HUBZone preference debate may end

The debate over whether a law lays out a first preference for certain small businesses when setting aside contracts is likely ending.

The House passed the Small Business Jobs and Credit Act (H.R. 5297), which includes a provision that would end confusion over whether companies in Historically Underutilized Business Zones, known as HUBZones, are supposed to get first preference over other categories of business, such as service-disabled veteran-owned small businesses, when agencies set aside a contract.

The bill would change “shall” to “may” in a section of the Small Business Act.

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After the House’s vote, the president said he would sign the bill Sept. 27.

Since 2009, the administration has faced off with the Government Accountability Office and Court of Federal Claims over the HUBZone preference issue.

The law states that a contracting officer “shall” award a set-aside contract to a HUBZone small business. However, the statute states that a contracting officer “may” award a set-aside contract to another type of small company. In other words, contracting officers must first check for eligible HUBZone companies that could do the work. If there were none, the contracting officer could look for other types of small businesses.

The administration said the “shall” in the statute is not a mandate because that wasn’t Congress’ intent in the Small Business Act. GAO officials and the court’s judges said the statute is law and the wording is clear.