Link: GAO Opinion
Agency: Defense Commissary Agency
Disposition: Protest sustained.
Keywords: HUBZone Program Priority
General Counsel P.C. Highlight: Under the law in effect at the time, the SBA’s HUBZone program had priority over all other programs (including 8(a) program and SDVO Program) for purposes of deciding whether a procurement should be set-aside. That law has been subsequently changed. Under the current law, a contracting officer may use his or her discretion in deciding whether to set-aside for the HUBZone, 8(a) program, or the SDVO program, so long as the program requirements have been met.
Rice Services, Inc. (Rice), a Historically Underutilized Business Zone (HUBZone) small business concern, protests the terms of a solicitation issued as a set-aside for service-disabled veteran-owned small business concerns (SDVOSBCs) by the Defense Commissary Agency (DeCA) for shelf stocking and custodial services.
DeCA issued a solicitation as a total set-aside for SDVOSBCs. Rice alleges that the procurement should instead be set aside for competition limited to HUBZone small business concerns. GAO has considered this issue in several prior protests and has concluded that the HUBZone statute requires procuring agencies to set aside procurements for HUBZone small business concerns when the conditions set forth in the statute are met. Protests raising the sole issue of HUBZone set-aside priority will be addressed in an “expedited and summary manner” where the agency acted contrary to our decisions in reliance on a DOJ Memorandum Opinion that stated that there is no statutory requirement to prioritize the HUBZone program.
GAO states that the plain language of the HUBZone statute requires an agency to set aside an acquisition for competition restricted to qualified HUBZone small business concerns where it has a reasonable expectation that not less than two qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price. The DeCA was required to consider whether the conditions for setting aside a procurement for HUBZone small business concerns were met, and if so, to set aside the procurement for HUBZone small businesses. Because the agency did not perform this mandatory step, GAO concludes that it was improper for the agency to proceed with this procurement as an SDVOSBC set-aside. GAO recommends that the agency undertake reasonable efforts to ascertain whether it will receive offers from at least two HUBZone concerns and award will be made at a fair market price. The protest is sustained.