews an SBA Area Office’s size determination, “based on clear error of
fact or law.” 13 C.F.R. § 134.314. Under this standard of review, “[a] finding is clearly erroneous
when[,] although there is evidence to support it, the reviewing body on the entire evidence is left
with the definite and firm conviction that a mistake has been committed.” Concrete Pipe & Prods.
of Cal., Inc. v. Constr. Laborers Pension Tr. For S. Cal., 508 U.S. 602, 622 (1993) (internal
alterations and citation omitted); see also PGBA, LLC v. United States, 389 F.3d 1219, 1224 (Fed.
Cir. 2004) (same); Taylor Consultants, Inc., SBA No. SIZ-4775, 2006 WL 1484895, at *10 (Apr.
7, 2006) (same). The United States Supreme Court has described the “clearly erroneous” standard
as significantly deferential. See Concrete Pipe, 508 U.S. at 623 (“[R]eview under the ‘clearly
erroneous’ standard is significantly deferential.”). But, the United States Supreme Court has

                                                  20
instructed lower courts and tribunals that the “clearly erroneous” standard “does not entitle a
reviewing [body] to reverse the finding of the trier of fact simply because it is convinced that it
would have decided the case differently.” Anderson v. City of Bessemer City, 470 U.S. 564, 573
(1985). Nor does the “clearly erroneous” standard permit the reviewing body to “duplicate the
role” of the trier of fact by reviewing the decision de novo. Id. (“In applying the clearly erroneous
standard . . . , the [reviewing body] must constantly have in mind that their function is not to decide
factual issues de novo.”). Instead, “[i]f the [trier of fact’s] account of the evidence is plausible in
light of the record viewed in its entirety, the [reviewing body] may not reverse it[.]” Id. at 573–
74. Moreover, “[w]here there are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.” Id. at 574. This is true, “even when the [trier of fact’s]
findings do not rest on credibility determinations, but are based instead on physical or documentary
evidence or inferences from other facts.” Id.

        The United States Court of Federal Claims is authorized to review challenges to agency
decisions, pursuant to the standards set forth in the Administrative Procedure Act (“APA”), 5
U.S.C. §§ 551–559, 701–706 (2012). 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.”); see also 5 U.S.C. § 706(2)(A) (“The reviewing court shall . . . hold
unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law[.]”).

        The United States Court of Appeals for the Federal Circuit has held that the court’s primary
responsibility is to determine whether a federal agency violated a federal statute or regulation and
whether any such violation was prejudicial. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d
1374, 1381 (Fed. Cir. 2009) (holding that the plaintiff “must show a clear and prejudicial violation
of applicable statutes or regulations”) (internal quotation marks and citations omitted); see also
Banknote Corp. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (holding that, when
challenging a government contract procurement due to a violation of law or procedure, “the
disappointed bidder must show a clear and prejudicial violation of applicable statutes or
regulations”) (citations omitted).

         If a federal agency’s decision is challenged, because it was made without a rational basis,
the trial court’s focus is “whether the . . . agency provided a coherent and reasonable explanation
of its exercise of discretion, so that the [plaintiff] bears a heavy burden of showing that the . . .
decision had no rational basis.” Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed.
Cir. 2009); see also Savantage Fin. Servs., Inc. v. United States, 595 F.3d 1282, 1287 (Fed. Cir.
2010) (“We must sustain an agency action unless the action does not evince rational reasoning and
consideration of relevant factors.”) (internal quotation marks, alterations, and citations omitted);
Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1368–69 (Fed. Cir. 2009) (“We have stated
that procurement decisions invoke highly deferential rational basis review. . . . Under that standard,
we sustain an agency action evincing rational reasoning and consideration of relevant factors.”)
(internal quotation marks, alterations, and citations omitted).

       When a court reviews whether a federal agency’s decision is arbitrary and capricious, it
examines whether an agency “entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the evidence before the agency, or [the
decision] is so implausible that it could not be ascribed to a difference in view or the product of

                                                  21
agency expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43 (1983); see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353,
1358 (Fed. Cir. 2015) (“We . . . apply the same ‘arbitrary and capricious’ standard of review set
forth in the [APA], as did the Claims Court[, in reviewing a decision by the SBA OHA].”).

       D.      Whether The Small Business Administration’s Decision That Ideogenics
               LLC Was Not A “Small Business” Was Contrary To Law, Not Rational, Or
               Arbitrary And Capricious.

               1. Because It Misapplied Precedent And Considered “Other Indicia” Of
                  Unusual Reliance (Count VI).

                       a.      Ideogenics LLC’s Argument.

        Ideogenics argues that the SBA OHA “mechanically adopted and erroneously applied” a
four-factor test developed in DoverStaffing, although the SBA OHA utilized a seven-factor test in
the past.14 Pl. Mot. at 29 (citing Taylor Consultants, Inc., 2006 WL 1484895, at *12+ (“These
seven factors are now almost twenty years old; they are neither exclusive nor
exhaustive. . . . Therefore, while it is acceptable to consider the seven factors, the [SBA] Area
Office must evaluate the totality of the circumstances as it effectively did here.”)).15 By applying
the DoverStaffing four-factor test, the SBA OHA failed to consider the following issues identified
in the D.P. Associates seven-factor test: (1) the distribution of work between the prime and
subcontractors; (2) who will manage the contract; (3) who has the higher skilled, more expensive
staff; and (4) who wrote the proposal. Pl. Mot. at 30. As a result of a “crabbed interpretation of
the relevant law and arbitrary evaluation of facts,” the SBA OHA arbitrarily ruled that Ideogenics
was unduly reliant on, and therefore was affiliated with         and              and therefore not a
“small business,” under the “ostensible subcontractor rule.” Pl. Mot. at 33.

       14
            Ideogenics’ February 5, 2018 Motion For Judgment On The Administrative Record
generically refers to a “seven-factor test.” Pl. Mot. at 30. The court’s research revealed that the
seven-factor test was first adopted in D.P. Associates, Inc., SBA No. 2719, 1987 WL 93680 (Aug.
7, 1987). The seven factors are: (1) “who will manage the contract;” (2) “which party possesses
the requisite background and expertise to carry out the contract;” (3) “which party ‘chased the
contract;’” (4) “what degree of collaboration was there on the bid or proposal;” (5) “are there
discrete tasks to be performed by each or is there commingling of personnel and material;” (6)
“what is the amount of work to be performed by each;” and (7) “which party performs the more
complex and costly contract functions.” D.P. Assocs., Inc., 1987 WL 93680, at *1–2. To avoid
confusion with the DoverStaffing four-factor test, the court hereinafter refers to the seven-factor
test as the “D.P. Associates seven-factor test.”
       15
          Ideogenics did not provide pinpoint citations for a number of the authorities cited in the
February 5, 2018 Motion For Judgment On The Administrative Record and the March 16, 2018
Reply. Likewise, the Government and EMS also occasionally omitted pinpoint citations.
Therefore, the court uses the notation “+” to indicate where a pinpoint citation has been provided
by the court.

                                                 22
                        b.      The Government’s Response.

        The Government responds that Ideogenics failed to show that SBA OHA precedent, after
DoverStaffing, changed the four-factor test, although it is not a “per se” test, as Ideogenics
contends. Gov’t Resp. at 35 (citing Charitar Realty, 2017 WL 542185, at *13 (“When [the
DoverStaffing] factors are present, violation of the ostensible subcontractor rule is more likely to
be found if the proposed subcontractor will perform 40% or more of the contract.”)). The SBA
OHA’s consideration of “other indicia” of “unusual reliance” reflected only that the SBA OHA
“recognized . . . that ‘engaging the incumbent as a subcontractor leads to heightened scrutiny of
the arrangement, but is not a per se violation’ of the ostensible subcontractor rule.” Tab 44, AR
2777 (quoting InGenesis, Inc., SBA No. SIZ-5436, 2013 WL 393479, at *16 (Jan. 28, 2013)). In
addition, the D.P. Associates seven-factor test is “neither exclusive nor exhaustive,” nor does it
“address ‘all aspects’ of the prime contractor/subcontractor relationship[.] Instead, [SBA] area
offices must, at a minimum, consider the aspects listed in 13 C.F.R. § 121.103(h)(4) and [may]
analyze factors outside of the [D.P. Associates test, only] if relevant.” TKTM Corporation, SBA
No. SIZ-4885, 2008 WL 541394, at *18–19 (Jan. 31, 2008). Therefore, DoverStaffing and its
progeny require that the SBA OHA consider “all aspects of the relationship between the prime and
subcontractor.” Gov’t Resp. at 36 (quoting DoverStaffing, 2011 WL 7101064, at *7). In this case,
the SBA OHA did so. Gov’t Resp. at 36 (citing Tab 44, AR 2776).

                        c.      Equity Mortgage Solutions, LLC’s Response.

        EMS adds that the SBA OHA “officially turned away from” the D.P. Associates seven-
factor test. Int. Resp. at 13 (citing C&C Int’l Comps. & Consultants, Inc., SBA No. SIZ-5082,
2009 WL 5485968, at *11–12 (Nov. 2, 2009) (“[H]enceforth, area offices should apply only the
all aspects standard to 13 C.F.R. § 121.103(h)(4) and make no size determination relying upon the
[D.P. Associates] test. . . . [That test] is not articulated in 13 C.F.R. § 121.103(h)(4), and its use is
no longer viewed as beneficial to the all aspects standard[.]”)). Given the SBA OHA’s “clear
rebuke” of the D.P. Associates seven-factor test, the SBA OHA’s decision in this case to apply the
DoverStaffing four-factor test was reasonable. Int. Resp. at 13.

