On March 2, 2010, the Court of Federal Claims (COFC) sustained a protest brought by a HUBZone contractor, Mission Critical Solutions (MCS), and held that the statutory language in the Small Business Act (SBA) requires prioritization of the HUBZone program over the 8(a) business development program. Mission Critical Solutions v. United States, No. 09-864C, (Fed. Cl. March 2, 2010).
MCS is an incumbent contractor providing information technology support services to the Department of the Army's Office of the Judge Advocate General. When the base year of MCS's contract expired, the Army decided to award the follow-on contract on a sole-source basis to an Alaska Native Corporation under the SBA's 8(a) program. As a qualified HUBZone small business, MCS argued that the HUBZone statute,15 U.S.C. § 657a(b)(2)(B), required the Army to first determine whether two or more qualified small business concerns will submit offers at a fair market price. MCS argued that, in contrast to the discretionary language in the 8(a) statute, if the HUBZone statutory criteria is met, competition for the contract opportunity must be reserved to HUBZone small business concerns.
The COFC agreed, holding that "Congress gave the SBA and contracting officers discretion to decide to place contracts within the 8(a) program, see 15 U.S.C. § 637(a), while dictating to contracting officers that a contract opportunity shall be awarded under the HUBZone statute on the basis of competition when certain restrictions are met." Mission Critical , No. 09-864C at 20. The mandatory language in the HUBZone statute thus requires agencies to consider whether two or more qualified small businesses could be expected to submit offers at a fair market price, and, if so, to set aside the contract opportunity for qualified HUBZone small business concerns. Because the Army awarded the contract to an 8(a) contractor on a sole-source basis without first determining whether two or more qualified HUBZone small business concerns would submit offers at a fair market price, the Army failed to comply with the plain meaning of the mandatory language in the HUBZone statute.
With this decision, the COFC has spoken definitively on an issue that has been the subject of a pointed dispute between the Government Accountability Office (GAO) and the executive branch concerning the priority of small business programs under the SBA.
MCS first brought this protest at the GAO, which the GAO sustained on May 4, 2009. See Mission Critical Solutions , B-401057, May 4, 2009, 2009 CPD ¶ 93. On July 10, 2009, the Office of Management and Budget issued a memorandum directing executive branch agencies to disregard GAO's ruling pending legal review by the executive branch. On August 21, 2009, the Office of Legal Counsel (OLC) of the U.S. Department of Justice issued an opinion addressing the issues raised in MCS's protest. The OLC disagreed with the GAO's analysis, arguing that the SBA's view that the HUBZone statute establishes "parity" with the 8(a) program and the SDVOSB program is a permissible interpretation and one entitled to deference. OLC stated further that the OLC opinion is binding on the executive branch while the GAO's decision is not, and directed agencies to disregard GAO decisions that are inconsistent with its opinion. However, rejecting the interpretation offered by the SBA and OLC-and affirming the arguments advanced by the GAO-the COFC held that the SBA's interpretation of the HUBZone statute was not entitled to any deference because "the language of the statute itself controls this case. . . ." Mission Critical, No. 09-864C at 32.
Last year, Senator Olympia Snowe (R-Maine) introduced Senate Bill 1489, "to amend the [SBA] to create parity among small business contracting programs," which was referred to the Committee on Small Business and Entrepreneurship on July 21, 2009. S.1489, 111th Cong. (2009). This bill remains in committee. Unless and until Congress acts affirmatively to establish parity among the small business programs under the SBA, HUBZone small business concerns will continue to be entitled to a preference for certain contracting opportunities where an agency's market research reveals that two or more qualified HUBZone small business will submit offers and the award can be made at a fair market price.