HUBZone program could shrink soon

The door of special contracting opportunities for small businesses in poor areas might close soon as Congress and the Obama administration attempt to change the rules.

Administration officials plan to finalize several revisions to the Small Business Administration’s Historically Underutilized Business Zone (HUBZone) program as early as June, according to a semi-annual report on acquisition regulation proposals. The report was released in today's Federal Register.

A new rule, which was first proposed in April 2009, would delete from the Federal Acquisition Regulation (FAR) language that gives HUBZone companies priority over other small businesses when an agency decides to set aside a contract. Under current regulations, small businesses, such as those owned by service-disabled veterans, can compete for the set-aside contract if no suitable HUBZone companies can do the work.

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However, the HUBZone program has its advocates.

“Most of our [small-business] programs are meant to help disabled veterans or women, specific groups,” Rep. Roscoe Bartlett (R-Md.), co-chairman of the Congressional HUBZone Caucus and a member of the Small Business Committee, said at an April 21 hearing. "The HUBZone program really helps whole communities."

The proposed rule would revise the FAR to reflect both SBA’s interpretation of its regulations regarding the relationship among the small-business programs and SBA’s interpretation of the Small Business Act overall, the report states.

However, a U.S. Court of Federal Claims judge ruled in March that the “shall” in federal law requires contracting officers to search for HUBZone companies first. That “shall” trumps interpretations and regulations that try to equalize the multiple small-business set-aside programs, the judge ruled.

Also, talk from Capitol Hill won't override the "shall," according to the judge. “Congress’s statements about the proper interpretation of a statute subsequent to the statute’s passage are of little persuasive authority,” the judge wrote in the ruling.

Several senators are trying to rid the statute of the “shall” that makes HUBZone firms the first choice. Sens. Richard Durbin (D-Ill.) and Mary Landrieu (D-La.), chairwoman of the Small Business and Entrepreneurship Committee, introduced the Small Business Programs Parity Act (S. 3190) in March. The measure would place small-business contracting programs on equal footing and give federal contracting officers the authority to choose the program that best suits an agency’s needs.

Other bills in the Senate and the House would also remove the language in question.

Last year, Landrieu tried to make the same change. She and the committee’s ranking member, Sen. Olympia Snowe (R-Maine), tried to erase the “shall” but weren’t successful. Committees are still reviewing the bills.

The report also offers short descriptions of the relevant regulations the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council are developing.