                        d.      The Court’s Resolution.

        SBA regulations provide the following “general principles of affiliation:”

            (1) Concerns and entities are affiliates of each other when one controls or has
                the power to control the other, or a third party or parties controls or has the
                power to control both. It does not matter whether control is exercised, so
                long as the power to control exists.
            (2) [The] SBA considers factors such as ownership, management, previous
                relationships with or ties to another concern, and contractual relationships,
                in determining whether affiliation exists.
            (3) Control may be affirmative or negative. Negative control includes, but is
                not limited to, instances where a minority shareholder has the ability, under
                the concern’s charter, by-laws, or shareholder’s agreement, to prevent a
                quorum or otherwise block action by the board of directors or shareholders.

                                                   23
           (4) Affiliation may be found where an individual, concern, or entity exercises
               control indirectly through a third party.
           (5) In determining whether affiliation exists, [the] SBA will consider the
               totality of the circumstances, and may find affiliation even though no single
               factor is sufficient to constitute affiliation.

13 C.F.R. § 121.103(a)(1)–(5).

       The “ostensible subcontractor rule” provides that

       [a] contractor and its ostensible subcontractor are treated as joint venturers, and
       therefore affiliates, for size determination purposes. An ostensible subcontractor is
       a subcontractor that is not a similarly situated entity, as that term is defined in [13
       C.F.R.] § 125.1 . . . , and performs primary and vital requirements of a contract, or
       of an order, or is a subcontractor upon which the prime contractor is unusually
       reliant.

Id. § 121.103(h)(4) (italics added).

      To determine whether a prime contractor is “unusually reliant” on a subcontractor, a SBA
Area Office is required to make findings regarding

       [a]ll aspects of the relationship between the prime and subcontractor . . . including,
       but not limited to, the terms of the proposal (such as contract management, technical
       responsibilities, and the percentage of subcontracted work), agreements between
       the prime and subcontractor (such as bonding assistance or the teaming agreement),
       and whether the subcontractor is the incumbent contractor and is ineligible to
       submit a proposal because it exceeds the applicable size standard for that
       solicitation.

Id. § 121.103(h)(4).

        In reviewing a SBA Area Office’s determination regarding “unusual reliance” and the
“ostensible subcontractor rule,” the SBA OHA may reverse a SBA Area Office’s determination
“based on clear error of fact or law.” Id. § 134.314. Under this standard of review, “[a] finding is
clearly erroneous when[,] although there is evidence to support it, the reviewing body on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.” Concrete
Pipe, 508 U.S. at 622 (internal alterations and citation omitted).

        In DoverStaffing, the SBA OHA considered the requirements of 13 C.F.R § 121.103(h)(4)
and identified four “key factors” that demonstrate “unusual reliance.” 2011 WL 7101064, at *7–
10. These factors are whether: (1) the subcontractor is an incumbent that is ineligible to compete
for the procurement; (2) the prime contractor intends to hire a majority of its workforce from the
subcontractor; (3) the prime contractor’s proposed management previously worked for the
subcontractor under the incumbent contract; and (4) the prime contractor has sufficient relevant
experience or must rely on the subcontractor to secure the contract. See id.; see also Charitar
Realty, 2017 WL 542185, at *13 (enumerating the DoverStaffing four-factor test); see also Modus
Operandi, Inc., 2016 WL 921996, at *12 (same). The four factors relate to issues of control,

                                                 24
management, and reliance, and are consistent with the general principle of affiliation requiring
consideration of “ownership, management, previous relationships with or ties to another concern,
and contractual relationships[.]” 13 C.F.R. § 121.103(a)(2).

          The DoverStaffing four-factor test, however, is not exclusive, and two or more firms may
be affiliated “even though no single factor is sufficient to constitute affiliation.” 13 C.F.R. §
121.103(a)(5). In this case, the SBA OHA considered the four DoverStaffing factors as well as
“other indicia” of “unusual reliance.” Tab 44, AR 2775 (“[T]he record in this case also contains
other indicia of unusual reliance, and thus arguably presents even stronger grounds for affiliation
than DoverStaffing itself.”). Although Ideogenics argues that the SBA OHA was required to apply
the D.P. Associates seven-factor test, that test is “not articulated in 13 C.F.R. § 121.103(h)(4), and
its use is no longer viewed as beneficial to the all aspects standard explicitly set forth in 13
C.F.R. § 121.103(h)(4).” C&C Int’l Comps. & Consultants, Inc., 2009 WL 5485968, at *11–12;
see also C.E. Garbutt Constr. Co., SBA No. SIZ-5083, 2009 WL 3759784, at *5 (Nov. 2, 2009)
(“Ostensible subcontractor appeals are intensely fact specific because the facts underlying these
appeals are unique.”).

        Therefore, the SBA OHA’s consideration of the DoverStaffing four-factor test, together
with “other indicia” is consistent with 13 C.F.R. §§ 121.103(a)(5) and (h)(4), requiring
consideration of “all aspects of the relationship” between Ideogenics,   and             , and
the SBA OHA did not omit “an important aspect of the problem.” 13 C.F.R. § 121.103(h)(4); see
also State Farm, 463 U.S. at 43; Tab 44, AR 2773–77.

        For these reasons, the court has determined that the SBA OHA’s application of precedent
and consideration of “other indicia” of unusual reliance was not contrary to law, without a rational
basis, nor arbitrary and capricious.

                                                 25
                 2. Because It Misapplied Executive Order 13495 (Count I).

                        a.     Ideogenics LLC’s Argument.

         In a final rule implementing Executive Order 13495,16 the Federal Acquisition Regulatory
Council (“FAR Council”)17 stated that in all contracts, subject to the Service Contract Act of 1965
(“Service Contract Act”),18 contracting officers should include a clause requiring contractors to
provide incumbent employees, who will be terminated after the award of a new contract, the “right
of first refusal” of employment under a new contract. Pl. Mot. at 12–13 (citing 77 FED. REG.
75,766 (Dec. 21, 2012) (“Contracting [O]fficers are expected to work with their existing service
contractors and bilaterally modify their contracts, to the extent feasible, to include the clause at
FAR 52.222-17.”19). As to key personnel, the FAR Council observed, “[i]f the key person position

       16
            Executive Order 13495 provides:

       [S]ervice contracts and solicitations for such contracts shall include a clause that
       requires the contractor . . . under a contract that succeeds a contract for performance
       of the same or similar services at the same location, to offer those employees (other
       than managerial and supervisory employees) employed under the predecessor
       contract whose employment will be terminated as a result of the award of the
       successor contract, a right of first refusal of employment under the contract in
       positions for which they are qualified.

Exec. Order 13495, 74 FED. REG. 6,103 (Feb. 4, 2009) (italics added).
       In this case, Executive Order 13495 is relevant, because        was awarded a prior HUD
contract, where                                   . In this case, both of these companies were
proposed as subcontractors to Ideogenics, that would be performing under the new contract.
       17
          The FAR Council was established, pursuant to 41 U.S.C. § 1302(a), to “assist in the
direction and coordination of Government-wide procurement policy and Government-wide
procurement regulatory activities in the Federal Government.” 41 U.S.C. § 1302(a). The FAR
Council is comprised of the Administrator of the Office of Federal Procurement Policy, the
Secretary of Defense, the Administrator of the National Aeronautics and Space Administration,
and the Administrator of the General Services Administration. See id. § 1302(b).
       18
          The Service Contract Act applies to all contracts “entered into by the United States of
the District of Columbia in excess of $2,500, the principal purpose of which is to furnish services
in the United States,” and sets forth labor protections for employees who provide services
thereunder. See Service Contract Act of 1965, Pub. L. No. 89-286, 79 Stat. 1034 (codified as
amended at 41 U.S.C. §§ 6701–6707 (2012)).
       19
            FAR 52.222-17 provides, in relevant part,

       [t]he Contractor and its subcontractors shall, except as otherwise provided herein,
       in good faith offer those service employees employed under the predecessor
       contract whose employment will be terminated as a result of award of this contract
       or the expiration of the contract under which the service employees were hired, a

                                                 26
is covered by the [Service Contract Act], then a qualified employee of the predecessor contractor
must be given the right of first refusal.” Analysis of Public Comments, Federal Acquisition
Regulation; Nondisplacement of Qualified Workers Under Service Contracts, 77 FED. REG.
75,766, 75,768 (Dec. 21, 2012).

         In this case, HUD incorporated Executive Order 13495 into the Solicitation. Tab 22, AR
969, 991. Therefore, all qualified employees of                and           , including all key
personnel, were afforded the right to continue their employment in the same position under a new
contract. See Bering Straits Logistics Servs., LLC, SBA No. SIZ-5277, 2011 WL 5083238, at *7
(Sept. 2, 2011) (“The hiring of incumbent personnel is expected, required by Executive Order
[13495], and does not constitute undue reliance.”); see also Maywood Closure Co., SBA No. SIZ-
5499, 2013 WL 5492242, at *7 (Sept. 16, 2013) (no affiliation where a proposed Project Manager
under a new contract was an employee of the incumbent, but would become an employee of the
prime contractor on contract award). Therefore, the SBA OHA’s ruling in this case that Executive
Order 13495 authorizes only the hiring of non-managerial personnel of an incumbent “does not
reflect the black letter meaning and intent underlying” Executive Order 13495, because it does not
distinguish between managerial and key personnel. Pl. Mot. at 14.

