Baig Associates, Inc., No. MSB-606 (March 24, 1998) Docket No. MSBT-97-7-21-18 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. _______________________________ ) IN THE MATTER OF: ) Docket No. MSBT-97-7-21-18 ) Baig Associates, Inc. ) Decided: March 24, 1998 ______________________________ ) APPEARANCES Usman M. Baig, P.E., pro se, for Petitioner Baig Associates, Inc. David Fishman, Esq., John T. Spotila, Esq., for Respondent Small Business Administration. DIGEST If an 8(a) program participant, which is a sole proprietorship, reports to the SBA that its proprietor now owns only 51% and another individual owns 49% of the business, it is reasonable for the SBA to request information and documents to reevaluate the program participant's continued eligibility for the 8(a) program. If the SBA was unable to reevaluate a program participant's program eligibility because the participant did not comply with the SBA's requests for information and documents, it is rea sonable for the SBA to conclude, absent that information and those documents, that the program participant did not establish its continued eligibility for the 8(a) program. It is reasonable for the SBA to conclude, from information supplied by the program participant, that an individual has a 49% ownership interest in the program participant, regardless of whether the information was erroneous, if the program participant fails to correct the error prior to the time the SBA made its decision to terminate the participant from the 8(a) program. Regardless of whether, as a practical matter, a 51% stockholder continues to manage an 8(a) program participant to the same extent as when it was a sole proprietorship, a legally signifi cant change occurred in the status of the concern when it incorporates. A corporation is not the same legal entity as a sole proprietorship. Regardless of whether an individual may be presumed to be socially disadvantaged under SBA regulations, that individual is considered nondisadvantaged unless the individual applies for disadvantaged status and the SBA determines that individual to be both socially and economically disadvantaged. FINAL DECISION ARKOW, Administrative Law Judge: Petitioner Baig Associates, Inc. (Baig) appeals a decision by the Respondent Small Business Administration (SBA) terminating it from the 8(a) program. The SBA found that Baig violated SBA regulations by failing to provide the SBA with documents and information concerning the incorporation of the sole proprietorship originally accepted into the 8(a) program, the disadvantaged status of the wife of Baig's principal stockholder, and other documents. Baig claims the decision to terminate it from the 8(a) program is arbitrary, capricious, and contrary to law. I find the claim to be without merit. Jurisdiction Jurisdiction to decide this appeal is proper. 15 U.S.C. Section 637(a)(9); 13 C.F.R. parts 124 and 134. The appeal is timely. 13 C.F.R. Sections 124.210(b), and 134.202(a). Issue Whether the action of the SBA terminating Baig from the 8(a) program is arbitrary, capricious, or contrary to law. 15 U.S.C. Section 637(a)(9)(C); 13 C.F.R. Section 124.210(h)(1). Facts Baig Associates, Usman M. Baig (Mr. Baig), Proprietor, was admitted into the 8(a) program as a sole proprietorship on May 2, 1994. SBA Response to Order of Feb. 24, 1998, Ex. 1. On May 12, 1993, Mr. Baig signed an 8(a) participation agreement, in which he, as the proprietor of Baig Associates, acknowledged that his concern could be terminated from the 8(a) program if it: (1) failed to obtain written approval from the SBA for any changes in its ownership, management, or control; (2) failed to disclose to the SBA the extent to which nondisadvantaged persons or concerns participate in its management; and (3) demonstrated a pattern of failing to make required submissions or responding to the SBA in a timely manner, including a failure to provide documents or certifications of continuing eligibility, or otherwise responding to requests for information from the SBA within the time frames provided for in the requests. AR at Ex. 12, Paragraphs 3(d)-(f). Mr. Baig, on behalf of Baig Associates, submitted to the SBA on June 11, 1996, its 8(a) Annual Update, which lists U. Baig as the concern's president and 51% owner, and E. Baig as a 49% owner. Mr. Baig provided this information in response to a requirement to list the names of each "proprietor, partner, officer, director, and each stockholder owning more than 10% of the stock of the company." AR at Ex. 8. Thereafter, the SBA sought clarification of that information. On July 18, 1996, it requested that "[i]f you have recently changed your business structure and have incorporated, submit all information such as Certificate of Incorporation, Articles of Incorporation, minutes, resolutions, copies of stock certificates and stock ledger." AR at Ex. 5, Att. 2. On July 22, 1996, Mr. Baig provided the SBA with a copy of its certificate of incorporation, but did not provide the other requested corporate documents. AR at Ex. 5, Att. 