O'Donnell Construction Company, No. MSB-504 (May 11, 1995) Docket No. MSBE-94-9-26-43 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. IN THE MATTER OF: ) ) Docket No. MSBE-94-9-26-43 O'Donnell Construction Company ) ) NOTICE OF APPEARANCES For the Petitioner: For the Agency John A. O'Donnell John T. Spotila President General Counsel O'Donnell Construction John Klein 2209 Canning St., N.E Agency Representative Washington, D.C. 20018 409 3rd Street, S.W. Washington D.C. 20416 DIGEST 1. Failure to admit an applicant to the Section 8 (a) Small Business Act program, where the applicant shows almost complete exclusion from a government bidding process and where the exclusion was based solely upon race or gender, was arbitrary and capricious; 2. A determination that a white male-owned company cannot be found to be socially disadvantaged as a matter of law because it has been successful in bidding and obtaining contracts in any Jurisdiction, was arbitrary and capricious; and 3. A finding that near total exclusion of a white male-owned company from bidding and contracting by the jurisdiction in which it is domiciled, and where discrimination is demonstrated by overwhelming evidence of a statistical and anecdotal nature, is not social discrimination against its individual owners and the company, was arbitrary and capricious. FINAL DECISION May 11, 1995 Nahum Litt, Administrative Law Judge 1/ JURISDICTION: Authority for these proceedings is found in Section 409 of the Business Opportunity Development Reform Act of 1988, Public Law 100-656 [Section 8(a)(9) of the Small Business Act of 1958, as amended, 15 U.S.C. 637 (a)(9)], hereinafter referred to as "the Act," and in the regulations codified at 13 CFR Parts 124 and 134, which are referred to hereinafter by section numbers only. ISSUE: This case presents the issue of whether a company owned by white males, which effectively is denied access to bid on contracts in the jurisdiction in which it is domiciled and seeks to do business, can successfully apply for inclusion under the SBA 8(a) program. Was the Associate Administrator arbitrary and capricious in finding that neither of the white male owners of the Appellant is personally socially disadvantaged, particularly under the criteria in Section 124.105 (c)(1)(v)(C) , which provides for entry into the 8 (a) program where there is a business history of social and economic discrimination? STATEMENT OF THE CASE: By letter dated May 11, 1994, the Acting Associate Administrator, Minority Enterprise Development (Associate Administrator), denied admission to the Small Business Act's 8(a) program to O'Donnell Construction Company because neither of its two white male co-owners (50% each) were socially disadvantaged as that term is defined and used in the statute and the regulations. The penultimate finding leading to the denial was that neither of the co- owners, (each is a 50% shareholders) was eligible because neither provided clear and convincing evidence of specific social discrimination, and, therefore, since neither is eligible, the company is not eligible. It was also found that there was no clear and convincing evidence that the company had been discriminated against by the government of the District of Columbia. Having found no social discrimination, the Associate Administrator also found that there was no clear and convincing evidence of economic discrimination and that O'Donnell Company was not socially and economically disadvantaged. A timely filed Petition for Reconsideration by Appellant was denied by order of the Associate Administrator on September 19, 1994. This appeal was filed on September 26, 1994. 2/ APPLICABLE REGULATIONS The applicable regulations are set out in the Appendix attached hereto. POSITIONS OF THE PARTIES Appellant Appellant's position is that the Associate Administrator ignored the evidence of record, distorted and ignored pertinent parts of its own regulations, misstated and ignored the findings of the United States Court of Appeals in O'Donnell Construction Co. v. District of Columbia. 963 F. 2d. 420 (DC Cir. May, 1992), and reached a predetermined. result despite the SBA's own regulations and the clear and convincing evidence of discrimination flowing from the refusal of the District of Columbia government to permit Appellant to bid and participate in road paving activities in the District of Columbia. Not one finding of the Associate Administrator in the May 11, 1994, denial letter is left unchallenged. A supplemental pleading was filed on April 12, 1995, wherein Appellant argues that it is discriminatory to apply a clear and convincing evidentiary standard to non-minority companies which seek admission to the program. Agency The Agency presses philosophical and legal arguments that the SBA program is not designed, and certainly the SBA is not bound, to find social disadvantage of white male owners even if the District of Columbia initially excluded them, i.e., discriminated against them in the bidding process. An affirmative finding in favor of Appellant, the Agency claims in its Answer to the Petition (pp. 10 and 11) might open the door to other similarly affected white male companies. 