Judge upholds HUBZone priority

Claims court judge says HUBZone priority couldn't be clearer

Another U.S. Court of Federal Claims judge has held that small businesses in the Historically Underutilized Business Zone program must get the first opportunity to bid on a contract.

In an opinion released Aug. 13, Judge Thomas Wheeler ordered the Air Force to end its contract with General Trade and Services Inc. because officials did not first set aside the work for companies in the Small Business Administration’s HUBZone program when at least two would have bid fair prices on the work. (Read Wheeler's opinion.)

The law requires that agencies attempt to find two or more qualified HUBZone small businesses that could bid on a set-aside contract before turning to another small-business program.


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In December 2009, General Trade and Services, a small business in SBA’s 8(a) Business Development Program, received a contract for inspecting and repairing houses at Eielson Air Force Base in Alaska. DGR Associates Inc. protested the contract, and the Government Accountability Office upheld the company's protest in May. However, Air Force officials said they would not follow GAO’s decision because the Obama administration has ordered agencies not to comply with it. So DGR Associates took the case to the Federal Claims Court.

Government attorneys argued that small-business regulations don’t require an agency to give HUBZone companies the first opportunity, but Wheeler wrote in his opinion that the law’s mandate is obvious.

“On the issue of statutory interpretation, the language of the Small Business Act granting priority to the HUBZone program could not be more clear,” Wheeler wrote.

“The outcome of this dispute turns on the interpretation of the statutory language that Congress used to establish the section 8(a) and HUBZone small-business programs,” he wrote. "Despite executive agency memoranda to the contrary, this court and the GAO have held that the plain meaning of the Small Business Act mandates a priority to the HUBZone program."

Several members of Congress are trying to change the law to make the small-business programs equal, which would give contracting officers more discretion in choosing the program through which to set aside a contract.

The law states that a contracting officer “shall” award a contract to a HUBZone small business. However, it also states that a contracting officer “may” award a contract to a company in one of the other programs, such as 8(a) or the program for small businesses owned by service-disabled veterans.

GAO and the courts have ruled that the "shall" connected to HUBZone businesses gives those companies preference over the small businesses covered by the "may" wording.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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