6 and Ex. 10. The certificate of incorporation states: (1) Usman M. Baig is the incorporator; (2) the corporation is authorized to issue 1,000 shares; and (3) the first board of directors consists of Usman M. Baig and Linda F. Baig. AR at Ex. 10. The certificate of incorporation was signed by Mr. Baig on May 22, 1996, and filed with the New Jersey Secretary of State on May 31, 1996. Id. The SBA, in a certified letter dated November 7, 1996, addressed to Mr. Usman Baig, President, Baig Associates, advised Mr. Baig that he had not provided the requested information necessary to evaluate Baig's continued eligibility for the 8(a) program following the incorporation of the sole proprietorship, the original business entity accepted into the 8(a) program. The letter gave Baig another opportunity to provide the information needed to evaluate Baig's continued eligibility in the 8(a) program. The letter requested copies of the concern's "Corporate Kit, which include Articles of Incorporation, Minutes, Resolutions, stock certificate[s] issued and stock ledger." The letter also requested Mrs. Baig complete SBA Forms 1010A, 413, and 912, relating to her disadvantaged status. Finally, the letter warned Baig that, if the SBA did not receive the requested information by November 29, 1996, it would begin termination proceedings against Baig. AR at Ex. 5, Att. 1. Baig received the letter on November 11, 1996. Id. (U.S. Postal Service Domestic Return Receipt (PS Form 3811)). Baig did not provide the information requested and, on January 14, 1997, the SBA notified Baig that it intended to commence this termination action. The SBA included among the proposed grounds for termination, Baig's failure to comply with its requests for information and documentation relating to the incorporation and the extent of Mrs. Baig's participation in the new corporation. The letter again set forth in detail Baig's alleged deficiencies and gave Baig yet another opportunity to submit information which would eliminate the proposed grounds for termination or to explain why the proposed grounds do not justify termination. AR at Ex. 9. Baig received the letter on January 25, 1997. Id. (PS Form 3811). In a timely reply dated March 28, 1997, Baig alleged that all the proposed grounds for termination were false. Regarding the alleged failure to provide the information and documentation requested concerning the incorporation, Baig stated: (1) incorporation is "a natural step" for the business; (2) it is not required to change the structure of the business when it incorporates; (3) it complied with New Jersey law when it incorporated and the SBA should not require more; (4) it did not change anything in its organization to get incorporated; (5) Mr. Baig verbally informed the SBA of its incorporation and, when requested, immediately provided the SBA with a copy of its certificate of incorporation; (6) it does not have a nondisad vantaged person participating in the management of the concern because his wife, Ermelinda (Linda) Baig, is a disadvantaged person due to her Filipino origins; (7) it submitted its certifi cate of incorporation, as requested by the SBA, and was never told it did anything wrong; and (8) the corporation is owned by both Mr. and Mrs. Baig. AR at Ex. 8. Baig did not provide the articles of incorporation, minutes, resolutions, copies of stock certificates, or the stock ledger with this submission, or the requested information pertaining to Mrs. Baig. After considering Baig's submission, the SBA determined that Baig should be terminated from the 8(a) program. See AR at Ex. 2- 6. On June 5, 1997, the SBA notified Baig of its termination from the 8(a) program. AR at Ex. 1. The SBA cited five reasons for Baig's termination: (1) Failure to obtain written approval from the SBA for any changes in ownership, management, or control of Baig, in violation of 13 C.F.R. Section 124.209(a)(4); i.e., Baig did not request permission from the SBA to incorporate the sole proprietorship which had been accepted into the 8(a) program; (2) Failure to disclose to the SBA the extent to which nondisadvantaged persons participate in the management of Baig, in violation of 13 C.F.R. Section 124.209(a)(5); i.e., Baig failed to disclose the extent of Mrs. Baig's participation in the corporation; (3) A demonstrated pattern of failing to make required submissions or responses to the SBA in timely manner, including failure to provide documents or certifi cations of continued eligibility or to otherwise respond timely to SBA requests for information, in violation of 13 C.F.R. Section 124.209(a)(6); i.e., Baig failed to submit the requested documents and information concerning the new corporation and its other stockholder, Mrs. Baig; [1] (4) Failure to continue to maintain its 8(a) eligibility, in violation of 13 C.F.R. Section 124.209(a)(1); i.e., without the information concerning Baig's incorporation, the SBA could not determine whether Baig continues to maintain its 8(a) eligi bility; and (5) Failure to pursue competitive and