        Therefore, Ideogenics concludes that it was contrary to law for the SBA OHA to
“disregard” Ideogenics’ compliance with Executive Order 13495 by not hiring employees en
masse from          and           . Pl. Mot. at 14–15.20 Specifically, Ideogenics extended offers
to two of the six managerial key personnel, who in turn signed letters of commitment, evidencing
that Ideogenics proposed “to hire incumbent workforce at the individual level.” Pl. Mot. at 15
(citing Tab 2, AR 410, 441, 444). Therefore, the SBA OHA’s ruling that Ideogenics intended to
hire the workforce of          and              en masse was contrary to law and arbitrary and
capricious. Pl. Mot. at 15.

                       b.      The Government’s Response.

       The Government responds that the “ostensible subcontractor rule” prohibits the hiring of
incumbent employees en masse and is consistent with Executive Order 13495, because it does not
“mandate that a successor contractor will rely upon the incumbent for its entire workforce.” Gov’t
Resp. at 13 (quoting Prof’l Sec. Corp., 2014 WL 1743488, at *9). In fact, Executive Order 13495
does not apply to managerial and supervisory employees. See Exec. Order 13495, 74 FED. REG.
6103–06 (Feb. 4, 2009) (“[T]he contractor . . . shall . . . offer those employees (other than
managerial and supervisory employees) . . . a right of first refusal of employment under this
contract[.]”). In addition, Ideogenics’ explanation that it hired employees individually, rather than
en masse, is not dispositive, because the SBA OHA correctly observed that, “a prime contractor
may still run afoul of the ostensible subcontractor rule when . . . it ‘proposes to rely upon [a

       right of first refusal of employment under this contract in positions for which the
       service employees are qualified.

48 C.F.R. § 52.222-17(b).
       20
            Ideogenics did not provide a citation to the Administrative Record to support this
argument.

                                                 27
subcontractor] for virtually all staffing, . . . and without contributing [its] own employees or other
value to the project beyond its small business status.’” Tab 44, AR 2776 (citing Prof’l Sec. Corp.,
2014 WL 1743488, at *9) (italics added).

       Ideogenics’ proposal also did not identify any existing Ideogenics employees who would
perform the HUD contract at issue; instead, every proposed employee was a current employee of
either       or            , neither of which was eligible to compete for this procurement, because
both were large businesses. Gov’t Resp. at 13 (citing Tab 44, AR 2774); see also Tab 21, AR 828;
Tab 22, AR 1300, 1302, 1323–24. Therefore, the SBA OHA correctly ruled that the SBA Area
Office’s finding that Executive Order 13495 and SBA precedent permitted an en masse hiring,
without violating the “ostensible subcontractor rule,” was clearly erroneous. Gov’t Resp. at 13.

                       c.      Equity Mortgage Solutions, LLC’s Response.21

        EMS adds that the SBA OHA “has routinely held that . . . Executive Order [13495] does
not allow a prime contractor to escape a finding of ostensible subcontractor affiliation based on its
en masse hiring of incumbent personnel.” Int. Resp. at 16 (citing Wichita Tribal Enters., SBA No.
SIZ-5390, 2012 WL 4208096, at *10 (Sept. 12, 2012) (“[T]he Executive Order does not apply to
managerial personnel, and does not mandate that a successor contractor will rely upon the
incumbent for its entire workforce. Thus, . . . when the alleged ostensible subcontractor is the
incumbent and the prime contractor proposes to hire, en masse, both the workforce and managerial
personnel of the alleged ostensible subcontractor, this may be grounds to conclude that the prime
contractor is unusually reliant upon the alleged ostensible subcontractor.”). Although Ideogenics’
proposal emphasized                               , without mentioning Executive Order 13495, the
SBA OHA nevertheless reasonably found a violation of the “ostensible subcontractor rule” based
on Ideogenics’ proposal. Int. Resp. at 17 (citing Tab 22, AR 1302, 1306; Tab 44, AR 2776;
DoverStaffing, 2011 WL 7101064, at *7 (“[A]n ostensible subcontractor case must be analyzed on
the basis of . . . the proposal at hand.”)).

       Because Ideogenics’ proposal represented that “

                ” the SBA OHA was satisfied that the second and third unusual reliance factors
were met. Int. Resp. at 15 (citing Modus Operandi, 2016 WL 921996, at *12 (ruling there was
“unusual reliance” where “Appellant proposed to staff . . . the project almost entirely with
personnel hired from [a subcontractor], and all non-managerial personnel would continue in the
‘same role’ that they performed on [the incumbent contract.]”)).

                       d.      Ideogenics LLC’s Reply.

        Ideogenics replies that it is not true that all contract employees would be hired from
and             , because the proposed                       is                            and not an
employee of            or               . Pl. Reply at 6 (citing Tab 2, AR 459). In addition,
differentiating between “key personnel” and “managerial and supervisory employees” under
Executive Order 13495 is problematic, because all key personnel must be given a right of first

       21
          Because EMS raises many of the same arguments as the Government, the court has
included only those that are not duplicative.

                                                 28
refusal. Pl. Reply at 6. In any event, it “

                        ” Pl. Reply at 6. The agreements Ideogenics entered into with            and
            require compliance with all applicable law, including Executive Order 13495. Tab 2,
AR 517. Therefore, Ideogenics “should not be punished for observing the law[,]” and it is
“contrary to law, . . . to deny the effect of . . . Executive Order [13495] simply because Ideogenics
did not mention Executive Order 13495 [in its proposal].” Pl. Reply at 7.

                        e.      The Government’s Reply.

        The Government replies that individuals designated as “key personnel” may or may not be
managerial or supervisory employees and that determines whether they are eligible to receive a
right of first refusal. Gov’t Reply at 4–5 (citing Analysis of Public Comments, Federal Acquisition
Regulation; Nondisplacement of Qualified Workers Under Service Contracts, 77 FED. REG.
75,766, 75,768 (Dec. 21, 2012) (“The definition of ‘service employee’ . . . provides, in part, that
it ‘does not include an individual employed in a bona fide executive, administrative, or
professional capacity[.] . . . [But, i]f the key person position is covered by the [Service Contract
Act], then a qualified employee of the predecessor contractor must be given the right of first
refusal.”)). In this case, even though the contract was subject to the Service Contract Act, the
Contract Manager and Alternate Contract Manager are “executive personnel who presumably
would not be covered by the Service Contract Act, regardless of whether they are designated as
key employees[,]” or whether their duties are managerial or supervisory. Gov’t Reply at 5 (citing
48 C.F.R. § 52.222-17(a) (excluding any person “employed in a bona fide executive,
administrative, or professional capacity”)). Therefore, “[n]othing in Ideogenics’ reply refutes (or
even meaningfully disputes) the key fact[]. . . that Ideogenics . . . [will] hir[e] a ‘large majority’ of
its workforce from its subcontractors.” Gov’t Reply at 2 (citing Tab 44, AR 2773).

       In addition, none of the cases on which Ideogenics relies stands for the proposition that the
“ostensible subcontractor rule” is not violated “merely because the prime contractor proposed to
hire particular subcontractor employees.” Gov’t Reply at 3 (italics added) (citing Tab 21, AR
828; Tab 22, AR 1300, 1302, 1323–24; Tab 44, AR 2774).

                        f.      Equity Mortgage Solutions, LLC’s Reply.

        EMS adds that the SBA OHA reasonably determined that Ideogenics was “affiliated” with
        and             , because the “ostensible subcontractor rule” is violated where the prime
contractor: (1) hired incumbent contractors as subcontractors; (2) proposed subcontracting 49% of
the work to those companies; (3) did not define the subcontract work on either a task or cost basis;
and (4) proposed retention of all of the incumbent management in the same positions as under the
prior contract. Int. Reply at 3 (citing CWU, Inc., SBA No. SIZ-5118, 2010 WL 2196619, at *17
(Mar. 26, 2010) (ruling the “ostensible subcontractor rule” was violated where a proposal exhibited
each of these characteristics). Although Ideogenics may disagree with the SBA OHA’s conclusion
that the record evidenced “unusual reliance” with regard to staffing, Ideogenics failed to show that
conclusion was arbitrary or capricious. Int. Reply at 9.

                                                   29
                        g.     The Court’s Resolution.

       The SBA Area Office found that “Ideogenics plan[ned] to hire subcontractor staff that
worked on the incumbent contract” and complied with Executive Order 13495. Tab 25, AR 1631.
The SBA Area Office also found that “Ideogenics’ proposal stipulates that the incumbent
managerial staff will be retained on an individual basis[,]” because “Ideogenics has executed
employment agreements for all key personnel” and “the proposal contains letters of commitment
from each of the key personnel[.]” Tab 25, AR 1632. Nevertheless, the SBA Area Office
concluded that “Ideogenics [was] not hiring a ‘large majority’ of its workforce from its
subcontractors[.]” Tab 25, AR 1633. Therefore, the SBA Area Office found that Ideogenics was
not “unusually reliant” on       and           for personnel. Tab 25, AR 1632–33.

