Georgia Tech Procurement Assistance Center

VA agrees that rule of two has priority over AbilityOne Procurement List

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In its most recent attempt to strike the appropriate balance between the Veterans First and AbilityOne programs, the U.S. Department of Veterans Affairs (“VA”) issued on May 20, 2019 a class deviation to the VA Acquisition Regulations (“VAAR,” 48 C.F.R. Chapter 8), instructing contracting officers to conduct a “Rule of Two” analysis before procuring from the AbilityOne Procurement List.

The Rule of Two is set forth in the Veterans Benefits Act of 2006 (“VBA”), 38 U.S.C. § 8127(d), which established the Veterans First program.  The Rule of Two requires that VA contracting officers determine whether two or more veteran-owned small businesses (“VOSBs”), including service-disabled veteran-owned small businesses, are capable of meeting the VA’s requirements at reasonable prices.  If two or more qualified VOSBs can satisfy the VA’s needs, the VA must procure those goods through those VOSBs that are awarded contracts.  The VBA also allows contracting officers to grant sole-source contracts to VOSBs under limited circumstances (38 U.S.C. §§ 8127(b)-(c)).

The new VA class deviation revises VAAR 808.002, Priorities for Use of Government Supply Sources, and subpart 808.6, Acquisition from Federal Prison Industries, Inc.—the two provisions that implement for the VA the FAR Part 8 mandatory source priority generally enjoyed by AbilityOne Procurement List and Federal Prison Industries vendors across government procurements.  The deviation instructs that the Veterans First priority displaces the AbilityOne priorities for “all VA contracts,” but that “if an award is not made to an eligible . . . VOSB under VAAR subpart 819.70, the priority use of AbilityOne applies and supplies and services on the Procurement List are mandatory sources.”  In this respect, the new VA class deviation reconciles the VA’s priorities for veterans and the separate, government-wide priority for AbilityOne nonprofit companies.

Continue reading at:  Government Contracts and Investigations Blog

GTPAC launches Veterans verification video

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The Georgia Tech Procurement Assistance Center (“GTPAC”) has created a new free training resource for Veteran small business owners.  GTPAC, with the support of the Defense Logistics Agency (“DLA”), has produced a free video that provides a detailed explanation of how Veterans can get their small business verified as a Veteran-Owned Small Business (“VOSB”) or Service-disabled Veteran-Owned Small Business (“SDVOSB”) under the U.S. Department of Veterans Affairs’ (“VA”) Vets First Verification Program.

SDVOSBs and VOSBs receive certain preferences in the federal procurement process, including SDVOSB and VOSB set-aside contracts, sole-source awards (for SDVOSBs), and subcontracting opportunities with federal prime contractors, who are often required to utilize SDVOSBs and VOSBs in their subcontracting plans.

“This video is a great resource for helping VOSBs and SDVOSBs understand the verification process at VA, and how they can benefit from getting verified,” said Andrew E. Smith, Program Manager of the Georgia Tech Procurement Assistance Center, he continued, “We take great pride in assisting our Veteran small business clients here in Georgia, and want them to take full advantage of the opportunities that are available to them.”

Each year, the federal government awards billions of dollars in contracts to VOSBs and SDVOSBs.  Federal prime contractors also frequently subcontract work to VOSBs and SDVOSBs when performing large government contracts.

GTPAC hopes this video helps Veterans understand the verification process, and makes that process a little bit easier.

Additional resources including links to key VA Verification websites is available on the Veterans Verification Video page.

VA announces increase in contracting with Service-Disabled and Veteran-Owned Small Businesses

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Secretary of Veterans Affairs (VA) Robert Wilkie announced an increase to the department’s goals for contracting with Service-Disabled Veteran-Owned Small Businesses (“SDVOSBs”) and Veteran-Owned Small Businesses (“VOSBs”).

For fiscal year (FY) 2019, VA seeks to award at least 15% of its total contract dollars to SDVOSBs and at least 17% to VOSBs, representing a 5% increase in both goals, a significant change not noted since 2010.

This increase reflects the department’s heightened emphasis on contracting with such firms after the U.S. Supreme Court’s decision in Kingdomware Technologies v. United States (2016), Wilkie said.

“Three years ago, the U.S. Supreme Court underscored our mandate to do business with service-disabled and other Veteran entrepreneurs,” Wilkie said. “We have increased the dollars awarded each year, but now it’s time to update the goals to reflect this new commitment.  We need to lock in the gains we have made and continue to build for the future.”

Continue reading at: U.S. Department of Veterans Affairs Press Release

Government contractors found guilty in $11 million veteran set-aside fraud scheme

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A federal jury has convicted Andrew Otero and his company, A&D General Contracting, Inc. (A&D), on charges that they fraudulently obtained $11 million in federal contracts specifically set aside for service-disabled veteran-owned businesses.  The jury’s decision was rendered on Nov. 21, 2018.

