Veteran-Owned Business Wins High Court Reversal

     WASHINGTON (CN) — The U.S. Supreme Court revived objections Thursday by a veteran-owned business that the government passed over for a federal contract.
     Kingdomware Technologies complained in 2012 when the Department of Veteran Affairs contract it sought went to a vendor that did not qualify as a veteran-owned small business.
     As a business owned by a service-disabled veteran, Kingdomware participates in what is known as the “federal supply schedule,” or FSS.
     Government agencies are supposed to consult the FSS before they purchase goods or services from commercial sources.
     Kingdomware’s challenge rang true with the Government Accountability Office, which called for the VA to solicit its contract again as a set-aside for a SDVOSB, short for service-disabled, veteran-owned small business.
     The Department of Veterans Affairs refused to bend, however, so Kingdomware filed suit in the U.S. Court of Federal Claims.
     In rejecting Kingdomware’s case, however, the Federal Circuit relied on Section 8127(d) of Title 38, a provision known as the “Rule of Two.”
     This rule 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.”
     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.
     Congress in turn passed the 2006 Veterans Act, and the Federal Circuit found that the secretary has consistently met goals in the years since “well beyond the previous 3% government-wide goal for SDVOSBs.”
     The Supreme Court revived Kingdomware’s case Thursday, saying the VA “must use the Rule of Two when awarding contracts, even when the department will otherwise meet its annual minimum contracting goals.”
     Despite the win, today’s ruling holds little practical benefit for Kingdomware.
     The vendor that beat out Kingdomware for the contract at issue finished the job in May 2013.
     Writing for the unanimous Supreme Court, Justice Clarence Thomas said the mootness doctrine does not apply here, however, because the controversy is “‘capable of repetition, yet evading review.'”
     “On the merits, we hold that §8127 is mandatory, not discretionary,” the 13-page opinion states. “Its text requires the Department to apply the Rule of Two to all contracting determinations and to award contracts to veteran-owned small businesses. The Act does not allow the Department to evade the Rule of Two on the ground that it has already met its contracting goals or on the ground that the Department has placed an order through the FSS.”

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