Veteran-Contract Spat Taken Up by High Court

WASHINGTON (CN) - A veteran-owned business passed over for a federal contract persuaded the U.S. Supreme Court to consider its challenge Monday.

The owner of Kingdomware Technologies qualifies as a service-disabled veteran, and the business participates in what is known as the "federal supply schedule," or FSS.

Federal law encourages government agencies to obtain goods and services from the FSS before purchasing from commercial sources, but Kingdomware complained over the award of a contract in 2012 to an FSS vendor that did not qualify as a veteran-owned small business.

Though the Government Accountability Office initially supported Kingdomware's challenge, calling for the contract resolicited as a set-aside for a SDVOSB, short for service-disabled, veteran-owned small business, the Department of Veterans Affairs refused to bend.

Kingdomware in turn sued and lost in the U.S. Court of Federal Claims.

The Federal Circuit affirmed last year, rejecting Kingdomware's reliance on a procedure known as the "Rule of Two," which supports competition-restricted SDVOSB contract awards "if the contracting officer has a reasonable expectation that not less than 2 small business concerns owned and controlled by service-disabled veterans will submit offers and that the award can be made at a fair market price."

"As it stands, there is no reason to compel the secretary to set aside any contract for a Rule of Two inquiry before using the FSS notwithstanding his goals, as Kingdomware requests," the decision states. The VA has consistently met the mandatory goals for procurement from SDVOSBs and VOSBs in each year since the Veterans Act of 2006 went into force, and Kingdomware does not contend otherwise. The secretary has complied with his statutory mandate to both set goals and meet them, and, accordingly, the VA contracting officer's decision not to set aside the contracts at issue was not arbitrary, capricious, or contrary to the law."

The opinion notes that Congress amended the Small Business Act in 1999 to set a government-wide goal of awarding 3 percent of government contracts to SDVOSBs.

That goal was not satisfied historically, with SDVOSBs receiving 0.24 percent of federal contract funds for the 2001 fiscal year.

Adoption of the Rule of Two in 2003 barely made a dent, with just 0.605 percent of government contracts going to SDVOSBs in 2005, and Congress in turn passed the 2006 Veterans Act.

In the years since this law was fully implemented, "the secretary set goals well beyond the previous 3% government-wide goal for SDVOSBs, and achieved well beyond his stated goals," the decision states.

The Supreme Court issued no comment, as is its custom, in agreeing to take up the case Monday.

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