The evidence demonstrated that Otero had no military experience.  Yet Otero and veteran Roger Ramsey participated in a conspiracy to defraud the government by forming a joint venture (JV) – and falsely representing that Ramsey’s firm and the JV qualified as service-disabled veteran-owned small businesses (SDVOSB).  Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veterans Affairs (VA) and the Army Corps of Engineers (ACE).

As proven at trial, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D.  To appear qualified, Otero and Ramsey initially executed an agreement to create the JV, which stated that Ramsey’s company would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.

However, as proved at trial, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply use the disabled veteran status of Ramsey’s firm to bid on contracts.  The side agreement also stated that A&D – not Ramsey – would run the construction jobs.  They also agreed that A&D would keep 98 percent of every payment.

In addition to the secret side agreement, the evidence demonstrated several ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D.  For example, although Ramsey (a service-disabled veteran) nominally served as president of his firm and the JV, he actually worked full-time for a telecommunications company.  Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order.

“Our nation strives to repay the debt of gratitude we owe to our veterans by setting aside some government contracts for veterans with service-related disabilities,” said United States Attorney Adam Braverman.  “These unscrupulous contractors abused this program through a cynical and illegal ‘rent-a-vet’ scheme.  They are now being held fully accountable for robbing truly deserving vets of important economic opportunities.”

The defendants are also facing civil charges consisting of alleged violations of the false claims act based on the similar misconduct.  The defendants have been ordered to appear in U.S. District Court for sentencing on February 19, 2019.

Source: https://www.justice.gov/usao-sdca/pr/government-contractors-found-guilty-11-million-veteran-set-aside-fraud-scheme

In VA procurements, veteran-owned businesses trump all other contractors

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On October 17, 2018, the Federal Circuit ruled that the Department of Veteran Affairs (“VA”) must give priority to veteran-owned small businesses (“VOSB”) when awarding contracts.  (PDS Consultants Inc. v. U.S., et al., Nos. 17-2379 and 17-2512, 2018 WL 5019735 – Fed. Cir. Oct. 17, 2018).

At first blush, no one would argue with the foregoing statement.

But, this mandate became less clear when the VA was faced with awarding a contract to a VOSB or following an otherwise mandatory requirement for all federal agencies to buy a specific list of items made by nonprofits employing the blind and significantly disabled.

Here is the source of confusion. More than 40 years ago, Congress enacted the Javits-Wagner-O’Day Act (“JWOD”), which required federal agencies to buy certain items and services from nonprofits that employ the blind or people with other significant disabilities. Today, this mandatory procurement policy is implemented through the AbilityOne program.

In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (“VBA”). As the U.S. Supreme Court stated in Kingdomware, the VBA made it mandatory in almost every procurement for the VA to follow the “Rule of Two.” The “Rule of Two” requires the VA to award a contract to a VOSB whenever at least two VOSBs can perform the work at a reasonable price.

Keep reading this article at: https://governmentcontractsnavigator.com/2018/10/18/in-department-of-veterans-affairs-procurements-veteran-owned-businesses-trump-all-other-contractors

‘Cascading’ set-asides now authorized at the VA

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In what many will see as VA’s continued assault on its Veterans First Contracting Program post-Kingdomware, the Dept. of Veterans Affairs (VA) recently implemented “Cascading” set-asides.

The VA refers to these set-asides as “Tiered Evaluations,” noting they are also known as “Cascading” set-asides.

The VA issued Acquisition Policy Flash (No. 18-15), transmitting Procurement Policy Memorandum (PPM) No. 2018-04, dated and effective February 8, 2018.

The VA issued the PPM in response to requests from VA contracting officers requesting guidance and procedures for the use of tiered evaluations within a single synopsized solicitation when applying the “VA Rule of Two.”

Keep reading this article at: http://vetlikeme.org/its-official-cascading-set-asides-are-now-authorized-at-the-department-of-veterans-affairs/

Former head of CVE urges VA to implement VOSB contracting preference

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For too long, the U.S. Department of Veterans Affairs (VA) has circumvented a policy known as VETS First, refusing to give preference to veteran-owned small businesses despite being directed to by Congress, the Government Accountability Office (GAO) and the U.S. Supreme Court.

This refusal hurts not only veteran-owned small businesses, but the millions of veterans who depend on the VA.

In 2006, Congress passed The Veterans Benefits, Health Care and Information Technology Act, which among other things established the VETS First program. But the VA, under administrations controlled by both parties, never followed through. On several occasions, the GAO has ruled that the VA has failed to follow the law. And still, it does nothing.

