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YOUNG-ROBINSON ASSOCS. v. UNITED STATES

March 22, 1991

YOUNG-ROBINSON ASSOCIATES, INC., Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant


Louis F. Oberdorfer, United States District Judge.


The opinion of the court was delivered by: OBERDORFER

LOUIS F. OBERDORFER, UNITED STATES DISTRICT JUDGE

 A hearing on Young-Robinson's application for a temporary restraining order was held on February 22, 1991. The argument of counsel and the limited record at that stage precluded any ruling upon plaintiff's application. Instead, an Order of February 27, 1991 treated the application as a motion for a preliminary injunction and scheduled another hearing. Two days before that hearing, the United States filed a response to Young-Robinson's motion and itself moved for summary judgment. The next evening plaintiff filed an opposition and a cross-motion for summary judgment in which it shifted the focus of its argument. No longer asserting that the interim contract clearly should have been solicited as an SDB set-aside, Young-Robinson argued instead that the primary issue was "whether the failure of a contracting officer to consider matters left to his discretion, but which matters must be considered by lawful regulation, constitutes a failure to comply with mandatory procedures and regulations." Plaintiff's Memorandum in Support of Its Cross-Motion for Summary Judgment at 1. At the hearing the next day, plaintiff's counsel also focused upon the possibility of procurement through the "8(a) Program," a Small Business Administration ("SBA") program designed to promote economically and socially disadvantaged small businesses, rather than a direct Department of Defense SDB set-aside. Because defendant's counsel was unable to respond adequately to these new arguments, further briefing was ordered.

 Both parties have complied with that order, and the pending motions are now ripe for resolution. *fn1" For the reasons stated below, an accompanying order will grant defendant's motion for summary judgment and dismiss the complaint.

 I.

 In order to succeed on its motion for summary judgment, the United States must "show that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In order to determine which facts are material, it is first necessary to review pertinent Department of Defense procurement procedures.

 A.

 As a general rule, the Competition in Contract Act of 1984 requires the Department of Defense to procure property and services through "full and open competition." 10 U.S.C. § 2304 (a) (1) (A) (1988). There are several exceptions to this general rule. In particular, the rule does not apply when "a statute expressly authorizes or requires that the procurement be made through another agency or from a specified source . . . ." Id. § 2304 (c) (5). Two statutorily authorized exceptions are implicated in this case.

 Sections 8(a) and 7(j) of the Small Business Act established the Minority Small Business and Capital Ownership Program, commonly known as the 8(a) program. See 15 U.S.C. §§ 636(j) & 637(a) (1988). In this program, the SBA enters into contracts with other agencies and then "arranges for the performance of such procurement contracts by negotiating or otherwise letting subcontracts to socially and economically disadvantaged small business concerns . . . ." Id. § 637(a) (1) (B). To qualify for the 8(a) Program, a concern must be majority-owned and managed by members of a group subject to "racial or ethnic prejudice or cultural bias" who have themselves experienced certain economic barriers. See id. §§ 637(a)(4) - (a)(6). The Defense Department has a policy of participating in this program "to the greatest extent possible." 48 C.F.R. § 219.801(a) (1990). Indeed, it considers requirements for 8(a) treatment prior to considering eligibility for the Department of Defense's own minority set-aside program. See id. § 218.803(c) ("Notwithstanding the DoD unique SDB procedure, requirements will be reviewed initially for suitability for inclusion in the 8(a) Program . . . .").

 The Department's minority set-aside program was instituted in 1986. In that year, Congress set for the Department a goal of devoting 5 percent of its contracting budget in each of fiscal years 1987, 1988, and 1989 to

 
(1) small business concerns, including mass media, owned and controlled by socially and economically disadvantaged individuals (as defined by section 8(d) of the Small Business Act (15 U.S.C. § 637(d)) and the regulations issued under such section), the majority of the earnings of which directly accrue to such individuals;
 
(2) historically Black colleges or universities; or
 
(3) minority institutions . . . .

 Pub. L. No. 99-661 § 1207, 100 Stat. 3816, 3973 (1986). In compliance with this Congressional mandate, the Defense Department regulations require, with some exceptions, that "the entire amount of an individual acquisition shall be set-aside for exclusive SDB participation if the contracting officer determines that there is a reasonably expectation that . . . offers will be obtained from at least two responsible SDB concerns . . . ." 48 C.F.R. § 219.502-72(a).

 The 8(a) program and the Defense Department's SDB policy are potentially at odds with another procurement policy benefiting small businesses. Under FAR § 19.01 et seq., certain acquisitions are set-aside solely for small business competition. The potential tension between small business ...


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