DGR previously filed a GAO protest and prevailed, but the Air Force refused to follow GAO’s recommendation, so DGR filed for declaratory and injunctive relief in the Court of Federal Claims.

There is an ongoing dispute as to the relative priority of the 8(a) and HUBZone programs. The GAO and Court of Claims have both held that the plain meaning of the Small Business Act mandates a priority to the HUBZone program, but the executive agency has issued memoranda to the contrary. An appeal has been docketed on this issue in the case of Mission Critical Solutions v. United States, 91 Fed. Cl. 386 (2010), appeal No.2010-5099 (Fed.Cir. Apr. 2, 2010).

In the DGR decision, the Court of Federal Claims states “the language of the Small Business Act granting priority to the HUBZone program could not be more clear”, and “Congress established a priority for the HUBZone program over other competing small business concerns.” 15 U.S.C. Section 657a(b)(2)(B). “The executive agency memoranda reflecting disagreement with this interpretation, more than anything, simply express disbelief that Congress could have intended a priority for the HUBZone program.” The memoranda referenced include an OMB July 2009 memo, a DOJ Office of Legal Counsel memo August 2009 memo, and an Office of the Under Secretary of Defense, Director, Defense Procurement and Acquisition Policy memo dated May 2010.

Significantly, in the DGR opinion, the United States Court of Federal Claims “permanently enjoins [the United States] from proceeding with the contract unlawfully awarded to [the 8(a) firm], and from awarding any contract that is not in compliance with the Small Business Act as interpreted herein.”

For further information about HUBZone or 8(a) set asides, or to discuss your government contract bid protest questions, contact Karen S Hindson PC.

Congress has established statutory and aspirational goals designed to help small businesses compete for government contracts. Goals: 23% of all prime contracting dollars to small business, 3% participation by small businesses in HUBZones, 5% participation by small businesses owned by women, 5% so socially and economically disadvantaged individuals, and 3% to service-disabled veterans.

The task force is to provide proposals and recommendations for using innovative strategies such as teaming to increase opportunities, removing barriers by unbundling large projects, expanding outreach to match firms with contracting and subcontracting opportunities, and establishing policies to assist with the objectives. The memorandum also directs development of a web site to improve transparency and accountability.

For more information on government contracts contracting and subcontracting opportunities for small businesses, contact Karen S. Hindson of Hindson & Melton LLC.

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.