Ardmore Consulting Group, Inc. v. Contreras-Sweet
118 F. Supp. 3d 388
D.D.C.2015Background
- Ardmore Consulting, owned by Vineeta Prabhu, applied for SBA 8(a) certification; SBA denied admission and Ardmore sought judicial review under the Administrative Procedure Act.
- SBA regulations require (1) ownership/control by socially and economically disadvantaged individuals and (2) demonstration of "potential for success," including being in business in the primary industry for at least two full years or qualifying for a waiver.
- Ardmore submitted inconsistent evidence about its primary NAICS classification (variously labeled as Data Processing/IT, Industrial Design, All Other Professional Services, and even Janitorial in a government database); its contract descriptions stated "Custom Software Development" or "Engineering Software Development."
- SBA investigated, requested clarification, and concluded Ardmore’s primary business activity was Custom Computer Programming Services (software development), not All Other Professional Services—the classification Ardmore ultimately asserted.
- Based on that classification and the record, SBA determined Ardmore failed the two-years-in-business requirement and could not obtain the relevant waivers (including an ownership waiver given connections to SRM Group, a firm associated with Ms. Prabhu’s husband).
- The district court reviewed the agency record under the APA standard and granted summary judgment to SBA, concluding SBA’s factual findings were supported by substantial evidence and not arbitrary or capricious.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper primary industry classification | Ardmore: SBA ignored tax forms and other labels showing All Other Professional Services; invoices’ "IT consulting" was shorthand and not dispositive | SBA: Contract descriptions and invoices showing custom software work supported classification as Custom Computer Programming Services; SBA reasonably resolved inconsistent evidence | Court: Upheld SBA; classification as Custom Computer Programming Services was supported by substantial evidence |
| Two‑years‑in‑business / potential for success | Ardmore: Had business history and tax labels supporting its chosen industry; SBA misapplied rule | SBA: Ardmore lacked two years of revenue/performance in the industry it was seeking certification in and could not meet waiver criteria | Court: Upheld SBA; Ardmore failed to demonstrate potential for success in the industry of its application |
| Ownership waiver / related‑firm prohibition (connections to SRM Group) | Ardmore: Firms are not in same/similar line of business; connections were overstated | SBA: Firms operated in same or similar line and had connections that precluded waiver | Court: Declined to reach merits because Ardmore’s failure on potential-for-success was dispositive |
| APA arbitrary/capricious challenge | Ardmore: SBA cherry‑picked evidence and failed to explain reliance on contract descriptions | SBA: Thorough review of inconsistent record and adequate explanation; path to conclusion discernible | Court: SBA decision was reasonable, based on substantial evidence, and not arbitrary or capricious |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (standard for arbitrary and capricious review)
- Richardson v. Perales, 402 U.S. 389 (substantial evidence standard)
- Orion Reserves Ltd. P'ship v. Salazar, 553 F.3d 697 (D.C. Cir. 2009) (agency factfinding must be upheld unless no reasonable factfinder could reach conclusion)
- Butte County, Cal. v. Hogen, 613 F.3d 190 (D.C. Cir. 2010) (agency cannot ignore contrary evidence)