3/ The Agency argues that this is not a novel issue that the applicable law here is different from the law concerning constitutionality of a program, and that nothing Appellant raises warrants upsetting the Associate Administrator's determination. That neither white male owner is socially disadvantaged and that the company is neither socially nor economically disadvantaged. The Agency takes the position that no matter what level of discrimination may exist in the District of Columbia against white male-owned companies, and whether the level is constitutional or unconstitutional, such discrimination has no bearing on eligibility of a white male-owned company for the SBA 8(a) program. The Agency urges that the only criteria here is whether those seeking inclusion are personally discriminated against by society as a whole. The effect of the Agency's understanding of the applicable law is that exclusion because of racial bias, no matter how concerted and complete, cannot justify admission of a white male-owned and operated company to the SBA program if (1) the individual owners do not show personal social disadvantage, and (2) the owners or the company can compete successfully in some jurisdiction elsewhere or in another market. 4/ The Associate Administrator also points out that the Circuit Court decision, which set aside the District of Columbia's affirmative action program for minority and disadvantaged business, did not make a finding that Appellant's owners were socially disadvantaged. The Associate Administrator argues that the evidence submitted by Appellant that the two white male owners were and are socially disadvantaged is not clear and convincing, and, absent such showing, neither is socially disadvantaged as that term is used in the regulation. Relying upon the admission of the owners that they were not socially disadvantaged in the sense of being personally subjected to "... chronic and substantial discrimination due to cultural ethnic or social background...", the Associate Administrator further argues that neither owner meets the threshold requirement of showing personal disadvantage as a white male. it is argued, moreover, that the submitted proof of discrimination in the bidding process does not disclose chronic disadvantage, that Appellant's success at bidding and obtaining contracts in other jurisdictions shows that Appellant has access to financial markets, and that the finding that Appellant should be denied access to the SBA program is not arbitrary and capricious. The Agency concedes that if either of the brothers was socially disadvantaged he would also, in this instance, be economically disadvantaged.5/ The Agency in its response to Appellant's supplemental petition on April 20, 1995, argues that the application of the clear and convincing evidentiary standard to non-minority applicants is consistent with the legislative history of the Act and that this standard has been upheld by Article III courts. FACTS John O'Donnell and Arnold O'Donnell are 50% co-owners of O'Donnell Construction Company, which is incorporated in the State of Virginia and domiciled in the District of Columbia. They have sought to bid on road paving and other contracts in the D.C. metropolitan area for over ten years. They have had limited success in obtaining contracts in Virginia and Maryland. All three jurisdictions have minority set-aside programs which both set aside a specific proportion of contracts for defined minorities and provide more favorable bidding process, financing, and general support for those groups which fall within the definition of the program. Appellant, however, has not been able to bid on most D.C. contracts. Neither has Appellant received any contracts in the District of Columbia except as a partial sub-contractor to a contract let as a minority set-aside. In support of its claim of social disadvantage on its application for eligibility, Appellant has included documentation describing denial of access to construction contracts by the District of Columbia during the years 1987 to 1993. During the fiscal years 1987 through 1990, Appellant was denied access to bid on 92 percent of all street construction work awarded by the District of Columbia Public Works agency. The District of Columbia Disadvantaged Business Enterprise Program (DCDBEP) denied Appellant access to submit bids on hundreds of construction projects totaling more than 98 percent of the construction projects awarded in the District of Columbia because the company is owned by white males. Prior to the denial of access by the DCDBEP, Appellant was denied access to bid on construction contracts under the District of Columbia Minority Business Opportunity Commission. In its application for eligibility Appellant submitted evidence of numerous specific accounts of discrimination by the government of the District of Columbia: November, 1987: Project Manager for the Barry Farms Project told Appellant not to bother with further pricing because the work would not be awarded to O'Donnell because the owners were white; October, 1988: O'Donnell received a letter of intent from the general