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HUBZone Competitions Have Priority under Small Business Act

The Court of Federal Claims enjoined a sole-source award to a contractor in the Small Business Administration's 8(a) program because the government should have first determined whether a set-aside was required under the Historically Underutilized Business Zone statute. The protester, the incumbent contractor providing information technology support services and an 8(a) and HUBZone small business concern, challenged the government's decision to set aside the follow-on contract under the 8(a) program and make a sole-source award. The protester contended the government should have competed the requirement among HUBZone small businesses. The question of the statutory priority of the HUBZone program had been disputed by the Government Accountability Office and the executive branch. After the GAO determined the HUBZone program had priority and sustained the protest (24 CGEN 112,839), the Office of Management and Budget directed executive branch agencies to disregard the GAO's rulings pending legal review. The Office of Legal Counsel of the Department of Justice subsequently issued an opinion disagreeing with the GAO's analysis and stating the GAO's decisions were not binding on the executive branch.

Plain Meaning

The court examined the language of the Small Business Act to determine whether it prioritized the HUBZone program or provided for parity with the 8(a) program. Although the Act's statements of policy and goals did not distinguish or prioritize the programs, the programs' implementing language indicated the HUBZone program took priority over the 8(a) program. The HUBZone competition provision --15 USC 657a(b)(2)(B) --directs "[n]otwithstanding any other provision of law ... a contract opportunity shall be awarded" on the basis of competition among qualified HUBZone small business concerns whenever two or more qualified HUBZone small businesses could be expected to submit offers and award could be made at a fair market price. This provision is properly interpreted as mandatory in relationship to both the HUBZone sole-source and 8(a) program provisions, both of which give the contracting officer discretion whether to award a contract in accordance with their terms. None of the Act's legislative history cited by the government overcame the plain meaning of the statutory language, and because the statute was controlling, the SBA's interpretation of its regulations as providing for parity was not afforded special deference. (Mission Critical Solutions v. U.S., FedCl, 54 CCF 79,272)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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