        The SBA OHA, however, ruled that the SBA Area Office’s findings were clearly
erroneous, not only because Ideogenics’ proposal did not mention Executive Order 13495, but also
failed to follow a prior SBA OHA decision discussing its import. Tab 44, AR 2774, 2776 (citing
Prof’l Sec. Corp., 2014 WL 1743488, at *9 (“[The SBA] OHA has recognized that the hiring of
incumbent personnel should no longer be considered strong evidence of reliance, in light of . . .
Executive Order [13495] and widespread industry practice. . . . [T]he problem . . . is not merely
that Appellant proposed to offer a right of first refusal to [a subcontractor’s] employees, but rather
that Appellant, having selected [that company] as its sole subcontractor, proposed to rely on [it]
for virtually all staffing[.]”)); see also DoverStaffing, 2011 WL 7101064, at *7 (“[A]n ostensible
subcontractor case must be analyzed on the basis of the solicitation and the proposal at hand.”).
As the SBA OHA explained, Ideogenics proposed to hire                   individuals from          and
            , including            and 2 key personnel, but all other personnel would be          and
             employees and all proposed key personnel would continue in the same position as they
held under the incumbent contract. Tab 44, AR 2760 (summarizing proposal); see also Tab 2, AR
435 (Ideogenics’ proposal stating, “[A]ll of Team Ideogenics[’] proposed Key Personnel . . .
currently [were] working in the same or similar roles on the [incumbent contract].”). Therefore,
the SBA OHA concluded that, “Ideogenics [has not] identified any proposed employees that are
not current employees of             or           ” Tab 44, AR 2774.

        It is true that the SBA OHA did not discuss whether the term “key personnel” in the
Solicitation was the same as or different from “managerial or supervisory employees” in the text
of Executive Order 13495. Tab 44, AR 2776. The record, however, reflects that Ideogenics
sourced all staff from            and              (Tab 2, AR 408, 410), and belies Ideogenics’
representation that it only offered “individuals” the right of first refusal. Pl. Mot. at 15. Therefore,
the SBA OHA did not “entirely fail[] to consider” Executive Order 13495, but recognized that it
did not preclude finding that Ideogenics planned to hire a majority of the contract workforce from
        and             . Tab 44, AR 2776. As such, the SBA OHA considered the relevant record
evidence and provided a coherent explanation for ruling that the SBA Area Office clearly erred in
determining that Ideogenics would not hire a “large majority” of its workforce from                 and
            . Tab 44, AR 2774, 2776.

        For these reasons, the court has determined that the SBA OHA’s interpretation of
Executive Order 13495 and the record evidence that Ideogenics intended to hire a “large majority”
of the proposed workforce from        and            , was not contrary to law, without a rational
basis, nor arbitrary and capricious.

                                                  30
               3. Because It Failed to Consider Ideogenics LLC’s Past Performance
                  Information (Count II).

                       a.      Ideogenics LLC’s Argument.

        Next, Ideogenics argued that, together with         and             , it had the collective
past performance experience necessary to reduce program risk and provide quality services, e.g.,
Ideogenics: (1) provided information technology services for                                   ; (2)
performed financial reconciliation services for                                           ; and (3)
                                                                           . Pl. Mot. at 17 (citing
Tab 2, AR 462–64). Although the Contracting Officer and the SBA Area Office concluded that
Ideogenics satisfied the past performance requirements, the SBA OHA did not afford the SBA
Area Office findings deference, but instead independently concluded that Ideogenics performed
no work in the loan servicing industry. Pl. Mot. at 17–18 (citing Tab 3; Tab 4; Tab 25, AR 1632;
Tab 51, AR 2879). Therefore, the SBA OHA incorrectly concluded that the SBA Area Office
speculated about Ideogenics’ past experience. Pl. Mot. at 18. The SBA Area Office also
appropriately relied on information provided by Ideogenics, so it was improper for the SBA OHA
to make an independent responsibility determination.22 Pl. Mot. at 18.

        In addition, the SBA OHA concluded that the                           of Ideogenics’ past
performance references were not                                                         , although it
did not                                                        . Compare Tab 1, AR 128–29 (“The
offeror shall submit . . . all relevant past performance performed in the three year period
immediately preceding submission of the proposal and all work currently being performed[ and]
provide a narrative describing the past performance references that reflect the most relevance[.]”
(bold and italics in original)), with Spiral Sols. & Techs., 2011 WL 5009339, at *22 (“[B]ecause
offerors had discretion to propose any examples they considered relevant, the fact that Appellant
chose to propose only one example of a larger dollar value contract does not establish that no other
experience exists.”). The SBA OHA also inappropriately relied on Charitar Realty, because that
case concerned a procurement that defined “similar” past performance, instead of subcontractor
past performance information, as was the situation in this case. Pl. Mot. at 30–31.

        Although the Solicitation required coordination between the new contractor,             and
            , the SBA OHA penalized Ideogenics for discussing the advantages of subcontracting
with           and           . Pl. Mot. at 19 (citing Tab 22, AR 906–09; Tab 51, AR 2881). As
such, the SBA OHA acted contrary to Spiral Solutions and Technologies, wherein the SBA OHA
ruled that a proposal that discussed the benefits of a “qualified incumbent staff” did not evidence
that the prime contractor would be unusually reliant on a subcontractor. See Spiral
Sols. & Techs., 2011 WL 5009339, at *29. Instead, Ideogenics explained the benefits of hiring an
       22
          A responsibility determination is required by the FAR to be made only by the Contracting
Officer, who must determine that a prospective contractor has “adequate financial resources to
perform the contract, or the ability to obtain them,” is “able to comply with the required or
proposed delivery or performance schedule,” and has “a satisfactory performance record.” 48
C.F.R. § 9.104-1. The FAR also provides that a prospective contractor “shall not be determined
responsible or nonresponsible solely on the basis of a lack of relevant performance history, except
as provided in [48 C.F.R. §] 9.104-2.” Id.

                                                 31
experienced workforce. Pl. Mot. at 19 (citing Tab 51, AR 2881). Therefore, in ruling that
Ideogenics did not have relevant past performance experience, the SBA OHA made an improper
“responsibility determination,”23 because only the Contracting Officer can make such a
determination. Pl. Mot. at 20.

                      b.      The Government’s Response.

        The Government responds that the SBA OHA properly considered past performance
information as an element of an “ostensible subcontractor” analysis. Gov’t Resp. at 20–21.
Although the SBA OHA may not conduct a “broad inquiry into a firm’s capabilities,” it is
“appropriate [for the SBA OHA] to consider a prime contractor’s experience, as part of an
‘ostensible subcontractor’ analysis, [that is] relevant to whether the prime contractor can perform
independently from the subcontractor[.]” Assessment & Training Sols. Consulting Corp., SBA
No. SIZ-5228, 2011 WL 2164050, at *6 (Apr. 27, 2011).

        Although Ideogenics relies on Public Communications Services, Inc., SBA No. SIZ-5008,
2008 WL 5267230 (Oct. 17, 2008), that case did not determine that consideration of past
performance information by the SBA OHA was arbitrary and capricious. Gov’t Resp. at 22.
Instead, the SBA OHA in that case declined to consider a prime contractor’s financial ability to
perform, because that determination must be made by a Contracting Officer. Gov’t Resp. at 22
(citing Public Commc’ns Servs., 2008 WL 5267230, at *8). In this case, the SBA OHA “properly
identified record evidence indicating that Ideogenics lack[ed] the past performance experience to
perform independently from its subcontractors.” Gov’t Resp. at 22. Therefore, the SBA OHA’s
decision that SBA Area Office speculated about Ideogenics’ past performance was well-founded.
Gov’t Resp. at 24.

        In addition,         of Ideogenics’ past performance references involved
          , nor did Ideogenics identify other relevant projects, requested by the June 13, 2017 SBA
Area Office letter. Tab 44, AR 2761, 2775; see also Tab 22, AR 1354–56. Ideogenics’ primary
NAICS Code is 541511,24 but it did not generate any revenues under the Solicitation’s NAICS
Code, i.e., 522390, or any NAICS Code in the Finance and Insurance sector under which the
Solicitation was classified, so Ideogenics had no experience in mortgage loan servicing. Gov’t
Resp. at 14 (citing Tab 21, AR 806; Tab 44, AR 2775). Instead, Ideogenics’ proposal touted
and                experience in performing the incumbent contract. Gov’t Resp. at 14 (citing Tab
22, AR 1300–02, 1354, 1357–64). Therefore, the SBA OHA’s ruling that Ideogenics did not have

       23
          The FAR provides that “[p]urchases shall be made from, and contracts shall be awarded
to, responsible prospective contractors only[]” and that “[n]o purchase or award shall be made[,]
unless the contracting officer makes an affirmative determination of responsibility.” 48 C.F.R. §
9.103(a)–(b) (italics added); see also 48 C.F.R. § 9.104-1 (listing criteria to be determined
responsible).
       24
          NAICS Code 541511 “comprises establishments primarily engaged in writing,
modifying, testing, and supporting software to meet the needs of a particular customer.” See North
American Industry Classification System, U.S. CENSUS BUREAU, https://www.census.gov/eos/
www/naics/index.html (Under “NAICS Search,” enter “541511” and select “2017 NAICS
Search”).

