8(a), HUBZone Parity Rule in Limbo The Small Business Administration has withdrawn a proposed rule that would grant HUBZone firms parity with 8(a) companies in awarding contracts, after the House Small Business Committee approved legislation that would overturn the rule. The issue has bitterly divided minority business advocates, who favor the 8(a) program, and backers of the HUBZone program, which is designed to create jobs in poor areas. “SBA received over 1,100 comments on the proposed rule and in reviewing those comments, felt several of them were significant enough to warrant further consideration. The agency does intend to publish an advanced notice of public rulemaking to address each of these issues,” the agency said in a statement issued by its public affairs office. The statement said no further action will be taken until Congress passes the SBA reauthorization bill, which sets the rules for the agency’s programs. The House version of that bill comes down squarely on the side of 8(a) firms. It gives the 8(a) program first crack at set-aside contracts and would require that all HUBZone business owners be disadvantaged individuals. (SAA, 8/8) In effect, that would make the HUBZone program a successor to the set-aside program for small disadvantaged businesses, which has been dormant for seven years. The Clinton administration declared a moratorium on SDB set-asides after the 1995 Adarand decision limiting affirmative action; the Bush administration has declined to lift the moratorium. At present only 18% of the more than 8,000 HUBZone-certified companies are also certified as small disadvantaged businesses, according to SBA’s PRO-Net database. The Senate version of the reauthorization bill contains no such provisions. Several senators, most notably Kit Bond (R-MO), are staunch backers of the HUBZone program and can be expected to oppose the House bill’s changes. Sen. John Kerry (D-MA), like Bond a former chairman of the Senate Small Business Committee, said last year that it was Congress’s intent to give the HUBZone program parity with 8(a)s in federal procurement. House Democrats dispute that. SBA issued its proposed parity rule on Jan. 28, 2002. (SAA, 2/8/02) Administrator Hector Barreto defended the rule at a House Small Business Committee hearing last year, saying the two programs should not be seen as competitors. But minority business advocates see them exactly that way. Rep. Nydia Velazquez (D-NY), a leading defender of the 8(a) program, said parity would undermine that program at a time when its share of contract dollars is already shrinking. In fiscal 2002 the government awarded 2.39% of contract dollars to 8(a) firms and 0.71% to HUBZone companies, according to the Federal Procurement Data Center.