A judge ruled that SBA mishandled the ATI case. But the company remains suspended.
SBA filed a one-document record
The Small Business Administration failed to provide a Federal administrative judge enough information to review the agency’s decision to suspend ATI Government Solutions from the 8(a) program, SBA’s Office of Hearings and Appeals ruled earlier this month. But despite sharply criticizing the agency’s handling of the case, the judge allowed the suspension to remain in place while SBA assembles a complete record.
SBA suspended ATI from Federal contracting on October 21, 2025, and followed up with a suspension from the 8(a) program two days later. The suspensions followed a video published by the O’Keefe Media Group where ATI staff appear to acknowledge “pass-through” schemes using ATI’s 8(a) status.
Under SBA rules, an 8(a) firm can appeal its program suspension to OHA. OHA then reviews the SBA’s administrative record—the collection of all the documents that SBA relied on in deciding on the suspension—to rule on whether there was enough evidence to justify the suspension.
But, in response to ATI’s appeal, SBA filed just one document as its administrative record—and it wasn’t even the 8(a) suspension letter. “I must conclude that the Agency’s proffered Administrative Record here met none of the requirements for submission of the Administrative Record,” Judge Christopher Holleman wrote in the decision. His ruling does not address whether the allegations against ATI are true, instead focusing on whether SBA followed proper procedures.
Judge Holleman remanded the case to SBA, ordering the agency to file a new administrative record by June 12. In the meantime, however, ATI remains suspended from both the 8(a) program and governmentwide. OHA’s jurisdiction reaches only to the 8(a) program. So, even if OHA were to lift ATI’s 8(a) suspension, that would not affect ATI’s continued suspension from receiving new Federal contracting actions. ATI would need to challenge the governmentwide suspension elsewhere under the procedures of FAR Part 9.4.
O’Keefe: “The biggest story we’ve ever done”
SBA suspended ATI just days after the O’Keefe Media Group published a video in which alleged ATI employees discussed doing as little as 20% of the work on 8(a) contracts. Owned by the Susanville Indian Rancheria, ATI qualified as a tribally owned 8(a) participant and was therefore eligible for sole-source 8(a) contracts up to $100 million. Public records show that ATI received $227 million in 8(a) contracts.
More recently, O’Keefe published a video with undercover interviews of alleged staff from Cherokee Federal and Chenega Corporation. James O’Keefe referred to the 8(a) investigations as “the crusade on the biggest story we’ve ever done.”
Both videos implicate the SBA’s rule on limitations on subcontracting. For services contracts, the rule limits spending on subcontractors to 50%. But there are many exceptions, as described in this article on GovCon Intelligence:
ATI Government Solutions and SBA's Limitations on Subcontracting
I’m going to assume that readers have heard of or even seen the YouTube video that led to SBA suspending ATI Government Solutions from government contracting last week. My big admission f…
In its filings at OHA, ATI referred to the O’Keefe video as “selectively edited” and “obtained by deceptive means,” according to the published OHA opinion. ATI stated that the individual depicted in the video was a short-term employee with no actual personal knowledge of compliance with 8(a) program regulations.
ATI also claimed that SBA did not conduct its own investigation, relying entirely on the video to support its suspension action. “SBA has usually investigated allegations of violations of the regulations before suspending 8(a) firms, and it has not done so here,” ATI argued, as paraphrased in the opinion.
SBA switches its reason for suspension
In its administrative record to OHA, SBA filed a single document: the October 21st letter suspending ATI governmentwide under FAR procedures. But the FAR suspension isn’t why ATI was suspended from the 8(a) program, OHA ruled.
Instead, according to the later 8(a) suspension letter—which OHA received from ATI—the 8(a) suspension was based on the statements from ATI’s employee.
SBA switched its reason for the 8(a) suspension midstream, Judge Holleman concluded. At first, the 8(a) suspension pointed to the video’s statements. Then, after ATI appealed, SBA claimed that it had the authority to suspend from the 8(a) program because ATI was suspended governmentwide. “A FAR suspension is adequate evidence for an 8(a) program suspension,” SBA argued.
But the judge disagreed, stating that SBA’s switch was an impermissible “post hoc rationalization.” “The Agency has thus stated on appeal a completely different justification for its action than that given at the time it was issued,” Judge Holleman wrote.
The problem with the switch, Judge Holleman ruled, is that it doesn’t reflect what SBA actually used to suspend ATI from the 8(a) program on October 23. As a result, SBA must go back and collect the documents upon which SBA officials relied to issue the suspension.
The judge directed that if the SBA consideration “includes videos, the videos must be included in the electronic submission of the Administrative Record.”
ATI remains suspended on both fronts
OHA has lifted 8(a) suspensions before in cases where SBA hasn’t justified the suspension. But OHA didn’t do so in this latest decision. Instead, SBA has until June 12 to provide additional documents to OHA.
“The Agency must bear in mind that it has the burden of showing that its decision to suspend Petitioner must have been based upon adequate evidence that protection of the Government's interest requires suspension,” Judge Holleman advised SBA, observing that the relevant standard is similar to the “probable cause” needed for an arrest or search warrant.
But, even if OHA were to lift the suspension or SBA were to do so on its own, ATI would still need to grapple with its continuing governmentwide suspension under FAR 9.4. The FAR provides that suspensions are for a “temporary period pending the completion of an investigation and any ensuing legal proceedings.” The suspension must be terminated within 12 months after the notice if legal proceedings are not initiated, unless the Justice Department or a prosecutor requests a six-month extension. The FAR suspension prevents ATI from receiving new contracts and most new contracting actions, including orders and, importantly, 8(a) awards.
After SBA’s filing on June 12, ATI has until June 22 to file objections and until June 29 to file a substantive reply. OHA Judge Holleman retains jurisdiction throughout, setting up a ruling on whether SBA can substantiate one of the most closely watched suspensions in the 8(a) program’s history.
With 20 years of Federal legal experience, Sam Le counsels small businesses through government contracting matters, including bid protests, contract compliance, small business certifications, and procurement disputes. His website is www.samlelaw.com.
This article is for informational purposes only and does not constitute legal advice.