HUBZone Evaluation Preference is Underutilized – Congress may change that!

The HUBZone Program aims to support small business growth in historically underutilized business zones across the country. One way in which certified HUBZones may benefit from their status is the HUBZone evaluation preference for award of federal contracts. FAR 19.1307(b)(2) & 52.219-4(a)(ii) provide that in “full and open competitions,” a contracting officer must deem the price offered by a qualified HUBZone firm to be lower than the price offered by another offeror – other than another small business – if the price offered by the qualified HUBZone firm is not more than 10% higher than the otherwise lowest, responsive and responsible offeror. The preference helps to level the playing field by giving federal agencies another tool to award contracts to HUBZone certified firms.

One issue with the HUBZone preference is that it is not clear whether the preference must flow to the task and delivery order level of an indefinite-delivery, indefinite quantity contract as applicable statutes and regulations do not expressly command such a result. The Small Business Act provides “in any case in which a contract is to be awarded on the basis of full and open competition, the price offered by a qualified HUBZONE small business concerns shall be deemed as being lower than the price offered by another offeror…”  Ref. 15 USC 657a(c)(3)(A).  The only statutory exception for application refers to procurements of commodities by Agriculture.  Arguably, if Congress intended for the price evaluation not to apply at the task order level, Congress would have so acted.  However, SBA has consistently read “contract” broadly, to include task orders, as did the Supreme Court in Kingdomware Techs., Inc.  Even FAR 2.201 defines “contract” as including orders.

As such, the HUBZone price evaluation preference is not used as widely as it could be because of differing opinions over whether the preference applies to task and delivery orders. GCP has learned that Congress is considering a statutory solution to resolve this uncertainty in favor of commanding application of the HUBZone preference at the task and delivery order level of federal contracts.  Specifically, amendment for #676 to the NDAA which is currently pending before the House Rules Committee.

If you have questions regarding the HUBZone preference or wish to learn more about supporting Amendment 676, please contact Trevor Skelly.