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Don't worry, the well hasn't run dry just yet. The short answer to your question is, yes. Businesses owned by service-disabled veterans and those in the 8(a) program still receive preferences, as do small businesses in the so-called HUBZones. However, the priorities are currently in a state of flux.

First, a few definitions might be helpful.

HUBZones are areas that meet certain demographic qualifications, such as a median household income that is less than 80 percent of the state's median household income, or an unemployment rate that is at least 140 percent greater than the statewide average. Small businesses that are located in a zone and employ people who reside in that zone qualify for HUBZone contracts (to keep the businesses alive).

A service-disabled veteran is a person who served in the active military, naval, or air service and whose disability was incurred or aggravated in the line of duty. A small business that is at least 51% owned and operated by one or more service-disabled veterans is granted this designation.

An 8(a) company is a small business that is owned by one or more socially and economically disadvantaged individuals. The Small Business Administration defines socially disadvantaged individuals as those who have been subjected to racial or ethnic prejudice or cultural bias historically. Generally speaking this includes Black Americans, Hispanic Americans, Native Americans, and Asian Pacific Americans as well as other groups designated by the SBA. Jews, despite having the longest running history of being discriminated against, are once again SOL. This is due to the determination the group composes a religion and not an ethnic group, even if you can pick out a Rahm Emanuel from the crowd.

In May, the Government Accountability Office ruled on a specific case in which a company owned by Alaskan Natives was given an Army contract and two HUBZone companies were not considered. The GAO said that the Army made a mistake in doing so and that legislation states that HUBZone companies are supposed to have priority over 8(a) companies. The ruling was challenged, but this month the GAO reaffirmed its position.

The Office of Management and Budget then instructed agencies to disregard the GAO ruling. OMB Director Peter Orszag said that GAO rulings are not binding and that White House and SBA lawyers are reviewing the decision.

Meanwhile, some lawmakers are advancing legislation that would clarify the rules. Sen. Mary Landrieu (D-LA) introduced an amendment to the defense authorization bill that would level the playing field between the three special types of small businesses. If passed, businesses in HUBZones, businesses owned by service-disabled veterans, and businesses in the 8(a) program would all have the same preference when agencies are conducting a set-aside procurement.

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Q: Are there preferences still in the selection of small business contracts?
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