contractor for a housing redevelopment project in the District of Columbia; O'Donnell was not awarded most of the work due to a mandatory minority business subcontracting requirement; May, 1991: the high bidder, a minority firm, was allowed to change their bid to become the low bidder, and was awarded the contract over O'Donnell, the low bidder, at the public opening; this contract was for a project at the Washington Cathedral, which had established a quota for District of Columbia certified Minority Business Enterprise contractors; November, 1991: First Virginia Bank declined to extend credit to O'Donnell Construction Company due to declining revenues and insufficient work on hand to support the loan request; June, 1992: Arnold O'Donnell was denied membership on a committee of the largest Washington area association of contractors because the chair believed that his presence would offend minority members of the committee; August, 1992: O'Donnell was the low bidder on a section of a project for the District of Columbia Housing Finance Agency; the project was awarded at a higher cost to a District certified Minority Business Enterprise; July, 1993: First American Bank denied to extend further credit to O'Donnell until significant corporate financial improvement improved and adequate collateral would be available; Other acts of discrimination are apparent from the record supporting social discrimination. During testimony before a District of Columbia City Council meeting, both O'Donnells were called "greedy racists" by a former contracting officer for the District of Columbia Government. The O'Donnells have received several telephoned threats of physical and financial injuries solely because they are white males. Comments were made during meetings held for small and minority owned businesses in the District of Columbia, where the O'Donnells have been labeled as evil and racist. (See also footnote 10 infra at p. 12). Those persons making derogatory statements were supported by individuals inattendance at these meetings. Leaders of various organizations on numerous occasions attempted to distribute information that the O'Donnells were racists. DISCUSSION This case raises three legal issues: (1) what is the geographical universe that governs a determination of discrimination in American society; (2) whether either of two white males must individually show social discrimination as 51% owners of the company; and (3) whether meeting all of the requirements of discrimination under the business history standard in the regulations, both statistical and anecdotal, requires that the Appellant be admitted into the SBA 8(a) program. At the outset, this case cannot be considered in a vacuum. By its May 5, 1992, decision The United States Court of Appeals for the District of Columbia entered an order, supra, setting aside the District of Columbia's statutes and regulations which it held unconstitutional, finding: We hold that the O'Donnell Construction Company has made a substantial case that the District is violating O'Donnell's Fifth Amendment right to equal protection of the laws and the district court should have enjoined the District, during the pendency of this suit, from enforc ing the Act in a manner that deprives O'Donnell of the equal opportunity to compete for city road construction contracts. (963 F.2d. 420 at p. 421). In deciding that injunctive relief should be granted, the Court found not only that Appellant was likely to succeed on the merits of its case, but that the continued discrimination against it in the bidding scheme devised and administered by the District of Columbia was causing Appellant irreparable harm which it would not be possible to recoup ( 963 F.2d. 420 at p. 428). The prime issue of what weight should be accorded to the O'Donnell case is not the finding of standing by the District Court, although that finding does depend on an underlying base of discriminatory practice, but upon the issuance by the Circuit Court of injunctive relief which is dependent upon the finding that Appellant suffered discrimination, that the discrimination was substantial, and that Appellant would suffer irreparable harm if the discrimination continued during the pendency of either further litigation or the District passing statutes which were constitutional. The Circuit Court decision in O'Donnell cannot be viewed in the abstract. The facts in that case are the same facts as in this case and, while used to analyze a different issue, cannot blithely be ignored. Those findings are persuasive, even if not legally dispositive, absent a showing on this record that different facts are presented here than were presented there. Aside from denying that the Circuit Court found that the O'Donnells had been subject to discrimination, the Agency on brief states a more stringent showing is required than merely meeting the Circuit Court's standard for injunctive relief on the basis of discrimination. Its argument is that the finding of discrimination attached only to the company and not to the owners. This is a "straw-man argument" and relies on the fiction constantly reiterated by the Agency that the discrimination