                                                32
“experience in the principal subject matter of this procurement” was supported by the
Administrative Record. Tab 44, AR 2775 (quoting Modus Operandi, 2016 WL 921996, at *12
(ruling the “ostensible subcontractor rule” was violated where a contractor lacked relevant
experience and relied solely on subcontractor for that experience)).

                       c.      Equity Mortgage Solutions, LLC’s Response.25

       EMS responds that the June 13, 2017 SBA Area Office letter required Ideogenics to
“highlight its past experience in providing the services/tasks outlined in the solicitation,” but
Ideogenics provided no such information. Int. Resp. at 19–20 (citing Tab 18, AR 799; Tab 44, AR
2775; see also 13 C.F.R. § 121.1008(d) (permitting adverse inferences where a protested concern
does not provide requested information)). Instead, Ideogenics’ technical proposal relied on
and                                                      . Tab 22, AR 1302, 1305, 1323.

        The United States Court of Federal Claims has determined that the SBA OHA is the best
interpreter of the “ostensible subcontractor rule.” Int. Resp. at 20 (citing Mark Dunning Indus.,
Inc. v. United States, 58 Fed. Cl. 216, 225 (Fed. Cl. 2003) (“[The] SBA is the best interpreter of
its own regulations.”)). Therefore, Ideogenics’ past performance information is a relevant factor
in an “ostensible subcontractor” analysis. Int. Resp. at 20 (citing Prof’l Sec. Corp., 2014 WL
1743488, at *10 (rejecting an argument that considering the experience in an ostensible
subcontractor analysis “is in the nature of a responsibility determination,” because the SBA OHA
“has repeatedly held that it is appropriate to consider a prime contractor’s experience . . . because
such matters are relevant to whether the prime contractor can perform independently from the
subcontractor”)).

        In addition, this case is analogous to one where the prime contractor was an information
technology services provider with no experience in the required services, but proposed to
subcontract with an incumbent contractor, whose experience “resonate[d] throughout the
proposal.” Int. Resp. at 21 (quoting SM Res. Corp., SBA No. SIZ-5338, 2012 WL 1892211, at *3,
6–7 (Mar. 27, 2012)). In that case, the SBA OHA ruled that the prime contractor’s “limited
experience in contracts of this nature,” together with the fact that the proposal was “replete with
references to [the subcontractor’s] extensive experience in this field, and its performance as the
incumbent,” supported a finding of unusual reliance and violation of the “ostensible subcontractor
rule.” Int. Resp. at 21–22 (quoting SM Res. Corp., 2012 WL 1892211, at *12).

                       d.      Ideogenics LLC’s Reply.

        Ideogenics replies that it has sufficient past performance experience in mortgage loan
servicing, because the projects cited in its proposal required “
                                                                                                 ”
Pl. Reply at 7 (citing Tab 2, AR 463). Specifically, Ideogenics’ other past performance references
included: “                                                                                  ” and

                .” Tab 2, AR 464. In addition, the dollar value of Ideogenics’ past performance is

       25
         Because EMS raises many of the same arguments as the Government, the court has
included only those arguments that are not duplicative.

                                                 33
not relevant in an “ostensible subcontractor” analysis and cannot be dispositive. Pl. Reply at 8
(citing A-P-T Research, Inc., SBA No. SIZ-5798, 2016 WL 8198438 (Dec. 19, 2016)).26

                       e.      The Government’s Reply.

       The Government replies that relevant experience under an “ostensible subcontractor”
analysis differs from the prime and subcontractors’ combined experience that a Contracting
Officer considers in making a responsibility determination. Gov’t Reply at 7 (citing
Assessment & Training Sols. Consulting Corp., 2011 WL 2164050, at *6 (“[I]t is appropriate to
consider a prime contractor’s experience as part of an ‘ostensible subcontractor’ analysis, because
such matters are relevant to whether the prime can perform independently from the
subcontractor[.]”)).

                       f.      Equity Mortgage Solutions, LLC’s Reply.

       EMS adds that, although Ideogenics relies on A-P-T Research as support in arguing that
the dollar value of past performance efforts should not be dispositive in an “ostensible
subcontractor” analysis, that case is distinguishable, because the prime contractor had sufficient
experience in each category of work contemplated by the contract and therefore was not affiliated
with the subcontractor. Int. Reply at 10 (citing A-P-T Research, 2016 WL 8198438, at *12+
(“Unlike the situation in DoverStaffing, . . . [the company] has experience in each category of work
contemplated by the [contract], including several technical disciplines.”)).

                       g.      The Court’s Resolution.

        A prime contractor’s past experience is relevant to determining whether the “ostensible
subcontractor rule” is violated. See Assessment & Training Sols. Consulting Corp., 2011 WL
2164050, at *6 (ruling that “it is appropriate to consider a prime contractor’s experience as part of
an ‘ostensible subcontractor’ analysis, because such matters are relevant to whether the prime can
perform independently from the subcontractor”). In this case, the SBA Area Office found that
“nothing in the record suggests that the decision to award to Ideogenics was due to the experience
of its proposed subcontractors[,]” and that, “[a]bsent such a finding, the [Contracting Officer’s]
decision to award to Ideogenics constitutes a determination that it has the relevant experience
necessary to win the contract.” Tab 25, AR 1632. Therefore, the SBA Area Office found that
Ideogenics was not “unusually reliant” on           and             . Tab 25, AR 1632.

       On appeal, the SBA OHA ruled that, contrary to the SBA Area Office’s finding, the record
evidence did not support a conclusion that Ideogenics had the requisite experience. Tab 44, AR
2775. The SBA OHA’s decision did not focus on the Contracting Officer’s responsibility to
evaluate past performance, but on the fact that the record did not contain any past performance
evaluation, as the SBA Area Office failed to “request, or obtain, information as to what impact
Ideogenics’[] past performance had on the source selection, or how the procuring agency evaluated
Ideogenics’[] past performance relative to that of       and             .” Tab 44, AR 2774–75.

       26
          Ideogenics did not provide a pinpoint citation for this decision. The SBA OHA analysis
in that case, however, did not discuss the relevance of a past performance dollar value to the
“ostensible subcontractor rule.”

                                                 34
Without that information, the SBA OHA reasoned, that “the [SBA] Area Office could only
speculate as to whether       and              past performance played a significant role in the
award decision, and [the SBA] OHA has made clear that an ostensible subcontractor analysis
cannot be based on ‘mere speculation.’” Tab 44, AR 2774.

        Moreover, the SBA OHA explained that the record reflected that Ideogenics was required
to submit “all relevant past performance performed in the three year period immediately preceding
submission of the proposal and all work currently being performed[,]” and to “highlight . . . past
experience in [] providing the services/tasks outlined in the solicitation, including the name of the
agency, dates of performance[,] and a description of the services rendered and how it relates to the
instant procurement.” Tab 44, AR 2774–75 (quoting Tab 1, AR 129–30 (bold and italics in
original); Tab 18, AR 799). Ideogenics completed SBA Form 355, reporting that it primarily
performs work under NAICS Code 541511, i.e., “Custom Computer Programming Services,” but
Ideogenics did not list any work under NAICS Code 522390, i.e., “Other Activities Related to
Credit Intermediation”—the Solicitation’s assigned NAICS Code—or even the NAICS sector in
which the Solicitation was classified. Tab 44, AR 2775 (citing Tab 20, AR 806). The sole
reference to loan servicing experience in Ideogenics’ proposal represents that, “
                                                                                                    ”
Tab 2, AR 462. Although it is true that one Ideogenics project involved “financial portfolio
management” and the other “loan support,” no detailed information was provided. Tab 2, AR
463–64. Instead, the descriptions of relevant past performance include
                                                                Tab 2, AR 463–64.

        In reviewing the record that was before the SBA Area Office, the SBA OHA properly
evaluated whether Ideogenics’ proposal reflected prior experience in loan servicing. Tab 44, AR
2774–75. In doing so, the SBA OHA did not make a responsibility determination, i.e., a
prospective and “broad inquiry into a firm’s capabilities” to determine whether a contractor will
be able to perform the contract. Assessment & Training Sols., 2011 WL 2164050, at *6 (internal
quotation marks omitted); see also 48 C.F.R. § 9.104-1 (“To be determined responsible, a
prospective contractor must[, inter alia,]. . . have adequate financial resources to perform the
contract, or the ability to obtain them[;] be able to comply with the required or proposed delivery
or performance schedule[; and h]ave a satisfactory performance record[.]” (italics added)).

        Therefore, based on the record, the SBA OHA concluded that the SBA Area Office clearly
erred in finding that the fourth DoverStaffing factor was not met, i.e., that Ideogenics had
“experience in the principal subject matter of th[e] procurement[.]” Tab 44, AR 2775. As such,
the SBA OHA properly concluded, based “on the information . . . provided by the concern whose
size status is at issue,” Ideogenics did not have relevant experience, and was dependent on
and               for that experience. See 13 C.F.R. § 121.1009(d).27

       27
          This regulation requires that the SBA Area Office weigh the record evidence and make
findings “based primarily on the information supplied by the protestor or the entity requesting the
size determination and that provided by the concern whose size status is at issue.” 13 C.F.R. §
121.1009(b).

