Agency: U.S. Army
Disposition: Protest sustained.
Keywords: HUBZone Set-Aside
General Counsel P.C. Highlight: Court rules that the Contracting Officer must first decide whether an award can be made under the HUBZone program before making award of the contract under either the 8(a) program or the SDVO program.
Under the 8(a) program, an agency may make award of an 8(a) contract valued up to $3.5 million without competition, on a sole-source basis. However, 8(a) participants that are also Alaska Native Corporations are allowed to receive 8(a) sole source awards without any dollar limitation.
Mission Critical Solutions, both an 8(a) company and a HUBZone company, was the incumbent contractor on contract to provide IT support services to the Office of the Judge Advocate General, U.S. Department of the Army. Mission Critical’s incumbent contract was a one-year contract with no options, valued at slightly less than $3.5 million. For the follow-on, the Army wanted to include two option years on the contract, which increased the expected value of the contract to $10.5 million. Rather than award the follow-on contract to Mission Critical or compete the contract under the 8(a) program, the Army awarded a $10.5 million contract sole-source award, without competition, to Copper River Information Technology, an 8(a) Alaska Native Corporation.
Mission Critical protested first to GAO and then to the Court of Federal Claims that the HUBZone statute, as drafted by Congress, required the Army to consider, first, whether it could compete the contract under the HUBZone program, before deciding to make an award of the contract under the 8(a) program. Both the Army and the Small Business Administration argued that the HUBZone program did not have precedent over the 8(a) program and that, in fact, the HUBZone program, the 8(a) program, and the Service Disabled-Veteran Owned (SDVO) program are on a par with each other — one does not take precedent over the other. Consequently, the Army and SBA argued, it is in the Contracting Officer’s discretion whether to select to make an award under the 8(a) program or the HUBZone program.
Mission Critical had first protested this matter to the GAO, which agreed with Mission Critical that the HUBZone statue, as drafted, placed the HUBZone program first in priority over the 8(a) program and the SDVO program. Because the GAO’s opinions are only advisory, the Agency is free to decline the GAO’s ruling, which it did in this case.
Mission Critical then took its case to the Court of Federal Claims, which agreed with Mission Critical and the GAO. The Court held that the HUBZone statute, as Congress drafted it, clearly requires that any contract opportunity where there are 2 or more responsible HUBZone contractors expected to submit a proposal for a fair market price must be competed among the HUBZone contractors. If no such HUBZone contractors are eligible for the competition, then and only then can the Contracting Officer turn to the 8(a) program for award. There is no comparable mandate for either the 8(a) program or the SDVO program. The Court issued an injunction requiring the Army to determine whether there are 2 or more eligible HUBZone companies to compete for this contract award and, if so, then to compete the award under the HUBZone program.