commercial business in accordance with the business plan, or failure to make reasonable efforts to achieve competitive status, in violation of 13 C.F.R. Section 124.209(a)(9); i.e., in 1993-95 Baig generated no revenues. [2] AR at Ex. 1. With the exception of the fifth ground for termination, all of the grounds relate to the incorporation of the concern originally accepted into the 8(a) program. Baig appealed its termination on July 21, 1997. Position of the Parties Baig asserts the SBA's decision to terminate it from the 8(a) program is arbitrary, capricious, and contrary to law; thus it should not be terminated. [3] Baig's Appeal Petition addresses the five grounds for its termination and argues: (1) approval of a change of ownership from the SBA is not necessary because 13 C.F.R. Section 124.103(i) only requires written approval from the SBA if the change involves a transfer of 10% or more of an ownership interest; (2) Mrs. Baig's participation in the business is "almost 0%," she is not interested in the business or its management, and her ownership interest is only 2.5%; (3) Baig has submitted everything requested by the SBA, including copies of Baig's stock certificates, which establish that Mrs. Baig's interest in the concern is only 2.5% (975 shares issued to Mr. Baig and 25 shares issued to Mrs. Baig); [4] (4) there is no requirement to obtain SBA approval for a transfer of less than a 10% interest in an 8(a) concern; and (5) it executed orders of $1.5 million in the year ending December 31, 1996. In asserting these arguments Baig contends the termination action "is without any basis, and is brought about by SBA, only because of their misunderstandings and miscommunication between SBA and Baig Associates, caused by some typographical error[s] in the papers, and communication breakdown, due to some SBA's internal mail problems, where the papers were either lost or delivered to [the] wrong place." SBA argues Baig failed to timely submit the information the SBA requested of Baig and that Baig has produced no evidence which shows the actions of the SBA to have been arbitrary, capricious, or contrary to law. The SBA requests that Baig's Appeal Petition be denied. Discussion I The SBA may terminate participation in the 8(a) program for good cause. 13 C.F.R. Section 124.209(a). Good cause includes: (1) failure of the concern to maintain its eligibility for pro gram participation (Section 124.209(a)(1)); (2) failure by the concern to obtain written approval from the SBA for any changes in ownership, management, or control (Section 124.209(a)(4)); (3) failure by the concern to disclose to the SBA the extent to which nondisadvantaged individuals participate in the management of the concern (Section124.209(a)(5)); and (4) a demonstrated failure to make required submissions or responses to the SBA in a timely manner, including a failure by the concern to provide documents or certifications of continued eligibility or otherwise respond to requests for information relating to the 8(a) program (Section 124.209(a)(6)(iii)). The generalized allegations, that Baig failed to maintain program eligibility and failed to make required reports and submissions to the SBA, stem from the specific allegations that Baig failed to comply with the SBA's regulations when it incorporated and changed its ownership from a sole proprietorship to that of a corporation with two stockholders and two directors, and failed to disclose to the SBA the extent of the participation in the concern of an individual not found disadvantaged by the SBA. The specific allegations will be discussed with their generalized counterparts. II An 8(a) program participant must obtain the written approval from the SBA prior to changing its ownership, except if the change involves a transfer of less than a 10% interest in the concern. In the latter case, a program participant must notify the SBA of the change as soon as possible. In both cases, the SBA is required to reevaluate the continued eligibility of the concern. 13 C.F.R. Sections 124.103(i), 124.111(d); see also 13 C.F.R. Section 124.101(b). Failure to comply with this provision is a ground for termination from the 8(a) program. Baig was accepted into the 8(a) program as a sole proprietorship. SBA Response to Order of Feb. 24, 1998, Ex. 1. On June 11, 1996, Baig reported to the SBA, in its 8(a) Annual Update, that Mr. Baig owned 51% of the concern and Mrs. Baig owned 49%. AR at Ex. 8. Because the Annual Update suggested Mr. Baig had incorporated his sole proprietorship, the SBA requested Baig furnish it with copies of its certificate of incorporation, articles of incorporation, corporate minutes, corporate resolutions, stock certificates, and ledger. AR at Ex. 5, Att. 2 (July 18, 1996 letter). Baig promptly provided the certificate of incorporation, but did not provide the other information despite the SBA's repeated requests. AR at Ex. 5, Att. 1 (Nov. 7, 1996); AR at Ex. 9 (Jan. 14, 1997). While that constitutes notification "as soon as possible," it does not meet the