Congress could end HUBZone priority in small-biz contracting
“Shall” seems to be the toughest word to erase from the law books. Even when everyone wants the word gone, it tends to stick around to wreak havoc for those who dislike its mandatory nature.
Officials have been trying to delete "shall" from the HUBZone program in order to equalize contracting set-asides among the various categories of small businesses. And this time Congress seems determined.
Currently, the law tells agencies that when they set aside a federal contract for small businesses to look first for companies based in economically depressed areas, or HUBZones. If none qualify for the job, then agency contracting officials can check out firms in the Small Business Administration’s 8(a) program and small companies owned by service-disabled veterans.
The law requires contracting officers to give HUBZone companies priority, and many people don’t like that advantage.
Yesterday, the House voted to close the conference in which representatives from the House and Senate amend the differences in the two versions of the fiscal 2010 National Defense Authorization Act (H.R. 2647). The Senate’s version includes a short section on Small Business Contracting Programs Parity. It would simply strike the pesky “shall” and replace it with the more egalitarian “may.” The section is expected in the final version too.
In case something goes wrong, there’s another option. Rep. Wally Herger (R-Calif.) yesterday introduced a one-line bill to strike the "shall" and pencil in "may." Herger today said he’s heard from many small businesses in his Northern California district who say that the HUBZone program in its current form prevents them from bidding on contracts.
Even some strong HUBZone advocates agree with the proposed change of wording. In July, Rep. Roscoe Bartlett (R-Md.), co-chairman of the HUBZone Caucus, said the small business categories should be treated equally.
The Obama administration is conducting its own legal review of the law regarding HUBZone business set-asides and the accompanying shall. But until it’s finished, Peter Orszag, director of the Office of Management and Budget, told agencies in a July memo that the categories of small businesses are equal when it comes to contract set-asides.
However, when asked to review two related bid-protest decisions, the Government Accountability Office pointed back to the law. The law, the standard by which the U.S. government operates, says those small businesses aren’t equal.
The Small Business Reauthorization Act of 1997 states that “a contract opportunity shall be awarded” on the basis of a set-aside competition among HUBZone companies. Meanwhile, Congress didn’t afford other small companies the same mandate. The law only says contracting officers “may” set aside a contract to those types of companies.
Until administration officials finish their review of the law, small business parity regulations “should not be disregarded by contracting officers, and federal agencies should not, as a result of the GAO’s decisions, be compelled to prioritize HUBZone small businesses,” Orszag wrote.
As the defense authorization bill comes before the House and Senate for a vote on passage, the administration's legal review may become moot. But "shall" is proving to be hard to erase.
Posted by Matthew Weigelt on Oct 07, 2009 at 1:58 PM