Keep reading this article at: http://thehill.com/blogs/pundits-blog/the-military/349692-the-va-must-do-its-duty-to-help-veteran-owned-small

VA issues interim procurement guidance in wake of Supreme Court decision

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VA-LogoIn reaction to the June 16, 2016 U.S. Supreme Court reversal of a lower court decision on the Veteran-Owned Small Business (VOSB) contracting program at the Department of Veterans Affairs (Kingdomware Technologies, Inc. v. United States), the VA has issued guidance to its acquisition team to ensure that procurements for VOSBs and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) are set-aside whenever a contracting officer has a reasonable expectation, based on market research, that two or more eligible firms are likely to submit competitive offers at a fair and reasonable price.

In the past, the VA had not implemented this rule, known as the “Rule of Two,” for orders placed against GSA and VA Schedule contracts.   The Supreme Court ruled that no exemption from the Rule of Two exists for such orders.  The Court also found that VOSB and SDVOSB set-asides should continue to be made even if and when the VA meets its goals for awards to VOSBs and SDVOSBs.

In announcing the new guidance, the VA’s Office of Acquisition and Logistics said that “additional policy and guidance will be provided via a Procurement Policy Memorandum and Class Deviation to be issued at a later date.”

Highlights of the interim guidance issued by the VA on June 22 include:

  • The VA’s Contracting Officers are to include a requirement in all solicitations that for evaluation purposes, only VA verified SDVOSBs or VOSBs in the VA’s VIP database at the time of contract award will be considered for award.  Non-VIP verified firms will be considered non-responsive and ineligible for award.
  • VA Contracting Officers are instructed to conduct and review the market research to ensure compliance with the Rule of Two, whether or not an initial decision was made to set-aside the acquisition to SDVOSBs or VOSBs.
  • For VA contracting requirements currently in the solicitation/evaluation phase, a review of the original market research is to be accomplished to confirm whether or not the Rule of Two was appropriately considered and whether offers are likely to be received from two or more qualified, capable and verified SDVOSBs or VOSBs at a fair and reasonable price. If the review results in a finding that there are two or more SDVOSBs or VOSBs, an amendment is to be be issued canceling the solicitation.
  • Where a notice to proceed has not yet been issued, VA Contracting Officers are directed to coordinate with the Head of the Contracting Activity, the Office of General Counsel and the Office of Small and Disadvantaged Business Utilization and “be prepared to proceed with issuing the notice to proceed if issued within 30 days of this guidance.”

Details on these changes can be found at: http://www.va.gov/oal/business/pps/flash16-16.asp

Supreme Court unanimously rules in favor of VOSBs in case involving the VA’s use of GSA Schedule contracts

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Supreme CourtToday – June 16, 2016 – the U.S. Supreme Court ruled in favor of the interests of Veteran-Owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) who challenged the practice of the Veterans Administration (VA) to not apply the veteran business preference to orders placed against GSA Schedule contracts.

According to government contract legal expert Steven Koprince, “The Supreme Court’s decision in Kingdomware Technologies, Inc. v. United States, No. 14-916 (2016) means that the VA will be required to truly put ‘Veterans First’ in all of its procurement actions – which is what Kingdomware, and many veterans’ advocates, have fought for all along.”

The issues involved in the Kingdomware case date back to 2006 when Congress first required the VA to restrict contract competitions to veteran-owned small businesses as long as there were at least two qualified VOSBs available to perform the work.  This is known as the “Rule of Two.”  In practice, the VA determined that this rule did not apply to orders the agency placed through GSA Schedules.  The Government Accountability Office (GAO) decided that the VA’s practices violated the law, but the VA refused to make any changes in its GSA Schedule purchasing.  Finally, in 2011, a SDVOSB company by the name of Kingdomware Technologies took the VA to court, but the U.S. Court of Federal Claims ruled against the GAO and in the VA’s favor.  Kingdomware appealed, but lost at the U.S. Court of Appeals in 2014.  One year ago, the U.S. Supreme Court agreed to hear Kingdomware’s case.

It’s been a long path to travel, but VOSBs and SDVOSBs can celebrate the unanimous decision handed down by the Supreme Court on June 16th.  The Court’s directive to the VA is clear – the written decision states that the Rule of Two “is mandatory, not discretionary.”  The Court goes on to state that the law in this case “unambiguously requires the Department [the VA] to use the ‘Rule of Two’ before applying other procedures.”

Koprince sums up the impact of the Supreme Court’s decision this way: “I expect that the Kingdomware decision will prove a major boon to SDVOSBs and VOSBs, ultimately resulting in billions of extra dollars flowing to veteran-owned companies.  The long battle is over – and SDVOSBs and VOSBs have won.”