against the company does not attach to the two owners even though they are the sole owners and are the company. The Court found that the O'Donnell Construction Company and its two owners had been discriminated against because they are white males. This is clearly a finding of social and economic disadvantage. Calling it something else or claiming such disadvantages do not personally attach to the owners is not reasonable. The Circuit Court's decision cannot simply be brushed away. Regardless of whether the Circuit Court's decision is persuasive or dispositive, each of the issues raised will be discussed seriatim. on the basis of the evidence in this record. A. Geographical Universe. The first question which must be addressed is whether the geographical universe for discrimination is the District of Columbia, the entire United States, or perhaps the entire world. The relevant regulatory language reads (see Appendix): The individual's social disadvantage must be rooted in treatment which he or she has experienced in American Society, not in other countries. Appellant argues that the Associate Administrator ignored the plain meaning of this regulation which compares discrimination in American society with discrimination in other countries. The plain meaning of the regulation is a comparison between jurisdictions in the United States, on the one hand, and, on the other, discrimination in other countries i.e. foreign as distinct from domestic. The compelling logical conclusion is that as a matter of law the American society at issue is the jurisdiction where Appellant resides and is domiciled. otherwise, the term "in other countries" has no meaning. But even if this phrase were absent, the regula tion is overly broad if used to exclude an applicant because somewhere in some jurisdiction in the United States "as a whole" discrimination is not "rooted" against a particular group or minority. The Associate Administrator cites no cases in support of his position. Under the criteria employed by the Associate Administrator, no white male or company 51% owned by white males which is successful in obtaining work in some jurisdiction, presumably world-wide, could ever be found socially disadvantaged. Accordingly, the argument is that neither the size, the jurisdiction, nor the policy of the District of Columbia is relevant as long as there is some jurisdiction, presumably in the United States, where Appellant can bid and obtain contracts.6/ The thesis seems to be that the term "whole" must be inferred as being in the regulation and considered as tantamount to "anywhere" in the United States in analyzing discrimination against a non-preferred applicant. Significant discrimination in any or many jurisdictions would not present clear and convincing evidence if "all" of society, apparently every jurisdiction, does not similarly discriminate. But discrimination is rooted out in jurisdictional pockets no matter how small, and if one accepts the Associate Administrator's rationale here, it is at odds with how all of the anti-discrimination laws work. The determination of the geographical universe here turn's upon whether the regulatory term "rooted in American society" applies to the District of Columbia as a separate entity or is applicable to the United States as a whole. First, the District of Columbia is an entity treated as a separate jurisdiction under the federal system even if it is not a State. On its face, the District of Columbia is a society defined by the regulation. Second, Appellant is not a fly-by-night interloper or a carpetbagger attempting to cash in on the basis of a fabricated legal issue. There is simply no serious question that Appellant is a District of Columbia company doing business as best it can in the District of Columbia. Third, there is no definition in the regulations which describes any limit or breadth of geographic jurisdiction for purposes of limiting or expanding eligibility on the basis of "rooted in American society". Admittedly, the discrimination addressed when this statute was enacted was to rectify past practices of discrimination against certain groups which had been historically disadvantaged by American society. The regulatory language in turn provides for admittance to those not in the preferred group who are discriminated against. The clear wording of the entire statutory scheme patently seeks to reverse the effects of discrimination no matter where it occurs or against whom it occurs. As stated above, there are no geographic limits upon the size of the government entity which would be covered under the anti-discrimination laws. Nor are there limits on a geographical basis for finding that the universe for determining discrimination for any company should be broader than a defined jurisdiction of a State or the equivalent of a State. Unless the statute is amended and the regulations rewritten to establish a legal and enforceable geographic rule more limited than a State or its equivalent, the area for consideration of discrimination is the State or its equivalent. Appellant can not have a crabbed geographical jurisdictional policy applied to it solely