Legal Meets Practical: Accessible Solutions

Veteran Victory Over AbilityOne On Pause

On September 1, 2017, the U.S. Court of Federal Claims (“CoFC”) granted an AbilityOne vendor’s request to stay the relief granted in a landmark case confirming that veteran-owned businesses take priority over AbilityOne vendors at the U.S. Department of Veterans Affairs (“VA”). As such, the VA may not procure eyewear products or services in VISNs 2 or 7 outside of the AbilityOne Procurement List until the appeal is resolved. (PDS Consultants, Inc. v. U.S., No. 16-1063C).

As many veteran-owned businesses competing in federal space are aware, a recent CoFC decision issued on June 30, 2017 held that at the VA, veteran-owned small businesses (“VOSBs”) and service-disabled veteran-owned small businesses (“SDVOSBs”) trump AbilityOne vendors (employers of those who are blind or have other significant disabilities). Even if a product or service is on the AbilityOne Procurement list, the “Rule of Two” (i.e., that the VA must set aside the procurement for VOSBs or SDVOSBs when a contracting officer had a reasonable expectation that he will receive offers from two or more qualified VOSBs at fair market prices) still applies.

In the case at issue, the VA had decided to procure eyewear products and services from an AbilityOne nonprofit for four Veterans Integrated Service Networks (“VISNs”) without performing a Rule of Two analysis. Eyewear products and services for VISNs 2 and 7 were added to the AbilityOne Procurement List before 2010. VISNs 6 and 8 were added to the AbilityOne Procurement List after 2010. In its protest PDS, a SDVOSB, argued based on the plain language of the Veteran Benefits Act (“VBA”) and the broad reading to the language of the VBA given by the Supreme Court in Kingdomware, that the VA’s decision to continue to enter into new purchasing agreements for eyewear products and services with AbilityOne nonprofits for VISNs 2, 6, 7 and 8 before performing a Rule of Two analysis was inconsistent with the VA’s obligations under the VBA. PDS argued in its bid protest that before the VA could continue to procure eyewear products and services through new agreements with AbilityOne nonprofits for VISNs 2, 6, 7 and 8, the VA had to first apply the Rule of Two to see if the opportunity should be a VOSB/SDVOSB set-aside.

The court entered judgment in favor of PDS and denied the government and the AbilityOne contractor’s (Wilson-Salem Industries for the Blind, Inc., DBA “IFB”) motion for judgment upon the administrative record on June 30, 2017. Before fashioning injunctive relief, the court learned that a bridge contract with IFB for VISN 2 was set to expire on September 30, 2017 and that the Blanket Purchase Agreement with IFB for VISN 7 would expire in July 2017, but that there were several option periods available under the agreement with IFB for VISN 7. In its judgment, the CoFC stated that the VA would be required to perform a Rule of Two analysis with regard to VISN 2 before the bridge contract with IFB expired on September 30, 2017. With regard to VISN 7, the court determined that the VA would be required to perform a Rule of Two analysis before December 2017, and, if the Rule of Two is satisfied, award a contract before January 31, 2018.

With a reported 52 jobs and $15.4 million in avenue revenue on the line, IFB filed an appeal before the U.S. Appeals Court of the Federal Circuit on July 31, 2017. It then asked the CoFC to stay its decision, meaning that the VA may not procure eyewear products or services in VISN 2 or 7 outside of the AbilityOne Procurement List until the appeal is resolved. As this motion was granted on September 1, this means that so long as the appeal is up in the air, IFB’s jobs and revenue from the contracts at issue are protected. Also, the VA may extend its contract as permissible under option years.

It’s as if PDS has won an Olympic medal but doesn’t yet get the glory because a competitor cried foul. Until the referees are done recalculating and reevaluating, second place keeps the trophy cup for now.

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