Let’s face it, government contracting is not always at the center of the legal universe. In fact, there are probably some lawyers and clients out there who have no interactions at all with government contracts. But in the middle of June 2016, government contracts were front and center and the subject of two unanimous U.S. Supreme Court decisions. Today, we briefly address one of those decisions, Kingdomware Technologies, Inc. v. United States, 579 U.S. ___ (2016). (We plan to address the other decision, Universal Health Services, Inc. v. United States et al. ex rel. Escobar et al., 579 U.S. ____ (2016) in a future blog post.)
In Kingdomware, the Supreme Court ruled that the Department of Veterans Affairs (VA) was required to follow the “Rule of Two” and award contracts to veteran-owned small businesses (VOSB) regardless of the contracting vehicle selected. Judge Thomas spoke for the Court and succinctly explained the Rule of Two as a requirement that the VA “shall award” contracts to VOSBs when there is “a ‘reasonable expectation’ that two or more such businesses will bid for the contract at ‘a fair and reasonable price that offers best value to the United States.’”
This decision could have a profound effect on VOSBs and all contractors that deal with the VA. There may be some VA needs that can only be satisfied by large businesses. You never know. But after Kingdomware, all VOSBs should be on notice that all VA requirements must first be offered to them. They should be on the lookout for contract actions to large businesses and should take measures to protect their rights under the law. Those measures include asking appropriate questions in the pre-proposal phase of procurements and filing pre-award bid protests, if necessary.
Every year, the VA spends billions of dollars to purchase goods and services ranging from IT to construction. After Kingdomware, virtually all of that spending should go to VOSBs. VA’s mandate goes back to the words first spoken by Abraham Lincoln and captured in the VA’s motto: “to care for him who shall have borne the battle, and for his widow and his orphan.” In our view, by requiring and ensuring that VA contracting dollars go to VOSBs, the Kingdomware decision is a win-win: VOSBs should get more business and the VA should meet its mandate to help all veterans.