                                                 35
        For these reasons, the court has determined that the SBA OHA’s ruling that Ideogenics did
not have relevant past performance experience, was not contrary to law, without a rational basis,
nor arbitrary and capricious.

               4. Because It Misinterpreted Ideogenics LLC’s Agreements With
                                         and                         (Count III).

                       a.      Ideogenics LLC’s Argument.

        Ideogenics argues that teaming agreements are necessarily preliminary, because it is
industry practice to wait until after the prime contract is awarded before a formal subcontract is
negotiated and finalized. Pl. Mot. at 20–21. The record reflects that the
between Ideogenics and           and             were not final. Pl. Mot. at 21. Nevertheless, the
SBA OHA prematurely decided that the non-employment provision precluded Ideogenics from
hiring any employees and failed to recognize that the non-employment provision was subject to
further negotiations. Pl. Mot. at 21. Each of the                          requires both parties to
comply with all federal and state laws and executive orders; therefore, a non-employment
provision would be unenforceable, as it would prohibit Ideogenics from offering a right of first
refusal to incumbent employees and violate Executive Order 13495. Pl. Mot. at 21–22. But, even
if the non-employment provision is enforced to prevent Ideogenics from hiring employees from
        and            , Ideogenics nevertheless could find non-incumbent personnel to perform
the contract. Pl. Mot. at 22. Therefore, the SBA OHA’s conclusion that Ideogenics would not be
able to hire any employees to perform the work was an improper “responsibility determination.”
Pl. Mot. at 22–23. In addition, the SBA OHA failed to recognize that the
insured that Ideogenics could                           . Pl. Mot. at 23–24 (citing Tab 2, AR 510–
11, 527–28); see also LOGMET, LLC, SBA No. SIZ-5155, 2010 WL 4271505, at *8–9 (Oct. 6,
2010) (ruling that a prime contractor would perform the “primary and vital requirements” of the
contract, where it would do the majority of work, although the prime contractor and subcontractor
would perform identical services)).

                       b.      The Government’s Response.

         The Government responds that subcontracts are not “teaming agreements,” because they
are not “agreement[s] to enter into . . . [future] subcontract[s.]” Gov’t Resp. at 26 (citing Tab 22,
AR 1402, 1419; see also Cyberlock Consulting, Inc. v. Info. Experts, Inc., 939 F. Supp. 2d 572,
574–76, 581–82 (E.D. Va. 2013) (finding that a teaming agreement requires that the parties enter
into a second agreement after contract award)). Therefore, the SBA OHA correctly recognized
that characterizing the “agreements” in this case as                       “create[s] a problematic
ambiguity” that “cannot be reconciled with Ideogenics’                                       reflected
in its proposal.” Gov’t Resp. at 27–28 (citing Tab 22, AR 1408, 1410, 1425, 1427; Tab 44, AR
2775). In addition, Executive Order 13495 and FAR 52.222-17 require that the “right of first
refusal” must be offered to employees, only if their employment under a different contract will be
terminated, because of a new contract. Gov’t Resp. at 28 (citing Tab 22, AR 970). In this case,
the non-employment provision prevents Ideogenics from hiring the employees from                    and
            , so they would remain as employees of            and            . Gov’t Resp. at 28. If
these employees performed contract work, ipso facto, Ideogenics could not perform 51% of that
work. Tab 22, AR 1323–24, 1402–03, 1419–20. Therefore, the SBA OHA’s conclusion was

                                                 36
consistent with SBA OHA precedent that a prime contractor is “unusually reliant” on a
subcontractor, where “the challenged firm’s proposal was so ambiguous that it was ‘unclear
whether [the prime contractor] proposed to provide any contract employees at all[.]’” Tab 44, AR
2775 (quoting Four Winds Servs., Inc., 2011 WL 3159674, at *5).

                       c.      The Court’s Resolution.

        As previously discussed, when a size determination is requested, the SBA Area Office must
rely “primarily on the information supplied by the protestor or the entity requesting the size
determination and that provided by the concern whose size status is at issue[,]” and “including
reasonable inferences from the record[.]” 13 C.F.R. §§ 121.1009(b), (e). If a SBA Area Office
finding is challenged, the SBA Area Office is required to provide the SBA OHA with “the entire
case file relating to that determination.” Id. § 134.306(a). On appeal, the SBA OHA will examine
the record as a whole to determine whether the SBA Area Office findings are “plausible in light
of the record viewed in its entirety.” Anderson, 470 U.S. at 574. In addition, SBA regulations
require that, in conducting an “ostensible subcontractor” analysis, the content of any proposed
agreements between prime and subcontractors must be considered. See id. § 121.103(h)(4) (“All
aspects of the relationship are considered, including[] . . . agreements between the prime and
subcontractor[.]”).

        In this case, the SBA Area Office found that, “Ideogenics’ proposed subcontracting
agreements with both            and           state that any and all communication regarding the
contract shall be through Ideogenics” and concluded that Ideogenics was not “unusually reliant”
on         and             to perform the contract. Tab 25, AR 1630. The SBA OHA, however,
ruled that the SBA Area Office’s finding that Ideogenics was not “unusually reliant” on
and              was clearly erroneous, because Ideogenics only
                                                                              . Tab 44, AR 2760,
2775 (citing Tab 2, AR 507–39; Tabs 14–25, AR 711–1640). The SBA OHA also considered that
the subcontracts included a non-employment provision, but Ideogenics failed to reconcile that
provision with its plan to hire       and             employees to actually perform the contract.
Tab 44, AR 2775 (“Ideogenics has not explained how its plan to hire incumbent subcontractor
personnel can be reconciled with the terms of the subcontracts.”); see also Tab 2, AR 516, 533
(“The Parties mutually agree not to offer employment, nor accept for employment, each other’s
employees who are directly or indirectly associated with the work covered by this Subcontract[.]”).
Therefore, the SBA OHA reasonably concluded based on the record that it was not clear whether
Ideogenics itself could perform the work required under the contract. Tab 44, AR 2775.

       The agreements at issue also bear the title               and use the same term therein.
Tab 2, AR 510, 527. The term                          appears once in a recital, referring to it as a
separate agreement entered into by the parties. Tab 2, AR 510, 527. Although Ideogenics argued
to the SBA OHA that the terms                    and                         are interchangeable,
Ideogenics’ proposal described the agreements as
and                                      Tab 2, AR 436.

       Assuming, arguendo, that the agreements at issue were “teaming agreements” to be
negotiated in the future, it would have been improper for the SBA OHA to speculate as to what
terms would be negotiated. See 13 C.F.R. § 121.1009(e) (“The SBA will base its formal size

                                                 37
determination upon the record, including reasonable inferences from the record[.]”); see also id. §
134.225(b) (“The record . . . will consist of all pleadings, motions, and other non-evidentiary
submissions, all admitted evidence, all orders and decisions, and any transcripts of proceedings in
the case.”). The SBA OHA, however, determined that “it [was] not evident that Ideogenics would
be able to carry out its plan to hire its workforce from its subcontractors, raising the possibility that
these personnel would remain subcontractor employees, and that no Ideogenics personnel would
be involved in performing the contract.” Tab 44, AR 2775. In prior cases, the SBA OHA has
explained that, “the concern should be if the agreement itself creates undue reliance on the
subcontractor.” Maywood Closure Co., 2013 WL 5492242, at *8.

        In the alternative, Ideogenics argues that the SBA OHA’s ruling was arbitrary and
capricious, because the agreements guaranteed that Ideogenics would perform the majority of
work. Pl. Mot. at 23–24. But, Ideogenics failed to appreciate that the “ostensible subcontractor
rule” may be violated when either the prime contractor does not perform the “primary and vital
requirements of the contract,” or the prime contractor is “unusually reliant” on subcontractors. See
13 C.F.R. § 121.103(h)(4). In this case, the SBA OHA determined that whether Ideogenics
performed the “primary and vital requirements” of the contract was immaterial, because that fact
“does not preclude a finding [in this case] that Ideogenics [was] unusually reliant [on] its
subcontractors based on the DoverStaffing line of cases.” Tab 44, AR 2776 (italics added).

        For these reasons, the court has determined that the SBA OHA’s interpretation of
Ideogenics’ agreements with          and          was not contrary to law, without a rational
basis, nor arbitrary and capricious.

                5. Because It Incorrectly Assessed Ideogenics LLC’s Management Control
                   (Count V).

                        a.      Ideogenics LLC’s Argument.

       The proposal submitted to HUD represented that Ideogenics would maintain full control
over contract performance and program management. Pl. Mot. at 25–26 (citing Tab 2, AR 436
(“

             ”)). The record also evidences that Ideogenics’ CEO
                                                          Tab 2, AR 463, 574. Therefore, the
SBA OHA had no basis for concluding that Ideogenics’ CEO would not
                   . Pl. Mot. at 26.28 Likewise, the SBA OHA’s conclusion that the non-
employment provision prohibited Ideogenics from hiring the Contract Manager and Alternate
Contract Manager,
          , was not substantiated. Pl. Mot. at 27.

