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Small Business Order of Priority Table (HOLD THE PRESS!)

Posted by Don Mansfield, 24 June 2009 · 2,184 views

WARNING: OMB issued a memorandum on July 10 directing executive agencies to temporarily disregard the two GAO decisions discussed below until a full review can be conducted. Until such a review is conducted, do not use the table.

Depending on your point of view, two recent GAO decisions have either clarified or muddied our understanding of the rules pertaining to the order of priority for small business programs. In International Program Group, Inc., B-400278; B-400308, September 19, 2008, the GAO held that HUBZone set-asides take precedence over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole sources (a highly criticized decision). In Mission Critical Solutions, B-401057, May 4, 2009, the GAO held that HUBZone set-asides take precedence over the 8(a) program. In both cases, the GAO sought, and disagreed with, the SBA's interpretation of the relevant statutes.

Based on these two decisions, and the current rules that in FAR Part 19, I have created a table to assist in determining the order of priority for small business programs. Instructions and relevant references are provided in the table. The table assumes that the acquisition exceeds the simplified acquisition threshold.

Take a look and let me know if you have any questions or comments.

This information is great. We have several new folks in our office, and we've been bantering this information back and forth...the table will help. Thanks
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It looks like the bottom line is that pursuant to 15 USC 637a(B)(2)(B), HUBZone set-asides take priority over everything else:

Notwithstanding any other provision of law... a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to qualified HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone small business concerns will submit offers and that the award can be made at a fair market price[.]

If I read your chart rightly, you say that the 8(a) takes priority over set-asides pursuant to FAR 19.502-2 and 19.502-3, HUBZone sole source awards, and Service-Disabled, Veteran-Owned Small Business (SDVOSB) set asides and sole source awards. You do not cite a statute as the basis for that priority, but FAR 19.800(e), which says that a contracting officer "should review' acquisitions for offering under the 8(a) program before deciding to apply any other set aside. I think it's rather generous to give 8(a) priority on the basis of "should review." FAR doesn't say "shall offer," "shall set aside," "shall award," or "shall go along with SBA wishes." What about FAR Subpart 19.5, which clearly says that an agency "shall" set a procurement aside for small businesses pursuant to the Rule of Two, which was promulgated by OFPP. I don't know who wrote 19.800(e) or on what basis they wrote it. It seems to me that 8(a) has parity with the 19.5 set-asides, not priority. What am I missing?

Finally, you say that there is parity among the remaining programs, including total and partial set-asides under FAR 19.5, HUBZone sole source, SDVOSB set-asides and SDVOSB sole source.

Good chart, but I'm not convinced about the 8(a) priority.
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I don't think that 8(a) has priority over the other programs the way that HUBZone set-asides do--it's more of a "soft" priority. 8(a) is not mandatory, but I think it is more than discretionary. If an agency ignored the possibility of offering an acquisition under the 8(a) program and went forward with a small business set-aside, they better have a good reason due to the language in FAR 19.800(e). "Should consider" is more than "may consider." It's not like the relationship between SDVOSB set-asides and SB set-asides, where the CO has complete discretion to choose either one--that's parity.

Regarding the "shall" in 19.5, I think we need to interpret that in a way where there is no conflict with 19.800(e). The only way to do that would be to say that the "shall" applies only after the agency has complied with FAR 19.800(e). Otherwise, FAR 19.800(e) would be meaningless.
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I agree. We should also point out that FAR 2.101 defines should as follows:

Should means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.
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Don - Does the recent OMB disagreement with GAO's decision have an implication on the table you provided with this Blog?
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Yes. That's why I added the warning at the top of the blog entry. I wouldn't use the table for now.
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