It seems like every email nowadays refers to “hoping all is well in these uncertain/difficult/strange times.” Small businesses–particularly restaurants–have been devastated by shutdowns. Teleworking is now the norm, not the exception (and we’ve realized most folks are just as productive). Whole companies are going belly-up, with the workforce poured into an already-tight job market. In general, times are tough, and on this day–Veterans Day, where we honor our heroes and acknowledge their sacrifices–I want to remind those veterans competing in the federal marketplace that the VA is required to put you first. When the VA fails to do that, strength in numbers holds them to it.
I’m referring specifically to the Kingdomware mandate, which was born when a Maryland-based small business prevailed at the U.S. Supreme Court in arguing that the Veterans Benefits Act at 38 U.S.C. § 8127 et. seq. (“VBA”) mandates the VA to set aside contracts for veteran-owned small businesses (“VOSB”) when certain requirements are met. These are when a contracting officer has a reasonable expectation that two or more VOSBs will offer and an award can be made at a fair and reasonable price that offers the best value to the government.
This is not a hand-out. This is consistent with the VBA’s purpose of assisting veterans in transitioning to civilian life by requiring the VA–the agency bound to protect them–to “maximize opportunities” for VOSBs, and it only applies when the result will be a contract that is of the “best value” to the VA. The VA isn’t required to award to veterans when the result is overpaying for a shoddier product or service; however, the law does require the VA to do more work in its award process by evaluating whether the opportunity should be set aside for veterans.
Since Kingdomware, which was a major victory for veterans and flooded the VA’s Center for Verification (“CVE”) with VOSB applications for the “verification” required to participate in VA set-asides, the VA has consistently been challenged on its meeting of the mandate, resulting in a body of case law that has further developed Kingdomware. One such development unfortunately carved out an exception to the veteran preference via legislation effective as of just this summer. This was prompted by the ruling in PDS Consultants, where the plaintiff prevailed at both the U.S. Court of Federal Claims and the Federal Circuit Court of Appeals. The courts affirmed that for the VA, the preference for veteran-owned firms is supreme. This includes any preference for firms covered by the AbilityOne Program (via the Javits-Wagner- O’Day Act, which applies to all agencies versus the VBA, which is unique to the VA. This was a “blanket” determination based on the language of both statutes.
In response to the Federal Circuit’s holding in PDS Consultants, Congress passed the Veterans Affairs Contracting Preference Consistency Act of 2020, which amends the VBA. The Consistency Act prioritizes blind and severely disabled entities by requiring the VA to use AbilityOne non-profit providers, rather than prioritizing VOSBs, when procuring any products or services added to the AbilityOne list prior to December 22, 2006.
In passing the bill, the Senate added an exception (to the exception) to protect some requirements that the VA had already transitioned to VOSBs. If the VA awarded a contract for a covered product or service to a VOSB pursuant to a Rule of Two determination between December 22, 2006 and August 7, 2020, the VA could not transition these requirements back to the AbilityOne program until a new Rule of Two analysis was conducted and the VA determined in writing that there was no reasonable expectation that two or more VOSBs could compete.
Not even two months after this new law was passed, the VA violated it. Per a very recent ruling by the U.S. Court of Federal Claims (“CoFC”), the VA misinterpreted its scope in transferring a prescription glasses deal to nonprofits that employ the blind. Superior Optical Labs, Inc. v. U.S., No 21-1211C (Oct 21, 2020). The CoFC granted the protest and the relief requested of a permanent injunction, holding that the VA had erred in failing to hold veterans first as was required.
The big takeaway here is this: since Kingdomware, the veteran preference continues to be chipped away, and we must do what we can to protect it. This can be especially hard due to the time and expense (not to mention quick acting) required to challenge a Kingdomware problem – most VOSBs simply cannot afford it, and one must wonder if the VA is banking on that during certain acquisitions.
Particularly within the veteran community, unity and action, are vital components necessary to ensure that the VA does its job in setting aside opportunities for veterans:
Unity – The federal marketplace is competitive, and it’s even harder when an opportunity isn’t set aside. If the VA is in pre-solicitation stages and it looks like they might not set aside for VOSBs, make sure you’re not the only one who emails the contracting officer to express interest. Remember: it’s the rule of two. Also, don’t be shy about contacting others for help in understanding what the VA is required to do and whether they’re falling short. Once bids are in, any argument you could have made is late because you must protest Kingdomware problems before offers are due.
Action – Organizations such as the NVSBC are wonderful at having members band together to prompt action. Considering joining an organization that suits you, and getting involved. Also, it’s not “bad business” to protest. Many folks fear retaliation, but if a protest is done in a respectful and professional manner, contracting officials in general understand it’s part of business. Last, respond to pre-solicitation notices. If the VA issues a sources sought notice and no VOSB responds, that can make challenging the decision not to set aside the work an uphill battle.
You had each other’s backs in battle and in the uniform, and now (more than ever) is the time to stand together to hold the VA to its mandate. The Kingdomware victory was a huge one, and you are entitled to enforce it.
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