## Facts

- The Small Business Administration (SBA) administers the Small Business Act’s Section 8(a) Business Development Program, under which SBA can take a federal agency requirement as a prime contract and then subcontract performance to an eligible socially and economically disadvantaged small business.
- San Antonio General Maintenance, Inc. (SAGM) participated in Section 8(a) and performed custodial services at Kelly Air Force Base (Kelly AFB) as an SBA subcontractor.
- SAGM graduated from the Section 8(a) program in 1985.
- When the custodial-services requirement came up for a follow-on contract after SAGM’s graduation, the SBA and the Air Force decided to keep the requirement within Section 8(a) and to award the subcontract to another Section 8(a) participant, Rite-Way Services, Inc.
- SBA memorialized its decision to retain the Kelly AFB requirement in Section 8(a) in a written memorandum that stated the factors the agency considered.
- SAGM and Pedro G. Molina, Jr. sued James Abnor (SBA Administrator) and Edward C. Aldridge, Jr. (Secretary of the Air Force) seeking declaratory and injunctive relief to stop an 8(a) award and to require competitive bidding.
- Plaintiffs sought a temporary restraining order and a preliminary injunction; defendants moved to dismiss or, alternatively, for summary judgment, and the court addressed the matters at a final hearing before ruling.

## Issues

1. Whether SBA’s and the Air Force’s decision to retain the Kelly AFB custodial-services requirement in the Section 8(a) program is reviewable in court, and whether a former Section 8(a) participant has a legally protected right to require competitive bidding on the follow-on contract.
2. If review is available, whether SBA’s decision to keep the requirement in Section 8(a) was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
3. Whether the Air Force violated Section 1207 of the National Defense Authorization Act (requiring 5% of Defense Department contract dollars to go to small disadvantaged businesses) by using Section 8(a) rather than an SDB set-aside or open competition.

## Decision

- The court denied plaintiffs’ requests for declaratory and injunctive relief.
- The court granted defendants’ motion for summary judgment.
- The court held that the challenged Section 8(a) contract-placement decision fell within the agencies’ statutory discretion and was not shown to be unlawful on the administrative record presented.
- The court rejected the claim that plaintiffs had an enforceable right to compel competitive bidding for the follow-on contract.
- The court held that Section 1207 did not bar the Air Force from meeting its SDB objectives through Section 8(a) contracting and did not require use of a different procurement vehicle for this requirement.

## Legal Principles

- Section 8(a) gives SBA substantial discretion to decide whether to accept or retain agency requirements in the program and to arrange contracting opportunities for eligible disadvantaged firms.
- A contractor that has graduated from Section 8(a) has no statutory entitlement to insist that an agency remove a requirement from Section 8(a) or open the follow-on procurement to full and open competition.
- Where a court applies Administrative Procedure Act–type review to a Section 8(a) placement decision, the agency action is upheld if the record shows consideration of the relevant factors and a rational explanation for the choice made.
- A statutory contracting percentage target for disadvantaged businesses (such as Section 1207’s 5% requirement) does not, without more, mandate a particular solicitation method or forbid use of Section 8(a) to satisfy the target.
- Injunctive relief is generally unavailable absent a clear legal right and a strong showing of likely success, especially when the requested order would interfere with procurement decisions Congress assigned to the agencies.

## Conclusion

San Antonio General Maintenance, Inc. v. Abnor held that SBA and the Air Force acted within their delegated authority when they kept the Kelly Air Force Base custodial-services requirement in the Section 8(a) program after SAGM graduated and awarded the work to another 8(a) subcontractor, and that neither the Small Business Act nor Section 1207 gave SAGM a right to force competitive bidding or required the Air Force to use a separate SDB set-aside instead of Section 8(a).


San Antonio General Maintenance, Inc. v. Abnor, 691 F. Supp. 1462 (1987)