requirement for prior written approval for a change in ownership of over 10%. The certificate of incorporation submitted to the SBA does not identify the stockholders of the corporation. [5] AR at Ex. 10. However, Baig's 8(a) Annual Update appears to identify Mr. and Mrs. Baig as Baig stockholders, along with their respective ownership interests of 51% and 49%. Despite this submission, Baig's Appeal Petition takes issue with the SBA's conclusion that Mrs. Baig owns 49% of the corporation, and that Baig needs to present additional documents addressing her ownership to the SBA. Instead Baig asserts prior SBA approval of the change was not required because Mrs. Baig owns less than 10% of the corporation. Baig's assertion is without merit for two reasons. First, Mr. Baig informed the SBA that Mrs. Baig's ownership interest was 49%. It did not present any evidence, such as stock certificates, to establish that her interest was less than 10%, despite being given many opportunities to do so, until after the SBA served Baig with the final termination letter. The SBA's letter of proposed termination advised Baig of the allegation that Mrs. Baig owned 49% of Baig's shares. Baig's March 28, 1997, response to that letter does not dispute that conclusion, but rather states that Baig "did not change anything in our organization to get incorporated," "the ownership in the organization remains the same," and "we never changed anything in regard to ownership." AR at Ex. 8. It is too late for Baig, in this appeal, to object to the SBA's conclusion and to present evidence that Mrs. Baig just owns less than 10%. Only evidence submitted to the SBA prior to reaching its decision may be considered in this appeal. [6] 13 C.F.R. Section 124.210(h)(1). Accordingly, based upon the evidence the SBA had before it when it decided to terminate Baig, it was reasonable for the SBA to conclude that Mrs. Baig had a 49% ownership interest in the concern, regardless of whether the information Baig provided the SBA was erroneous. Second, in the final analysis, it does not matter whether the transfer of ownership was more or less than 10%. Regardless of the percentage of a change of ownership, the SBA must reevaluate a program participant's eligibility. 13 C.F.R. Sections 124.103(i); 124.111(d). The only difference is whether that reevaluation is completed prior to or after Baig made the change. In both cases, the SBA was unable to reevaluate Baig's 8(a) program eligibility because Baig did not comply with the SBA's requests for information and documents. Without the requested information and documents, the SBA could not reevaluate Baig's program eligibility. Accordingly, the only reasonable conclusion the SBA could draw, absent having the details of the incorporation, was that Baig did not establish its continued eligibility for the 8(a) program. Baig questions whether a reevaluation of its program eligibility is necessary. It contends, there was no real change in Baig's management as a result of the incorporation. As a practical matter, it may be true that Mr. Baig continued to manage the concern to the same extent as when it was a sole proprietorship. However, a significant change occurred in the status of the concern, because a corporation is not the same legal entity as a sole proprietorship. The SBA requires a reevaluation of program eligibility if a sole proprietorship incorporates, because the disadvantaged individual who owns the sole proprietorship must establish that he owns and controls the corporation. See 13 C.F.R. Section 124.103(i). Thus, Baig must establish that Mr. Baig owns and controls the corporation. Baig must establish that Mr. Baig owns at least 51% of the stock in the concern. 13 C.F.R. Section 124.103(b). This may be shown by the presentation of the corporation's stock certificates and stock ledger. As the individual upon whom eligibility is based, Mr. Baig must control the corporation's board of directors either in actual numbers of voting directors or through weighted voting. 13 C.F.R. Section 124.104(b). This may be shown in either the articles of incorporation or the corporate by-laws. Since Baig does not claim to have submitted either of those documents and the SBA claims they were not submitted, Mr. Baig's control of the corporation cannot be determined from the AR. Accordingly, the SBA reasonably questions whether Mr. Baig controls the concern and its board of directors. Further, the certificate of incorporation states that both Mr. and Mrs. Baig are on the board of directors. Absent a showing to the contrary, it would seem that both have an equal vote. If that is the case, then Mrs. Baig, who is not an individual upon whom eligibility is based, can defeat any corporate actions by preventing a majority vote in favor of such action. This negative control is prohibited. See 13 C.F.R. Section 124.104(d)(1). Further, at least one socially and economically disadvantaged full-time manager must hold the position of President or Chief Executive Officer. 