Read the text of the Supreme Court decision here: http://www.supremecourt.gov/opinions/15pdf/14-916_6j37.pdf

Read Steven Koprince’s detailed analysis of the decision here: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/victory-sdvosbs-win-in-kingdomware-supreme-court-decision/

Read earlier articles about this case here:

Live reports, tweets, and webinar offered on VA’s Kingdomware Supreme Court case

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On Feb. 22, 2016, the U.S. Supreme Court will be hearing oral arguments in a controversy that deals with whether federal agencies are doing enough to assure that their contracts go to businesses run by veterans, especially service-disabled veterans.

You’ll be able to access live reports, a Twitter feed, and even a free webinar on the Court’s hearing.  More about that in a moment, but first some background and information on why this case is so significant.

Background

The case dates back to November 27, 2012, when the U.S. Court of Federal Claims ruled that the Department of Veterans Affairs (VA) has discretion to procure goods and services from GSA’s Federal Supply Schedule (FSS or simply GSA Schedule) without first considering a set-aside acquisition for service-disabled veteran-owned small businesses (SDVOSBs) or veteran-owned small businesses (VOSBs).

The Court of Federal Claims ruling represented a departure from several U.S. Government Accountability Office (GAO) decisions that stated the VA should comply with the Veterans Benefits, Health Care, and Information Technology Act of 2006 before conducting a GSA Schedule buy.  The 2006 Act created the so-called “Veterans First” contracting program that gives priority to SDVOSBs and VOSBs in the VA’s acquisitions.  Despite GAO’s opinions, the VA instructed its contracting officers to not apply the “Veterans First” principles to GSA Schedule contracting.

A Winding Road to the Supreme Court

The company bringing the challenge, Kingdomware Technologies, Inc., appealed the decision by the Court of Federal Claims.  But the U.S. Court of Appeals for the Federal Circuit held that the purpose of the “Veterans First” rule is to ensure that the VA meets its SDVOSB goals, and that so long as the VA meets its SDVOSB goals, it is free to procure services and supplies from the Federal Supply Schedule without first considering a SDVOSB procurement.  This lead the Kingdomware firm to take its plea to the Supreme Court.

The U.S. Department of Justice urged the Supreme Court to deny review, contending that the Federal Circuit got it right.  The Supreme Court nevertheless granted review.

Then the VA surprised everybody.  It abandoned the argument that the statutory preference for veteran-owned companies applies only if the VA has not met its SDVOSB or VOSB contracting goals.  That position had proven to be successful in its arguments before both the Court of Federal Claims and the Federal Circuit.  The government’s new argument was that the statute’s use of the term “contract” excludes orders under the Federal Supply Schedule or other multiple award vehicles.  This new strategy by government lawyers puzzled Court watchers and federal contracting experts alike.

The mystery of how this case would turn out got more murky.  On Nov. 4, 2015 — just five days before the Supreme Court was scheduled to hear oral arguments in the Kingdomware case — the Court yanked the case from its docket.  The Court directed the parties, not later than Nov. 30, to submit briefs on whether the contracts in question had been fully performed, and if so, whether full performance renders the case moot.

Need another curious twist?   While attorneys for Kingdomware worried that the VA would most certainly take the position that the case is moot, the brief filed by the government took the position that the case is not moot.

In response to the briefs, the Supreme Court announced, just before Christmas, that the Court would hear oral arguments in Kingdomware Technologies v. United States on February 22, 2016.

Anxious To Learn about the Arguments Made to Supreme Court?

Everyone who’s interested is small business set-asides, in general, and to extent to which the VA must prioritize veteran-owned firms in its contracting, specifically, wants to know about the arguments being made to the Supreme Court in this case.

The good news is you have the opportunity to learn about the Kingdomware case almost as if you are in the courtroom.  Attorney Steven Koprince — who has been active in supporting Procurement Technical Assistance Centers (PTACs like the Georgia Tech Procurement Assistance Center) across the country, as well as the Association of Procurement Technical Assistance Centers (APTAC) — will be attending the hearing and reporting back on what happens.  He will be:

  • Posting his impressions on his blog, SmallGovCon, the afternoon of Monday, Feb. 22.  You can check SmallGovCon.com that day or let him know if you would like him to email the post directly to you.
  • Answering your questions posted on Twitter starting at 10:00 a.m. EST on Tuesday, Feb. 23, for a full hour. You can follow Steven on Twitter @stevenkoprince or use the hashtag #Koprince4Vets.
  • Offering a free webinar to those who are interested in hearing what he learns at the oral arguments.  Steven’s webinar will take place at 12 noon EST on Tuesday, Feb. 23.  You can register for it here.

Kingdomware Koprince

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