DOJ Supports SBA in "parity" dispute

The Dept. of Justice has issued a legal memo supporting SBA's interpretation of the small business statutes. GAO had ruled that the HUBZone program has priority over the 8(a) and Service-Disabled Veteran-Owned Small Business programs. DOJ agrees with SBA that there is "parity" among the programs. Here is an excerpt:

Under SBA's regulations, federal contracting officers are given substantial discretion to consider and designate contracts for either the HUBZone, 8(a), or SDVO Program without having to prioritize one program above the others. This aspect of the regulations - which, according to SBA, effectively establishes "parity" among the three programs - has been called into question by a pair of recent Government Accountability Office ("GAO") bid protest decisions. In these decisions, GAO rejected SBA's approach and ruled instead that the Act mandates that priority be given to the HUBZone Program when certain statutory conditions are met. As a result, according to GAO, contracting officers must set aside federal contracts to qualified HUBZone small businesses, when two or more such businesses can submit fair market bids, before they can set aside such contracts for award to small businesses under the 8(a) or SDVO Programs.

Having carefully reviewed the relevant legal materials, including SBA's own views, we conclude that the Act does not compel SBA to prioritize the HUBZone Program in the manner GAO determined to be required. In our view, SBA's regulations permissibly authorize contracting officers to exercise their discretion to choose among the three programs in setting aside contracts to be awarded to qualified small business concerns. Further, in accord with this Office's longstanding precedent, GAO's decisions are not binding on the Executive Branch.

You can download the entire memo from the PubKLaw website: http://www.pubklaw.com/papers.html.

We'll probably see this issue again, next time before the Court of Federal Claims.