13 C.F.R. Section 124.104(a)(2). Without the corporate documents requested by the SBA, it cannot determine whether Mr. Baig holds either of those positions. Therefore, the SBA reasonably found that Baig (1) never provided the documents and information it requested concerning its incorporation; (2) never received SBA approval for the change in ownership, either before or after the change took place; and (3) failed to maintain program eligibility. III Individuals who have not been found to be socially and economically disadvantaged by the SBA are restricted in the extent that they may participate in the management of an 8(a) concern. 13 C.F.R. Section 124.104(c). If a nondisadvantaged individual's participation violates those restrictions, the concern no longer meets the requirements to continue in the 8(a) program, and may be terminated. 13 C.F.R. Section 124.209(a)(1). To assess the participation of nondisadvantaged individuals, the SBA requires that 8(a) firms disclose the extent to which nondisadvantaged individuals participate in the management of the concern. See 13 C.F.R. Sections 124.104(c), 124.111. Also, failure to disclose the extent of participation is a ground for termination from the 8(a) program. 13 C.F.R. Section 124.209(a)(5). Among the restrictions on a nondisadvantaged individual's participation in the management of an 8(a) concern are that no nondisadvantaged director or stockholder of Baig may: (1) own more than a 10% interest in another concern in the same or similar line of business as Baig (Section 124.104(c)(2)); (2) have an equity ownership interest of more than 10% in another 8(a) concern (Section 124.104(c)(5)); (3) receive excessive compensation (Section 124.104(c)(3)); (4) be a former employer of a disadvantaged owner (Section 124.104(c)(4)); and (5) provide critical financial support to the concern (Section 124.104(d)(3)). Baig believes that because Mrs. Baig is a Filipino American, she is socially and economically disadvantaged and these restrictions do not apply to her. However, Mrs. Baig is considered to be nondisadvantaged until her disadvantaged status is established. A nondisadvantaged individual is "any individual who does not claim disadvantaged status, does not qualify as disadvantaged, or upon whose disadvantaged status applicant concern does not rely in qualifying for 8(a) program participation." 13 C.F.R. Section 124.100. A disadvantaged individual is "an individual who SBA has determined to be socially and economically disadvantaged in connection with a concern's application for or participation in the 8(a) program." Id. Mrs. Baig may be able to qualify as socially and economically disadvantaged under the SBA regulations. As a person with origins in the Philippines, she will be presumed to be socially disadvantaged if she claims that status. 13 C.F.R. Section 124.105(b). But there is no presumption that a socially disadvantaged individual is also economically disadvantaged. An individual claiming disadvantage must establish economic disadvantage by presenting to the SBA evidence that meets the requirements of 13 C.F.R. Section 124.106. Baig neither presented any evidence to the SBA nor argues that Mrs. Baig ever claimed to be a socially and economically disadvantaged individual. [7] On the contrary, Baig argues, in its reply to the notice of proposed termination, that it does not have a nondisadvantaged individual participating in the management of the concern because Mrs. Baig is Filipino. Baig's argument evinces a misunderstanding of the regulations governing the 8(a) program. Mrs. Baig is nondisadvantaged until she asserts a claim of disadvantage with the SBA, and the SBA finds she meets the requirements for that status. When the SBA suspected that Mrs. Baig had a 49% ownership interest in the concern, it requested information which would allow it to assess the extent of Mrs. Baig's participation in the concern. Baig chose not to provide all of the requested information. That failure to do so violates 13 C.F.R. Section 124.209(a)(6)(iii), and led to one of the grounds for termination. Further, absent evidence to the contrary, Baig's failure to provide the requested information can appropriately lead to the conclusion that Baig failed to establish that Mrs. Baig's participation in the concern does not violate the SBA's restrictions on the participation of nondisadvantaged individuals. Accordingly, the SBA's conclusion that Baig failed to disclose the extent of Mrs. Baig's participation in the 8(a) program was reasonable and cannot be found to be arbitrary, capricious, or contrary to law. [8] IV The decision of the SBA to terminate Baig from the 8(a) program must be sustained unless a review of the written administrative record demonstrates the SBA acted arbitrarily, capriciously, or contrary to law in concluding Baig did not meet the requirements to continue in the 8(a) program. Such a review is narrow and does not permit me to substitute my own judgment for that of the SBA. My review must examine whether the SBA considered all of the facts presented as well as the