SBA Warns of Turmoil Without Parity Rule The Government Accountability Office has thrown set-aside programs into confusion by rejecting the rule giving parity to 8(a), HUBZone and service-disabled veteran-owned businesses in consideration for set-asides. It may be up to Congress to sort it out. In deciding a bid protest, GAO declared the parity rule is contrary to law, because the law says a contract “shall” be set aside if two or more HUBZone firms are ready and able to do the work at a reasonable price. In contrast, the law says a contract “may” be set aside for SDV firms. In urging GAO to reconsider, SBA’s counsel said, “Creating an order of precedence that would place one program, e.g., the HUBZone program, over all others would hinder the Government’s and the agency’s ability to meet its individual [contracting] goals.” SBA said the parity rule was adopted because federal agencies “must be afforded some discretion in determining which small business program to utilize.” The counsel’s letter said the SBA administrator has legal authority to interpret the Small Business Act: “The decision substituted GAO’s judgment for that of the SBA Administrator.” In rejecting the request to reconsider, GAO lawyers wrote, “Simply stated, the SBA’s regulatory implementation of the HUBZone and SDVOSBC programs is not consistent with the relevant statutory language and cannot be considered reasonable or otherwise given deference.” The legal standoff is an invitation for protests by HUBZone firms whenever they are passed over for set-asides, because GAO will treat its decision as a precedent in ruling on future protests. “The precedent is what it is,” GAO’s managing associate general counsel, Michael R. Golden, said in an interview. “It’s going to be up to the individual agencies who are really going to have to deal with it” when they decide how to award set-asides, he added. SBA did not respond to a request for comment. “GAO is taking the heat, but it’s really Congress that caused the problem,” said Robert Burton, former deputy administrator of the Office of Federal Procurement Policy. “The statutes unfortunately have inconsistent wording.” Burton told Set-Aside Alert that regulators recognized the conflicting language when the parity rule was adopted. “GAO is probably interpreting the statutes correctly. The SBA policy is more practical and probably reflects what was intended,” he added. “Congress needs to revisit this. They need to clarify” their intent. Several members of Congress have proposed changing the law to give SDV firms parity, but none of the bills passed. In September GAO sustained a protest by a HUBZone company, International Program Group Inc., over a Marine Corps contract that was set aside for an SDV firm. The ruling said the contracting officer should have considered a HUBZone set-aside first. (SAA, 10/10) The decision rejected SBA’s parity rule, which gives HUBZone, 8(a) and SDV companies equal priority in set-asides. A pending proposed rule would add the parity provision to the Federal Acquisition Regulation. In asking for reconsideration, SBA said GAO is “creating a new policy concerning the SBA’s socioeconomic programs.” Under GAO’s decision, SBA said, agencies have no way of knowing which category is second in line after HUBZones. In addition, it warned that HUBZone companies could receive a disproportionate share of set-aside contracts, squeezing out other groups. GAO rejected the request for reconsideration Oct. 24, saying SBA had only repeated arguments that had already been found wanting.