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GAO: HUBZones take precedence over 8(a) firms.

The Government Accountability Office has ruled that a contract must be removed from the 8(a) program if qualified HUBZone businesses are willing and able to do the work.

In overruling SBA's objections, GAO expanded on its decision last year that HUBZone firms are first in line for set-aside contracts. The law creating the HUBZone program states that a contract "shall" be set aside for HUBZone companies if two of them are capable of performing the work. In contrast, the law leaves it up to contracting officers' discretion whether to set aside work for 8(a) and service-disabled veteran-owned firms. (SAA, 10/ 10/08)

Ruling on a protest by Mission Critical Solutions of Tampa, FL, GAO told the Army it should have considered a HUBZone set-aside for a follow-on contract for IT support even though the work had previously been set aside for an 8(a) firm.

SBA's parity rule gives 8(a), HUBZone and SDV firms equal consideration for set-asides. Last year GAO rejected the rule based on "the plain meaning" of the HUBZone law. It applied the same reasoning in deciding that an agency must consider a HUBZone set-aside before awarding a follow-on contract for work that has been performed by an 8(a)firm. "[I]n our view, a separate 'contract opportunity' arises every time an agency prepares to award a new contract," GAO said.

The relative priority of 8(a), HUBZone and SDV firms has long been a political football. Veterans' organizations have lobbied Congress to make the SDV program a mandatory set-aside on an equal basis with HUBZones.

Last year SBA argued unsuccessfully that agencies must be given some discretion in determining which small business program to use so that they could achieve their procurement goals in all socioeconomic categories. In its latest decision GAO said SBA's position is not reasonable "since it fails to give effect to the mandatory language of the HUBZone statute."

Congress is due to reauthorize SBA programs this year, giving lawmakers an opportunity to weigh in on the issue.

Further complicating matters, the Government Accountability Office has found evidence of widespread fraud in the HUBZone program, leading several members of Congress to threaten to shut it down. (SAA, 4/3)
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Publication:Set-Aside Alert
Date:May 15, 2009
Previous Article:Regulators to consider set-asides on task orders.
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