A May 14, 2010 decision of the GAO – U. S. Government Accountability Office – in B.402494, DGR Associates, Inc., confirms that the GAO’s interpretation of the law governing HUBZone set-asides continues to be in direct conflict with the interpretation of the Department of Justice.
In the DGR decision, GAO sustained the bid protest of a firm bidding on an Air Force housing maintenance RFP. The GAO finds the law governing Historically Underutilized Business Zone (HUBZone) priority to be unambiguous and requiring a HUBZone set aside if the statutory conditions are met (at least two HUBZone concerns and award will be at a fair market price). Nonetheless, the Air Force set the procurement aside for the Small Business Administration (SBA) section 8(a) program with the concurrence and support of the SBA and Department of Justice. This conflict throws the bid protest system into disarray, as the GAO sustains a bid protest and the Executive Branch agency refuses to follow the GAO decision. The GAO acknowledges this dilemma in its decision, noting that this issue will only be resolved by a change in the law or by a decision by the United States Court of Appeals for the Federal Circuit.
The Justice Department currently has an appeal pending in the case of Mission Critical Solutions v. United States, in which the Federal Claims Court agreed with GAO’s interpretation of the law. Watch for a decision by the Federal Circuit. Contact government contracts attorney Karen S. Hindson for more information.