Link: GAO Opinion
Agency: Department of the Air Force
Disposition: Protest sustained.
Keywords: HUBZone Priority
General Counsel P.C. Highlight: Despite the Department of Justice’s recommendation to the contrary, GAO finds that the HUBZone Small Business Program has priority over all other SBA programs such as the 8(a) program or the SDVO program. A procurement may not be set aside for 8(a) participants unless and until the agency has determined if there are two or more qualified HUBZone small business concerns and if the award can be made to one of these HUBZone participants at a fair market price)
Following a request for proposals (RFP) for military family housing maintenance, issued by the Department of the Air Force (Air Force), DGR Associates, Inc. (DGR), a Historically Underutilized Business Zone (HUBZone) small business concern, protested that the Air Force should have issued the solicitation as a HUBZone set-aside rather than setting it aside under the 8(a) program.
The Air Force issued the RFP as a set-aside for 8(a) small business concerns. The RFP contemplates the award of a fixed-price requirements contract for maintenance, inspection, and repair services for military family housing. DGR filed an agency-level protest, which was denied, then a GAO protest challenging the Air Force’s decision not to set aside the procurement for HUBZone small businesses.
GAO stated that the plain language of the statute authorizing the HUBZone program is mandatory and requires that an agency set aside a procurement for HUBZone participants when certain criteria are met (specifically, where the agency has a reasonable expectation of receiving offers from at least two qualified HUBZone small business concerns and where the award can be made at a fair market price). GAO concluded that the Air Force was required first to consider whether the conditions for setting aside the procurement for HUBZone businesses were met. Because the Air Force did not perform this mandatory step in the set aside process, GAO found that it was improper to proceed with the procurement as an 8(a) set-aside.
The Air Force claimed that it was following a Department of Justice Memorandum binding on all Executive Branch agencies that said that the HUBZone program does not have priority over the 8(a) program and that federal contracting officers have substantial discretion to consider and designate contracts for either the HUBZone, 8(a), or the Service Disabled, Veteran-Owned (SDVO) Program without having to prioritize one program above the others. Citing GAO precedent and a recent case from the Court of Federal Claims agreeing with GAO’s interpretation, GAO upholds its previous decision that the HUBZone statute clearly gives the HUBZone program priority over all other small business programs. GAO further states that future GAO protests raising this issue will be decided in the same way in an expedited and summary manner. GAO sustained the protest and recommended that the Air Force reimburse the protester its costs of filing and pursuing the protest.