The Justice Department's Office of Legal Counsel released another opinion today/yesterday (depending on what time zone you're in). Its subject matter is a real bread-and-butter OLC issue, and thus characteristically (to use a term that has fallen into regrettable desuetude since I was a kid) "dullsville." To paraphrase the opinion, it presents the question whether "[t]he Small Business Act . . . compel[s] the prioritization of awards under the Historically Underutilized Business Zone Program over those under the 8(a) Business Development Program and the Service-Disabled Veteran-Owned Small Business Concern Program"--in other words, whether "contracting officers must set aside federal contracts to qualified HUBZone small businesses . . . before they can set aside such contracts for award to small businesses under the 8(a) or SDVO Programs."
For those of you who have not fallen into a stupor or lapsed into hysterical blindness as a result of reading the issue, the reason this is of interest is that the SBA regulations indicate that it has the discretion to award set-asides under 8(a) or SDVO before HUBZone. And the Government Accountability Office, an agency of Congress, has concluded that "the [Small Business] Act mandates that priority be given to the HUBZone Program when certain statutory conditions are met." (The Ninth Circuit has expressed a view of the relevant language similar to GAO's, based on the characterization of the HUBZone language as "mandatory" and the language of the other programs as "discretionary." See Contract Mgmt., Inc. v. Rumsfeld, 434 F.3d 1145, 1149 (9th Cir. 2006).)
In an opinion signed on August 21 and published today/yesterday, OLC concludes that the statute is ambiguous, and thus the SBA has discretion under Chevron to interpret the Act as its regulations have. The opinion concludes by saying that "Our conclusion . . . is binding on all Executive Branch agencies, notwithstanding any GAO decisions to the contrary." It is the longstanding view of OLC that it, and not GAO (which is, after all, a legislative entity), provides authoritative legal interpretation for the Executive Branch, and the new opinion duly underscores that point by citing precedents from each of the past three presidential administrations for that proposition. That won't cut any ice on the Hill if the relevant committee chairs are inclined to agree with the GAO, but perhaps the volume of any disagreement will be muted since the relevant personae are all from the same political party.
Following up on my post last week, today's opinion is another in a line of decisions published very promptly after signing, although there is an obvious reason for prompt publication here. The SBA undoubtedly has been feeling increasingly uncomfortable with the GAO opinions out there (the most recent one was handed down in May 2009), and I'm sure it was eager to be able to point to a published OLC opinion that validates the reasoning of its regulations.