The U.S. Court of Federal Claims has ordered the VA to pay attorneys’ fees to Miles Construction, LLC stemming from the Court’s February decision that the company’s ”right of first refusal” provision did not render it ineligible for the VA’s SDVOSB program.
In ordering the VA to pay attorneys’ fees, the Court held that the VA’s defense of its broad interpretation of “unconditional ownership” was not substantially justified–but also suggested that the Court might not reach the same result under the SBA’s SDVOSB rules.
The Court’s decision in Miles Construction, LLC v. United States, No. 12-597C (2013) involved Miles Construction’s request for reimbursement of its attorneys’ fees under the Equal Access to Justice Act. Under EAJA, a qualifying small business may recover its attorneys’ fees for prevailing in litigation against the government, but only if the government’s litigation position was not “substantially justified.”
Opposing the request for attorneys’ fees, the VA argued, in part, that it had been “substantially justified” in taking the position that the SDVOSB program’s “unconditional ownership” requirement prohibited right-of-first-refusal provisions. The VA primarily relied upon SBA Office of Hearings and Appeals decisions holding that right-of-first-refusal provisions defeat “unconditional ownership” under the SBA’s SDVOSB regulations.