        28
         Ideogenics did not provide any citations to the Administrative Record to support this
argument.

                                                   38
        The SBA OHA also incorrectly analogized this case to Charitar Realty. Pl. Mot. at 30. In
that case, Charitar’s Program Manager did not report to anyone nor have a role in contract
performance; that is not the case here. Pl. Mot. at 31–32.29 In addition, DoverStaffing is not
controlling, because the proposal in that case “did not assign a major role to the [the contractor’s]
President; the subcontract provided for [shared] oversight authority between the prime contractor
and subcontractor; and the prime contractor intended to hire all of its key employees from the
subcontractor.” Pl. Mot. at 32 (citing DoverStaffing, Inc., 2011 WL 7101064, at *8–9). In contrast,
Ideogenics’ CEO will have final authority to control the Contract Manager and Alternate Contract
Manager. Tab 2, AR 435 (“Both of these individuals will be Ideogenics employees as stipulated
in section 4.5 of the RFP.”). In addition, the        and            agreements do not provide for
shared oversight authority with Ideogenics. Pl. Mot. at 32. Therefore, the SBA OHA erroneously
assumed that subcontractor involvement would impede Ideogenics’ control over contract
performance. Pl. Mot. at 26.

       Ideogenics’ proposal evidences that          and           will perform subordinate duties
but not exert significant control over contract performance. Tab 2, AR 431–32; see also A-P-T
Research, 2016 WL 8198438, at *11+ (ruling that where there was more than one subcontractor, a
lack of control by the prime contractor cannot be presumed). The SBA Area Office correctly
found that         and              would incur      % and     %, respectively, of the labor costs
under the contract; but, together they would receive only    % of the amount paid by HUD. Tab
25, AR 1630–31. Therefore, the agreements with             and             support the SBA Area
Office’s findings regarding labor costs and government payments, evidencing that Ideogenics’
management would be in control of contract performance. Pl. Mot. at 28 (citing Tab 2, AR 510–
11, 527–28; Tab 24, AR 1620–21). Accordingly, the SBA OHA’s ruling that Ideogenics would
not control contract performance was contrary to precedent and the record. Pl. Mot. at 28.

                       b.      The Government’s Response.

        The Government points out that, if Ideogenics cannot hire any employees, all employees
necessarily will be supervised by             and             , over which Ideogenics will have no
control. Gov’t Resp. at 33 (citing Pl. Br. at 26). Although Ideogenics touts the CEO’s past
professional experience as a                         , that does not evidence how he will exercise
management control on this contract. Gov’t Resp. at 33 (citing Tab 44, AR 2777 (discussing the
CEO’s relatively minor role)). Therefore, the SBA OHA reasonably concluded that “Ideogenics’[]
CEO appears to be the only current Ideogenics staff member referenced in its proposal, but he has
no major role on the contract beyond interfacing with the Contract Manager, Alternate Contract
Manager, and the         , which Ideogenics concedes is merely an advisory committee conforming
to ordinary contractor meeting practices.” Tab 44, AR 2777. The fact that Ideogenics has two
subcontractors, rather than one, also is not dispositive, because the awardee is the party responsible
for performance. See Competitive Innovations, LLC, SBA No. SIZ-5369, 2012 WL 8717518, at
*17+ (Sept. 17, 2012) (“The key issue is not that [the prime contractor] would utilize multiple
subcontractors, but that [the prime contractor] itself will have no role in performing the contract’s
primary and vital requirement.”).

       29
          Ideogenics did not provide any citations to the Administrative Record or to Charitar
Realty, 2017 WL 542185, to support this argument.

                                                 39
                        c.     Ideogenics LLC’s Reply.

        Ideogenics replies that after DoverStaffing, the SBA OHA has ruled that hiring key
personnel from subcontractors is not per se evidence of affiliation or undue reliance. Pl. Reply at
3 (citing InGenesis, Inc., 2013 WL 393479, at *15–16 (“[T]he use of two current [subcontractor]
employees . . . as key personnel does not create unusual reliance”); Maywood Closure Co., 2013
WL 5492242, at *9+ (determining entities were not affiliated, despite the fact that a subcontractor
employee was proposed as a project manager, because he would be employed by the prime
contractor after contract award); NVE, Inc., SBA No. SIZ-5638, 2015 WL 2342883, at *10+ (Feb.
6, 2015) (no undue reliance where the project manager was a prime contractor employee under the
control of the prime contractor’s President); Nat’l Sourcing, Inc., SBA No. SIZ-5305, 2011 WL
6183625, at *12+ (Dec. 7, 2011) (no undue reliance where mid-level managers who were
subcontractor employees nevertheless would be subordinate to the prime contractor)).

       In this case, the Contract Manager and Alternate Contract Manager are incumbent
employees, who will become Ideogenics employees after contract award and report to Ideogenics’
CEO at that time. Pl. Reply at 4. As such, the SBA OHA “failed to provide a rational explanation
as to why and how the incumbent subcontractors can control the            [,] once they become
[Ideogenics] employees[.]” Pl. Reply at 4. In fact, Ideogenics’ subcontracts with           and
            state that

                                                                                     Pl. Reply at 4
(quoting Tab 2, AR 518). Therefore, neither              nor             would exercise control over
these employees, because Ideogenics                                              . Pl. Reply at 4–5.

       Nor did the SBA OHA credit Ideogenics with having                               wherein
it would                                                                           , including
                                                           Pl. Reply at 5 (quoting Tab 2, AR
436). This “shows that Ideogenics not only would hire independent employees [if] incumbent
employees reject [an] employment offer, but also would
                                                                                            Pl.
Reply at 5 (italics in original). As Ideogenics explained,

                                Tab 2, AR 437.

                        d.     The Government’s Reply.

         The Government adds that, since Ideogenics also must rely on                         to provide
facilities for contract performance, it is clear that Ideogenics “bring[s] little to the contract beyond
[Ideogenics’] small business size status, when it is [using] both . . . staff and facilities from [the]
subcontractors.” Gov’t Reply at 10 (italics in original).

                                                  40
                       e.      Equity Mortgage Solutions, LLC’s Reply.

        EMS restated that Ideogenics’ proposal requires that the Contract Manager and Alternate
Contract Manager are                                                       so in fact, the CEO will
not have control over performance. Int. Reply at 4, 6–7 (citing Tab 22, AR 1302, 1306, 1309–10,
1327, 1328). In support, EMS refers to the                         that shows Ideogenics reporting
directly to the ESG, including subcontractor representatives. Int. Reply at 4–5 (citing Tab 2, AR
438; Tab 22, AR 1330). In addition, Ideogenics’ proposal does not show that the CEO will have
any control over performance, other than “being identified on the proposal’s cover page . . . and
referenced                                                   ” Int. Reply at 5 (citing Tab 22, AR
1290; Tab 22, AR 1354–55).

                       f.      The Court’s Resolution.

       The SBA Area Office found that Ideogenics would manage contract performance, because

       [Ideogenics’                  shows that the ultimate supervisory roles for contract
       performance, the Contract Manager and Alternate Contract Manager, will both be
       Ideogenics employees[,] [although] the mid-level supervisory staff . . . are all
       assigned to          [and]           . . . . Additionally, the proposal states that
       Ideogenics takes ultimate responsibility over all subcontractor action . . . and may
       take corrective action to remedy [poor performance]. It further stipulates that the
       Ideogenics Contract Manager is,
                                   Furthermore, Ideogenics’ proposed subcontracting
       agreements with both          and             state that any and all communication
       regarding the contract shall be through Ideogenics. Accordingly, the mid-level
       managers employed by            and               are subordinate to the Ideogenics
       Contract Manager who in turn reports . . . directly to [the] Ideogenics CEO.

                                          *      *       *
       [T]he proposed management approach and subcontractor agreements . . . make
       clear that Ideogenics will not only manage the contract, but will be ultimately
       responsible for performance by both its employees and those of its subcontractors.

Tab 25, AR 1629–32 (alteration in original).

        The SBA OHA, however, ruled that the SBA Area Office clearly erred in finding that
Ideogenics would manage contract performance on the basis that “the existing Contract Manager
and Alternate Contract Manager” will be “Ideogenics employees.” Tab 44, AR 2760–61, 2775;
Tab 2, AR 435. As EMS pointed out, Ideogenics’ proposal included a
             among Ideogenics,          , and            , and stated that “all of Team Ideogenics[’]
proposed Key Personnel are currently working in the same or similar roles on the [incumbent
contract]. Team Ideogenics has executed all employment agreements and Letters of Commitment
for all proposed key personnel.” Tab 2, AR 431–32, 435; Tab 44, AR 2760. The subcontracts
between Ideogenics and           and             also state that the “Subcontractor’s personnel who
are to perform the services shall be under the employment, and ultimate control, management, and
supervision of the subcontractor[,]” and prohibited Ideogenics from employing any current

                                                 41
or              employees. Tab 2, AR 516, 518, 533, 535; Tab 44, AR 2760–61. Therefore, the
SBA OHA reasonably concluded that, “[a]ccording to the proposal, the Contract Manager and
Alternate Contract Manager will be supervised by Ideogenics’[] [CEO, who] . . . . is assisted by
the [ESG], . . . includ[ing] representatives from . . . , and         .” Tab 44, AR 2760.

