On Sept. 27, 2010, President Obama signed legislation into law re-establishing equality among each of the small business subcategories that competes for government contracts.
The 2010 Small Business Jobs Act, which also provides tax cuts for undersized firms and creates programs to support private sector lending, makes a technical revision to the 1953 Small Business Act by replacing the word “shall” in the Historically Underutilized Business Zone statute with the word “may.”
The old language in the Small Business Act stated that a procurement officer shall award contracts based on limited competition to HUBZone small businesses. But, the statutes creating the service-disabled veteran-owned small business program and the Small Business Administration’s 8(a) Business Development Program used the word “may” when referring to set-aside contracts.
Prior to this law, the Government Accountability Office and the U.S. Court of Federal Claims determined the difference unambiguously established a preference for HUBZone firms.
But a controversy over the issue of parity among small business types was sparked in May 2009 when Mission Critical Solutions, which had lost out on an Army IT contract to an 8(a) minority-owned small business, filed a protest with GAO. The company argued, and GAO agreed, that HUBZone firms were legally at the top of the small business pecking order and the government should have given Mission Critical Solutions the first crack at the contract. That ruling sparked a fury of activity, with the Office of Management and Budget and Justice Department issuing rare contradictory memos instructing agencies to disregard GAO’s nonbinding decision because it could “significantly limit the discretion” of contracting officers.
A copy of the Small Business Jobs Act of 2010 can be downloaded here: Small Business Jobs Act of 2010.