laws and regulations which guide the decision-making process. Then, I must determine whether there was a clear error of judgment by the SBA in making its decision before I can find the SBA acted arbitrarily, capriciously, or contrary to law. See Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). A clear error of judgment can be found if the SBA: fails to properly apply the law and regulations to the facts of the case; fails to consider an important aspect of the problem; offers an explanation for its determination that runs contrary to the evidence; or provides an implausible explanation that is more than a difference between my views and those of the SBA. In sum, the SBA must articulate a satisfactory explanation for its action, including a rational connection between the facts found and its determination. See id. After a careful review of the entire written administrative record, I find the SBA's termination of Baig from the 8(a) program is fully supported in the record and is reasonable. I conclude that the SBA's decision is based on the entire record; that it considered all of the relevant regulatory and statutory factors; and it made no clear error of judgment. I further find Baig failed to comply with the requirements for continued eligibility in the 8(a) program by failing to submit the information and documents the SBA requested concerning Baig's incorporation and the extent of Mrs. Baig's participation in the concern. Accordingly, the SBA's decision is not arbitrary, capricious, or contrary to law. [9] Conclusion Respondent Small Business Administration's determination terminating Petitioner, Baig Associates, Inc., from the 8(a) program is NOT ARBITRARY, CAPRICIOUS, OR CONTRARY TO LAW. See 15 U.S.C. Section 637(a)(9)(C); 13 C.F.R. Section 124.210(h)(1). This is the final decision of the Small Business Administration and is binding upon all parties, including those within the employ of the Agency. 15 U.S.C. Section 637(a)(9)(D); 13 C.F.R. Section 124.210(i). ______________________________ RICHARD S. ARKOW Administrative Law Judge _________________________ [1] The SBA alleges Baig failed to submit other information, either required or requested by the SBA. It is unnecessary to address those allegations to decide this case. [2] It is also unnecessary to address this allegation to decide this case. [3] Baig also requests that the SBA "provide extra efforts to enable Baig Associates to get 8(a) work" and other assistance to compensate it for the SBA's conduct. I am not authorized to grant such relief. See 13 C.F.R. Section 124.210 and 13 C.F.R. part 134. [4] Baig enclosed with its Appeal Petition copies of its stock certificates, which it alleges reflect the ownership interests of its stockholders, and a financial statement for the year ending December 31, 1996, which it alleges disproves the fifth ground for termination. I must decide this appeal solely upon the written administrative record before the SBA at the time it made its decision to terminate Baig. 13 C.F.R. Section 124.210(h)(1). Accordingly, I may not consider the stock certificates and any other new evidence submitted with the Appeal Petition. [5] There is no requirement that the stockholders and their ownership interests be included in the certificate of incorporation. [6] Baig's contention that it informed the SBA that Mrs. Baig's interest in Baig was less than 10% prior to its decision to terminate Baig is not credible, because Baig's submissions, as reflected in the AR, failed to contest the SBA's conclusion. [7] Mrs. Baig did not claim disadvantaged status in the original 8(a) application. SBA Response to Order of Feb. 24, 1998, Ex. 1. [8] Baig has filed numerous motions concerning the completeness of the record. The motions mainly consist of the generalized assertion that Baig has submitted all required documents, and the argument that if Baig had not submitted all required documents, the SBA would not have approved its business plan. I have considered all of Baig's motions and, except as discussed in the Order of Feb. 24, 1998, I find them to be without merit and irrelevant to the reasons for this decision. See also Dec. 2, 1997, Order Denying Motion (explaining that under 13 C.F.R. Section 124.210(h)(1) an appeal must be decided solely on a review of the written administrative record the SBA had before it when the decision to terminate Baig was made). [9] It is not necessary to discuss the other reasons for Baig's termination. If several reasons for termination are set forth in the SBA's determination, and at least one has its basis in law and fact, the denial will not be considered arbitrary, capricious, or contrary to law, even if one of those other reasons is arbitrary, capricious, or contrary to law. See Matter of Pride Technologies, Inc., SBA No. 557 at 13-14 & n.14 (1996) (holding if SBA sets forth several reasons for denial of 8(a) eligibility, and at least one has its basis in the law and in the facts of record, the denial is not arbitrary, capricious or contrary to law). Posted: May, 1998