The amendment to the Department of Defense Authorization Act that replaced "shall" with "may" in the part of the Small Business Act relating to HUBZones was dropped from the final version of the Act. This means that the HUBZone set-asides remain mandatory under the Small Business Act. The Department of Justice has issued a memo that HUBZone set-asides are not mandatory, but dropping the amendment strengthens tha argument that Congress intended HUBZone set-asides to be mandatory and have priority over 8(a) and Veteran's set-asides. The decision to drop the parity language as disappointing to the sponsors of the amendment who said this would not be the end of the attempt to bring parity to the three programs. See article here.
Unfortunately this leaves the priority of HUBZOne set-asides undecided, with GAO saying they are mandatory and the Obama administration saying they are not mandatory. Because there are two Federal court cases interpreting the "shall" in the Act as making HUBZone set-asides mandatory, it will take another suit challenging the failure to use the HUBZone set-aside by a contracting agency to settle this issue for now.