because of its white male ownership.7/ The determination that the geographical universe for discrimination here is broader than the discriminatory policy of the District of Columbia is, therefore, arbitrary and capricious. Appellant cannot be denied admission to the SBA 8(a) program because it can bid, and sometimes obtain contracts, elsewhere or in other jurisdictions which may not discriminate against it in the same manner as in the District of Columbia. Nor does the fact that by their nature all set-aside and contractual arrangements for encouraging defined minority enterprises are discriminatory vis-a-vis all non-favored groups (discussed more fully in the discussion below)8/ provide any support for the Agency position here that there are no precise geographical boundaries which define an area of discrimination for American society. The objective of all these programs is to make the system more fair and provide opportunities to those who are disadvantaged. The objective is not total exclusion of a business merely because of race and gender. Appellant does not argue that legitimate set-asides would warrant admission to the program: it argues that the totally unfair application of the set-aside scheme by the District of Columbia, coupled with overt and described hostility towards it as a white male-owned company, warrants admission. The Agency's argument is chiefly philosophical, and is not supported by the plain language of the Act and the regulations. It cannot form a basis f or the proposition that there is no geographical limit on where an applicant not favored must compete. Last, the Agency's view would require that if an applicant was either (1) totally unsuccessful in bidding on or obtaining contracts elsewhere or (2) unable or disinclined to compete in other jurisdictions, it would have to be admitted to the program. This, of course, was not intended by the Act or the regulations. B. Individual Social Disadvantage. The Associate Administrator's finding that the Appellant must show that each of the two white male owners of the company is individually socially disadvantaged is not supported by any of the regulations cited. The Associate Administrator atomizes the process to reach determinations which historically have been used to protect the program from invasion by non-disadvantaged members of society masquerading as minority-owned firms. A review of how the Agency has applied its 51% ownership criteria shows that its application here is completely out of context. That test appears to be used uniformly, and it would seem, from the cases found, to be used solely to preclude those not having a preference as a statutorily recognized minority from sneaking into the program through one of the presumptions. It is not even clear from reading the Associate Administrator's Answer to the Petition why the determination was reached on the issue of 51% ownership inasmuch as there is no dispute that 100% of the company is owned by white males. In the context of this case, it is meaningless to analyze whether one of the two is socially disadvantaged: the basis of claimed discrimination by the Company is a complaint that a preference group, having control of a jurisdiction, is discriminating against white male-owned companies. The effect of applying this test here is to condone discrimination by applying an analysis used to protect the program from fraud of those trying to claim status to which they are not entitled. The application of this test to the facts here is arbitrary and capricious. C. Business History. The underlying rationale of the Associate Administrator's analysis of the Appellant's "business history" commences at the same elemental point as its argument on geographical jurisdiction, i.e. that eligibility in the SBA program can never flow to those discriminated against by jurisdictions having affirmative action programs. since such programs, the argument goes, could always be found to have some element of discrimination inherent in their very substance, all companies which are not in the group favored selectively for special treatment, essentially as named minorities, would otherwise be eligible. The Associate Administrator, therefore, views all proof of discrimination in bidding on contracts in jurisdictions having set aside or similar programs as not relevant to this determination. The denial was entered because neither of the two owners "convincingly" proved personal or business bias against themselves or social disadvantage under the individual criteria normally used by the SBA.9/ As discussed below, however, there is significant and unrefuted evidence of discrimination against the O'Donnell Company in its business history, on almost the same evidence before the Circuit Court in the O'Donnell case, supra, to prove discrimination by the District of Columbia in application of its statute as well as that the statute was unconstitutional. At several places in its petition Appellant suggests that the Associate Administrator is biased and that the decision was predetermined without regard to the evidence. Normally, the presumption of administrative regularity would obviate any need