Legal Meets Practical: Accessible Solutions

Is the VA Already Defying the Supreme Court?

As we know, in late June, the U.S. Supreme Court sided with veterans in holding that in some cases, the U.S. Department of Veterans Affairs (VA) is required to set aside certain pieces of work for veteran-owned small businesses (VOSBs).

Almost immediately, the VA issued an Acquisition Policy Flash, which reiterates the Supreme Court’s major holdings: namely, that the Rule of Two applies to orders placed under the GSA Schedule, and applies even when the VA is meeting its SDVOSB and VOSB contracting goals. (As a refresher, the “Rule of Two” is that the work has to be set aside for veteran companies when there is a “reasonable expectation” that at least two such businesses will bid on the contract and “the award can be made at a fair and reasonable price that offers best value to the United States.”). The Policy Flash states that the VA “will implement the Supreme Court’s ruling in every context where the law applies.” It also instructs contracting officers to conduct robust market research to ensure compliance with the Rule of Two.

More recently, the VA issued further guidance on the implementation of the Kingdomware decision, in the form of a memorandum that describes the changes to the Veterans Affairs Acquisition Regulation (VAAR). It juxtaposes the old policies contained within the VAAR, compared with the new policies adopted due to the Supreme Court’s holding related to the Rule of Two.

Notably, the memorandum enumerates the changes to the VAAR (at 810.001-70) as it relates to the market research contracting officers must conduct in determining whether a contract should be set aside for the veteran community:

“When performing market research, contracting officers shall review the Vendor Information Pages (VIP) database at https://www.vip.vetbiz.gov as required by subpart 819.70. The contracting officer will search the VIP database by applicable North American Industry Classification System (NAICS) codes to determine if two or more verified service-disabled veteran-owned small businesses (SDVOSBs) and veteran- owned small businesses (VOSBs), in the appropriate NAICS code, are listed as verified in the VIP database. The contracting officer will determine if identified SDVOSBs or VOSBs are capable of performing the work and likely to submit an offer/quote at a fair and reasonable price that offers best value to the Government. If so, the contracting officer shall set-aside the requirement in the contracting order of priority (see 819.7005 and 819.7006).”

This is the qualifier for whether a contract will be reserved for veterans, and if you’ll examine it closely, you’ll see this is very “soft” language. How is the contracting officer supposed to assess if the VOSBs with the corresponding NAICS codes are “capable” of performing the work? How will he know/determine if they’re capable of offering a “fair and reasonable price” that is the “best value” to the Government? How are “fair and reasonable price” and “best value” defined?

Because this is soft language, this raises the issue of whether it provides wiggle room for the VA to avoid following Kingdomware. Many veteran business owners and organizations are concerned that the VA will attempt to escape Kingdomware on a technicality, or otherwise fail to follow its precedent. After all, the VA has been fighting the precedent for over four years – first at the Government Accountability Office, then the U.S. Court of Federal Claims, then a federal district court. . . and finally the end of the line, the U.S. Supreme Court. It stands to reason that it will try to find a way around adhering to the decision.

If you as a veteran business owner have concerns with the way the new regulations are worded, or with how the VA is now implementing Kingdomware, please know that you have a voice. The National Veteran Small Business Coalition (which was involved in the decision) is collecting input relevant to Kingdomware. This includes input into the new wording of the regulations and how you have seen contracting officers implement (or not implement) Kingdomware in recent procurements. If you would like to chime in on their input to the VA, please email their executive director director, Scott Denniston, at scott.denniston@nvsbc.org. You may also leave comments below. Help us make sure Kingdomware has the positive impact it should!

*Did you find this article informative? If so, sign up for Sarah Schauerte Reida’s legal blog on veteran issues at: http://www.legalmeetspractical.com. Remember to click the link sent to your email to activate your subscription!

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4 Responses to “Is the VA Already Defying the Supreme Court?”

  1. Sarah,
    Sad to see this, but even sadder to say that the “coded”language from VA was expected, rather than a more vigorous enforcement of the spirit and intent of the law. SDVOSBs /VOSBs don’t have that large of a voice or lobby to protect their interests therefore, it seems that the Department of VA would assume the leadership in that role of protecting the interests of its SDVOSB/VOSB community.
    You’ve done an exemplary job of staying on top of this issue, I’m interested in following up and voicing my concerns toward fulfillment of further adjudication of SCOTUS’ decision and being active in holding the VA accountable to promulgation of policy supporting that decision.
    Help me as I attempt to stay abreast of this issue and it’s challenges.
    Jake

  2. Sadly, this no longer surprises me.

  3. Sarah, The VA just posted a video by Greg Giddens, their Acquisition and Procurement Director talking about their new “Guiding Principles” to use in a principles-based process rather than worrying about all the procedure-based processes.at: http://www.blogs.va.gov/VAntage/30126/collaboration-rapid-sourcing-among-key-principles-for-va-acquisition-program/#comment-109478

    His address to me sounded a lot like “Don’t worry about the FAR or the laws and stuff – if it feels right, just do it. The principles are to do it faster, cheaper, better.” I posted a comment to the blog entry (still awaiting moderation) that said:

    Greg’s “Guiding Principles” don’t sound very supportive of the “Rule of Two” or other Veteran Owned Small Business or Service Disabled Veteran Owned Small Business acquisition and procurement practices, even though the Supreme Court just held the VA accountable for purposefully and willfully violating this provision of Federal law for years. I am all for Mr. Giddens’ attempts to do things better, faster, cheaper, but there are still reasons why some of the provisions of the FAR are in place. The laws that established those provisions had a purpose to accomplish certain things: to avoid corruption, to enable veterans and small businesses to get a leg up against the behemoth contractors who suck government money like a giant vacuum from our Treasury, to ensure fairness in contracting, and more. I just didn’t get a good feeling from the “Guiding Principles” that these provisions of the FAR were deemed as important as they ought to be in VA acquisition and procurement, and that concerns me greatly, both as a citizen and a disabled veteran small business owner.

    Just thought you might like to know about this.

    • Listening Mr. Giddens left me feeling that the VAseems to be backpedaling away from the SCOTUS decision in an effort to save face and continue doing business “the VA way”. I’m concerned that there may be undercurrents that feel that no one outside of the VA can tell it how to conduct its acquisitions. I’m concerned. There’s nothing wrong with doing things smarter, faster, cheaper, etc., but lets not overlook the law and it seems that the signal being sent is, …”don’t worry, we’ll continue as before”. It won’t surprise me when another protest is filed. I hope I’m wrong.

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