The Veterans Administration can freely acquire goods and services from GSA's Federal Supply Schedule, and it is not required to set-aside such procurements for veteran-owned small businesses (VOSBs) or service-disabled veteran-owned small businesses (SDVOSBs). Under the Veterans Benefits, Health Care, and Information Technology Act of 2006, the VA is required to set aside procurements for VOSBs or SDVOSBs (if it is possible to do so) before opting to use another procurement method. VA applies the so-called "Rule of Two" by conducting market research to determine whether there are at least two VOSBs or SDVOSBs capable of meeting its requirement at a fair price before selecting a different procurement method.
In Kingdomware Technologies, Inc. v. United States, No. 12-173C (Fed. Cl. Nov. 27, 2012), the Court of Federal Claims found that the 2006 Act does not apply to FSS purchases. Despite multiple GAO decisions holding the opposite, Judge Firestone found that the 2006 Act does not specifically address the relationship between the set-aside requirements and the VA's use of FSS. Because of this ambiguity, the court looked to the agency's interpretation and found that the VA has consistently interpreted the 2006 Act as "having no effect on its ability to use the FSS without limitation." Ultimately, the Court found the VA's interpretation reasonable, and it granted judgment in favor of the agency.
It is clear that the VA will continue to look to the FSS where practicable, especially for smaller purchases where it will save administrative costs by doing so. While the Kingdomware decision may be seen as further reducing opportunities available to small businesses, especially VOSBs and SDVOSBs, it highlights the advantages of participating in the FSS. Small businesses seeking to remain competitive as a VA contractor especially should consider getting on the FSS as an additional marketing and sales tool.