to address such an allegation, but here one of the findings by the Associate Administrator not only gives this allegation credence but also undermines the bona fides of the Associate Administrator's other findings. The Associate Administrator found (page three of the May 11 letter): Even in those limited instances where allegations of discriminatory practices against you and your brother are based upon statements attributed to third parties, there are no statements or confirmation from those parties in your application. Perhaps this is just an imprecise statement of the evidence which the Associate Administrator deemed necessary to be convincing, but the unartful expression of the needed evidentiary showing compromises all of the findings made in this case. One could almost take official notice of the inability of a person slurred racially or on grounds of gender to obtain an affidavit from the person who made offensive remarks --- particularly when the affidavit would in all likelihood provide clear and convincing evidence for administrative discipline and an action in tort against such individu- al. 10/ It is also noted that it is difficult, if not close to impossible, to obtain corroborating statements from others in an office even if not required of the person who may have uttered the defamatory remarks if the occurrence was in an office setting that is hostile to an applicant. No finding is made here on the allegation of bias, but it is clear that Appellant is not suffering from paranoia. The Associate Administrator cites three cases in support of its position that it was not acting in an arbitrary and capricious manner. In Software Systems Associates, Inc. , Doc. No MSBE-90-6-410, Decided February 13, 1991, the Administrative Law Judge sustained the Associate Administrator's decision that Appellant had not shown social disadvantage on the grounds that her anecdotal evidence of gender bias was insufficient. The Judge found that the sole issue was whether there was "clear error of judgment" in reaching the decision in the case. Finding that there was only one contract at issue where financing was alleged affected by gender, he determined that there was no other evidence in the business history of the Appellant to warrant any other finding (Decision p.31). The simple factual discussion, lack of any statistical evidence, and rather weak showing in that case offers no help here except as a restatement of the standard of review. In Columbia General. Inc., Doc. No. MSBE-90-4-9-8, Decided November 14, 1990, the judge rejected most of the arguments as post hoc rationalizations, dismissed several of Appellant's arguments as vague, upheld the argument that the Associate Administrator did not have to reach the issue of economic disadvantage if there were no finding of social disadvantage, and ultimately upheld the Agency decision on the basis of the standard of review (Decision P. 17). In Frontier Company of San Antonio, Docket No. MSBE-90-6-25-12, Decided April 23, 1991, the judge upheld a finding that the evidence showed that the Appellant there could not compete because of his own inadequacies, not because of prejudice due to his handicap. The case turned solely on the facts. None of these cases stands for anything other than that the facts in each case are controlling and that the standard of review places a heavy burden on an appellant.11/ The Associate Administrator's determination that Appellant's business history does not show economic discrimination is not sustainable on any rational grounds. Appellant does not have access to District financial markets, cannot bid on a significant percentage of projects in the District, and is not on a reasonably fair playing field within the context of legitimate affirmative action programs. 12/ Here the f acts are that the Company, and perforce its two sole owners, are at an economic and social disadvantage in the District and the O'Donnell Company, as a company, is socially and economically disadvantaged in the District of Columbia. On the facts of this case, the decision to deny Appellant eligibility on the basis of business history is arbitrary and capricious. The over-technical application of the regulations by the Associate Administrator in limiting the ability of Appellant to enter this program, moreover, has turned logic upside down. 13/ For example, ignoring that O'Donnell Company was not permitted to bid on almost all of the contracts, but then minutely dissecting the small number of bids Appellant was permitted to make, does suggest a mind-set against Appellant. The Associate Administrator found that failure to obtain contracts on six bids over a six or seven year period where they were permitted to file bids did not show chronic discrimination. But, not being able to bid on 98% of the contracts for six or seven years is chronic discrimination. As a company" regardless if one believes that there is convincing evidence of discrimination as to any or all of the six individual bids in the District which the Associate Administrator analyzed, the overall discrimination as to the entire bidding process is clear, convincing and simply overwhelming