       Based on this evidence, the SBA OHA concluded that Ideogenics would not manage
contract performance, because the subcontracts at issue

       prevent or restrict Ideogenics from managing and supervising its subcontractors’
       work, [which] is suggestive of unusual reliance. It is settled law that “[a]mong the
       main considerations in ostensible subcontractor analysis [is] which concern will be
       managing the contract.” DoverStaffing, [2011 WL 7101064], at [*]8. . . . Second,
       the subcontracts also provide that subcontractor employees “shall be under the
       employment, and ultimate control, management, and supervision of the
       Subcontractor.”

                                          *      *       *
       [In fact, four] of the proposed six key personnel, as well as many of the mid-level
       managerial staff, will be subcontractor employees, and the terms of the subcontract
       agreements appear to restrict Ideogenics from directly managing its
       subcontractors or from hiring the proposed Contract Manager and Alternate
       Contract Manager, who are current                employees. . . . Ideogenics’[] CEO
       appears to be the only current Ideogenics staff member referenced in its proposal,
       but he has no major role on the contract beyond interfacing with the Contract
       Manager, Alternate Contract Manager, and the [ESG], which . . . is merely an
       advisory committee conforming to ordinary contractor meeting practices. . . . [The
       SBA OHA] has held that tangential involvement by the prime contractor’s senior
       leadership is insufficient to dissipate unusual reliance on a subcontractor.”

Tab 44, AR 2775–76 (some citations omitted) (italics added).

       Therefore, the SBA OHA properly relied on record evidence in ruling that the SBA Area
Office clearly erred in finding that Ideogenics would manage contract performance.

         Nevertheless, Ideogenics argues that A-P-T Research stands for the proposition that
collective support by more than one subcontractor precludes a finding that a prime contractor will
not control contract performance. Pl. Mot. at 8. A-P-T Research, however, does not stand for the
proposition that having multiple subcontractors prevents a prime contractor from being “unusually
reliant.” Instead, that case observed only that multiple subcontractors “reduce[] the likelihood that
[the contractor] will be reliant upon any one of them.” A-P-T Research, 2016 WL 8198438, at *13
(italics added). Therefore, the SBA OHA properly determined that “it is possible to find a violation
of the ostensible subcontractor rule[,] even when a prime contractor will utilize multiple
subcontractors.” Tab 44, AR 2777 (citing Competitive Innovations, LLC, SBA No. SIZ-5369,
2012 WL 8717518 (Sept. 25, 2012) (determining the “ostensible subcontractor rule” was violated
where the prime contractor proposed four subcontractors who would perform the majority of the
work)).

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       For these reasons, the court has determined that the SBA OHA’s ruling that Ideogenics was
“unusually reliant” on subcontractors to manage contract performance, was not contrary to law,
without a rational basis, nor arbitrary and capricious.

               6. Because It Excluded Evidence On Appeal And Ruled That Ideogenics LLC
                  Was “Unusually Reliant” On A Subcontractor For Facilities (Count IV).

                       a.      Ideogenics LLC’s Argument.

       Ideogenics argues that the SBA OHA violated 13 C.F.R. § 134.30830 by not admitting the
             to evidence that Ideogenics would pay a fair market price for the commercial facilities
required to perform the contract. Pl. Mot. at 24 (citing Tab 39, AR 2716; Tab 40, AR 2736).

                       b.      The Government’s Response.

         The Government responds that the                   is not relevant to Ideogenics’ “dependence
on . . . subcontractor              to obtain the [facility] it intends to use.” Gov’t Resp. at 30–31.
In any event, Ideogenics did not provide the                  to the SBA Area Office for consideration
in the initial size determination. Gov’t Resp. at 31 (citing Tab 21, AR 832 (Ideogenics’ submission
to the SBA Area Office, without the                    )). Therefore, the SBA OHA did not need to
consider the                , because the record otherwise sufficiently evidenced that Ideogenics did
not have the necessary facilities to perform the contract. Gov’t Resp. at 31–32 (citing Tab 44, AR
2775–76; see also Tab 21, AR 832; Tab 22, AR 1300–01, 1303, 1740). Although Ideogenics
claimed that it would                      , it never did. Gov’t Resp. at 16 (citing Tab 21, AR 832;
Tab 22, AR 1740, 1775). Therefore, the “SBA OHA rationally concluded that Ideogenics [relied
on] subcontractors to meet this key solicitation requirement, [that] is suggestive of unusual
reliance.” Gov’t Resp. at 16.

                       c.      Equity Mortgage Solutions, LLC’s Response.

         EMS adds that Ideogenics never properly moved to admit the                  . Int. Resp. at
26, 28. Moreover, Ideogenics’ reliance on                 to provide facilities and equipment in a
“turnkey manner” was an indication of undue reliance, under SBA OHA precedent. Int. Resp. at
27 (citing Tab 22, AR 1306; Femme Comp, Inc., SBA No. SIZ-2689, 1987 WL 93650, at *9 (June
12, 1987) (“[T]he total dependence of a prime contractor on a subcontractor for space and other
facilities cannot help but give power of control to the subcontractor, especially during the actual
performance period.”)). Therefore, the SBA OHA’s decision is “entitled to a presumption of
regularity and must be upheld as long as a rational basis is articulated and relevant factors are
considered.” See Emery Worldwide Airlines v. United States, 264 F.3d 1071, 1085 (Fed. Cir.
2001).

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          This regulation provides that “[e]vidence not previously presented to the [SBA] Area
Office which issued the size determination being appealed will not be considered[,]” unless the
SBA OHA “orders the submission of such evidence” or the party files and serves a motion
“establishing good cause for the submission of such evidence.” 13 C.F.R. § 134.308(a).

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                       d.      The Court’s Resolution.

        SBA regulations provide that “[e]vidence not previously presented to the [SBA] Area
Office which issued the size determination being appealed will not be considered[,]” unless the
SBA OHA “orders the submission of such evidence” or the party files and serves a motion
“establishing good cause for the submission of such evidence.” 13 C.F.R. § 134.308(a). As the
SBA OHA’s November 16, 2017 decision stated, new evidence must be “relevant to the issues on
appeal, . . . [must] not unduly enlarge the issues, and [must] clarif[y] the facts on appeal.” Tab 44,
AR 2772 (quoting Vista Eng’g Techs., LLC, SBA No. SIZ-5041, 2009 WL 1892558, at *4 (June
5, 2009)). Accordingly, the SBA OHA “‘will not accept new evidence when the proponent
unjustifiably fails to submit the material to the [SBA] Area Office during the size review.’” Tab
44, AR 2772 (quoting Project Enhancement Corp., SBA No. SIZ-5604, 2014 WL 5421284, at *8
(Oct. 6, 2014)).

        In this case, Ideogenics did not submit the           to the SBA Area Office, so it was
not considered in the SBA Area Office’s findings and it could not be considered relevant to the
issues before the SBA OHA on appeal. Tab 44, AR 2772; see also Tabs 14–24, AR 711–1640
(SBA Area Office file); Tab 39, AR 2715 (Ideogenics’ motion for leave to submit the            ,
describing it as
             ). Accordingly, the SBA OHA’s decision to exclude the                was consistent
with 13 C.F.R § 134.308(a) and controlling precedent.

        Ideogenics’ alternative argument that the SBA OHA improperly considered the
      is not supported by the record. Tab 44, AR 2759, 2771–77. Instead, the SBA OHA’s
decision recited that the Solicitation required the contractor to “establish a fully equipped office
within 50 miles of Tulsa or Oklahoma City, OK[.]” Tab 44, AR 2759 (quoting Tab 1, AR 208).
The SBA OHA concluded that Ideogenics did not “have the necessary facility to perform this
contract, a requirement of the RFP[,]” because its proposal stated

                                                            Tab 44, AR 2760 (quoting Tab 2, AR
410), 2775. In support, the SBA OHA cited two decisions. Tab 44, AR 2775–76. The first was
Modus Operandi, where the solicitation required offerors to respond to sample technical problems,
but the protested firm did not have personnel with relevant experience, without relying on a
subcontractor. Tab 44, AR 2776 (citing Modus Operandi, 2016 WL 921996, at *13 (“It therefore
appears questionable whether Appellant could have participated in this competition without
assistance from [the subcontractor] in addressing the technical scenarios.”)). The second was
Professional Security Corporation, where the SBA OHA explained, “the . . . Appellant may also
be reliant on [a subcontractor] for support services essential to performing the contract.” Tab 44,
AR 2776 (citing Prof’l Sec. Corp., 2014 WL 1743488, at *9 n.3). In this case, physical facilities
were an important contractual requirement. Tab 1, AR 208. Therefore, the SBA OHA reasonably
determined that Ideogenics’ reliance on subcontractors to fulfill this requirement evidenced
“unusual reliance.”

        Therefore, the court has determined that the SBA OHA’s decision to exclude the
      was not contrary to law, without a rational basis, nor arbitrary and capricious. Likewise, the
court has determined that the SBA OHA’s ruling that Ideogenics was “unusually reliant” on

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and             to provide the facilities required to perform the contract was not contrary to law,
without a rational basis, nor arbitrary and capricious.

IV.    CONCLUSION.

       For these reasons, Ideogenics’ February 5, 2018 Motion For Judgment On The
Administrative Record is denied. All other pending motions are denied as moot. The Clerk of the
United States Court of Federal Claims is directed to dismiss the December 13, 2017 Complaint.

       IT IS SO ORDERED.
                                                     s/ Susan G. Braden
                                                     SUSAN G. BRADEN
                                                     Chief Judge

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