in showing discrimination against the company. In other words, Appellant was and is being discriminated against as a company because it is owned by white males. The discrimination displayed on this record as a whole goes well beyond any rationalization that such discrimination is tied to set aside programs, whether constitutional or unconstitutional or whether legitimately or illegitimately administered. Unabated discrimination by the District of Columbia against Appellant is the business history of this case. As stated earlier this is not a situation where the affirmative action program creates a fairer and better playing field, but one of almost total exclusion on impermissible grounds of race and gender. This case thus represents an aberration where otherwise sanctioned affirmative action programs become not a remedy for valid societal purposes but an impermissible total exclusion of a particular segment of society from fair treatment.14/ Appellant has been excluded from the District of Columbia bidding process because of a collective personal social discrimination; it has been excluded improperly because of the identity of its owners as members of a group without regard to their individual qualities. Last, the Associate Administrator states that if Appellant is admitted to the 8(a) program, every white male-owned company which participates in an affirmative action bidding program would be eligible. This is simply not the case. The facts here display a systematic and impermissible denial of participation in bidding on projects within the jurisdiction where it is domiciled a total exclusion from a process and not simply providing an additional advantage to permit greater access or redress of prior discrimination of specific classes of small business enterprises. Moreover, it is hoped that the Associate Administrator is in error in his belief that there are a multitude of similar cases where affirmative action programs have gone so far awry as has the program in the District of Columbia, where the program was found to be unconstitutional in both its passage and its application. But even if that were the case, and there can be shown to exist other similarly situated domiciled white male-owned companies that are being discriminated against and treated like Appellant Company has been treated by the District of Columbia, that is not a basis to deny Appellant access to a program which is designed to redress artificial and unfair barriers to business entry caused by social and economic discrimination. Certainly those who framed the original legislation to aid small businesses that were being denied fair access to contract bidding and financial resources did not envisage that jurisdictions, some large cities larger in population than many States, would use social policies designed and almost universally approved as a fair remedy, to adopt exclusionary, discriminatory procedures. But those are the facts in this case. The Act would need to be amended and the regulations rewritten in order to deny relief to an applicant similarly situated to Appellant here. Section 124.105 sets out tests which this Appellant meets in every particular. These tests were set up to permit participation where discrimination occurred, and it is no less a concern because it is a white owned company bidding for contracts in a majority, minority controlled jurisdiction than vice-versa. It may not be what was intended, but it is what has been clearly expressed and it is difficult to believe that those who intended to right a wrong could reach any other result. One additional procedural matter must be addressed. Appellant's last attack on the standard of proof appears to be motivated more for the purpose of creating an appealable right than an expectation that a ruling in its favor would be entered. In view of the decision above on the merits, however, there is no need to rule on this supplemental motion and it is dismissed as moot. CONCLUSION The May, 11, 1994, determination denying 8(a) entry eligibility to the Petitioner, O'Donnell Construction Company, is not in accord with the law and the pertinent regulations, and is not reasonably based upon the record that was before the Acting Associate Administrator at the time that determination was made. Accordingly, I find that the determination IS ARBITRARY, CAPRICIOUS AND CONTRARY TO LAW. This constitutes the final decision of the Small Business Administration. it is binding upon the Petitioner, the Agency and its employees. See Section 124-210(i). Nahum Litt Administrative Law Judge APPENDIX APPLICABLE REGULATIONS Section 124.103 of the regulations provides: Except for concerns owned by Indian tribes an applicant concern must be one which is at least 51 percent unconditionally owned by an individual(s) who is a citizen of the United States ... and who is determined by the SBA to be socially and economically disadvantaged. Section 124.105 (a) of the regulations provides: General. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identities as members of groups without regard to their individual qualities ..... Section 124.105 (C) (iii) provides: The individual's social disadvantage must be rooted in treatment which he or she has experienced in American Society, not in other countries. Section 124.105 (c) (1) (v) of the regulations provides: The individual's social disadvantage must have negatively impacted on his or her entry into and/or advancement in the business world. SBA will entertain any relevant evidence in assessing this element in an applicant's case. SBA will particularly consider and place emphasis on the following experiences of the individual, where relevant: (A) Education ...... (B) Employment ...... (C) Business History. SBA shall consider, as evidence of an individual's social disadvantage, unequal access to credit or capital; acquisition of credit or capital under unfavorable circumstances; discrimination in receipt (award and/or bid) of government contracts; discrimination by potential clients; exclusion from business or professional organizations; and other similar factors which have impeded the individual's business development. Both parties admit that Appellant is not a member of a designated group where discrimination is presumed and that it is necessary for Appellant to come under the provisions of Sections 124.103 and 124.105 (c) (1) (v). _______________________ 1 Sitting by designation pursuant to notice issued March 7, 1995. Formerly Chief Administrative Law Judge, U.S. Department of Labor. 2 A Motion For Summary Judgment was denied by order of the Administra tive Law Judge dated December 2, 1994. 3 In a chamber of horrors type-argument, the Agency contends that other white male-owned companies who are affected by constitutionally approved set-aside programs would be eligible if Appellant were found eligible and the criteria for determination for social disadvantage on an individual basis were not applied. 4 Neither party has cited a statutory or regulatory definition of the term "social disadvantage". The Agency relies upon its imprecise regulations to flesh out what it describes as the criteria which it will examine to reach such a determination. As shown below, the Agency also relies on certain decisions of administrative law judges which have sustained the Agency's determination of facts in specific cases. These cases are instructive but are not precedents as that term is normally used. 5 Appellant had requested discovery in order to determine their economic disadvantage, apart from the issue of their social disadvantage. 6 The Associate Administrator has not addressed the question as to whether the status or size of the District of Columbia is significant. The District of Columbia has a larger population than many States, as Appellant points out. In the recent past the District has argued that it is a State and should have appropriate status as a State. 7 Would total exclusion in a two State area represent discrimination? or, would the discrimination be acceptable if it were only the entire Southwest? 8 See infra, p. 11, C. Business History 9 Education, employment, or various aspects of business history. 10 The testimony of Edward L. Nelson, a member of the District of Columbia's Contractor's Association, before the District of Columbia's Department of Public Works Oversight Committee, is in evidence and displays clear racial bias and animosity toward Appellant as white males who he argues cannot make a living from the available contracts which they could bid on outside of the District of Columbia. His testimony not only shows bitterness toward Appellant for trying to break down the few opportunities he believes that minority contractors have in the area, but the contempt in which he holds the O'Donnell brothers. He personally believes them to be "white racists" and shills for the non-minority contractor's association. Whether they are shills or white racists is not relevant to whether the O'Donnells have been discriminated against because of race or gender. 11 In Equal Employment Opportunity Commission v. Sears Roebuck & Co., 628 Fed. Supp. 1264 (N.D. Ill., 1986), the Court concisely set forth the use of evidence, statistical and anecdotal, in discrimination cases. This case is instructive regardless of what standard is employed on review. 12 The Circuit Court's entering an injunction against the District of Columbia apparently has not wrought significant changes in the way the District treats Appellant. Perhaps in the future the Court's injunctive relief may benefit Appellant, but the only evidence in this record is that as of the time the Associate Administrator decided this case, nothing had changed. 13 A Broadway play produced in the 1950's opens with the lead character, poised in front of closet door with a drawn bow and arrow, declaiming that since the arrow could only travel half the distance between where it started and its destination at each moment in time, the arrow could never, logically, reach its target. The arrow, of course, when released, penetrates the door and impales a rabbit, proving once more that perceived logic and the real world often part company. 14 An elegant and concise summary of the current law is set out in the concurring opinion by now-Associate Justice Ginsberg (963 F.2d. at p.429).