Kingdomware Techs., Inc. v. United States
| Decision Date | 27 November 2012 |
| Docket Number | No. 12-173C,12-173C |
| Parties | KINGDOMWARE TECHNOLOGIES, INC., Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Bid Protest; Veterans Benefits,
Health Care, and Information
Technology Act of 2006, 38 U.S.C. §§
8127-28 (2006 & West Supp. 2012);
Veteran-Owned Small Business Set-
Asides; Chevron Statutory
Interpretation
Timothy H. Power, Sonoma, CA, for plaintiff.
Robert C. Bigler, United States Department of Justice, Washington, D.C., with whom were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director, for defendant.
Plaintiff Kingdomware Technologies, Inc. ("plaintiff"), a service-disabled veteran-owned small business, brings this bid protest claim seeking injunctive relief compelling the Department of Veterans Affairs ("VA") to comply with the Veterans Benefits, Health Care, and Information Technology Act of 2006, 38 U.S.C. §§ 8127-28 (2006 & West Supp. 2012) ("the 2006 Act" or the "Act"). Plaintiff filed an amended complaint on July 18, 2012, alleging that VA conducted three procurements in violation of the 2006 Act by failing to set aside those procurements for veteran-owned small businesses ("VOSBs") orservice-disabled veteran-owned small businesses ("SDVOSBs"), such as plaintiff. For the purposes of the pending cross-motions for judgment on the administrative record, the parties have stipulated to the facts in regard to one of the three procurements at issue. The parties' cross-motions focus only on the legal question of whether VA failed to comply with the 2006 Act in conducting this procurement.1 For the reasons that follow, the court GRANTS the government's motion for judgment on the stipulated facts, and DENIES plaintiff's motion.
This case turns on a question of statutory interpretation: whether, under the 2006 Act, VA must first determine if it can conduct its acquisitions using restricted competition among SDVOSBs or VOSBs before deciding to use another procurement method, the Federal Supply Schedule ("FSS"), to meet its requirements. In particular, the court must determine whether Congress intended that VA retain its discretion to procure goods and services from the FSS, in light of the set-aside procedures set forth in the 2006 Act. If Congress is silent as to this issue, the court must determine whether VA's interpretation, that it does not to need consider restricted competition among SDVOSBs and VOSBs before procuring from the FSS, is reasonable with regards to the statutory language, purpose, and legislative history of the 2006 Act. The answer to this questiondepends on the terms and structure of the Act itself, and on Congress' understanding of the relationship between the Act and the procurement methods available to VA under the Federal Acquisition Regulations. In several decisions, the Government Accountability Office ("GAO") has taken the position that the legislation and its regulations mandate that VA must determine whether it can set aside each of its procurements for restricted competition among SDVOSBs and VOSBs before using the FSS. VA has elected not to follow the GAO decisions, including in the present case.2
This particular question of statutory interpretation is a case of first impression before this court. To better understand the dispute over the proper interpretation of the 2006 Act, the court sets forth below the statutory and regulatory framework relevant to the FSS procurement at issue together with the GAO precedent and VA's response.
Federal agencies traditionally procure supplies using full and open competition to ensure that the public receives the best value possible, using procedures outlined in the Federal Acquisition Regulations ("FAR"). See 48 C.F.R. ("FAR") § 14.000 et seq. (sealed bidding procedures); FAR § 15.000 et seq. (negotiated acquisition procedures). Individual agencies, including VA, are permitted to deviate from the general FAR. See FAR § 814.104 et seq. (); FAR § 815.303 (); FAR § 819.7001 etseq. (implementing in part the 2006 Act at issue here). VA's unique acquisition regulations are referred to as the Veterans Affairs Acquisition Regulations ("VAAR").
When procuring supplies or services, an agency may be required to use certain sources or set aside procurements for certain types of contractors. See FAR § 8.002 (). FAR Part 19 includes provisions relating to contract set-asides for small businesses generally and for certain types of small businesses, such as women-owned small businesses or economically-disadvantaged small businesses. See FAR § 19.000(a)(3). These set-aside provisions also include set-asides for SDVOSBs,3 such as plaintiff, pursuant to the Veterans Benefit Act of 2003, 15 U.S.C. § 657f (2006).4 FAR Part 19 mandates that small business set-asides be used within or over certain contracting thresholds when the contracting officer reasonably expects to receive offers from two or more responsible businesses and the award will be competitive or awarded at fair market price. FAR § 19.502-2(a), (b). Inaddition, contracting officers conducting acquisitions over certain contracting thresholds must preference several specialized small business set-aside programs, including that for SDVOSBs, before using a general small business set-aside. FAR § 19.203(c). Small business set-asides have priority over acquisitions using full and open competition. FAR § 19.203(e).
Although the traditional acquisition and set-aside procedures described above are appropriate for many acquisitions, it is often inefficient to use these methods for smaller acquisitions. To provide federal agencies with a "simplified process for obtaining commercial supplies and services at prices associated with volume buying," the General Services Administration ("GSA") has established the Federal Supply Schedule ("FSS"). FAR § 8.402(a). Contractors agree to provide supplies and services at stated prices for given periods of time on the FSS, permitting federal agencies to buy supplies directly from the FSS, rather than holding a publicly-advertised full and open competition for every individual requirement. Id. Orders placed against the FSS are deemed to satisfy the conditions of full and open competition and are not subject to the requirements of traditional procurement procedures, including the set-aside requirements established in FAR Part 19. FAR § 8.404(a).
Agency discretion to use the FSS is usually unrestricted. Absent a statutory or regulatory requirement to the contrary, an agency generally retains unfettered discretion to select the procurement method it wishes to use and in particular, whether it wishes to meet its acquisition requirements using the FSS. K-Lak Corp. v. United States, 98 Fed. Cl. 1, 8 (2011) (quoting Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed.Cir. 2009)) ("Federal procurement entities have 'broad discretion to determine what particular method of procurement will be in the best interests of the United States in a particular situation.'"). Importantly for this case, it is well-settled that when placing an order against the FSS, the agency is exempt from the small business set-aside programs under FAR Part 19. FAR §§ 8.404(a), 8.405-5(a), 19.502-1(b); see K-Lak, 98 Fed. Cl. at 2 n.3 ().
The FSS has therefore been historically utilized as a procurement method separate and apart from traditional procurement methods and set-aside provisions found elsewhere in the FAR. The parties' dispute in this case centers on whether the language of the 2006 Act alters the traditional relationship between the FSS and small business set-asides by mandating that VA first determine whether it can set aside all of its procurement activities for restricted competition among SDVOSBs and VOSBs before deciding to meet its requirements through the FSS. The court now turns to the 2006 Act and its implementing regulations.
Congress enacted the Veterans Benefits, Health Care, and Information Technology Act as Sections 502 and 503 of Public Law 109-461 in 2006.5 The 2006 Act applies only to supplies and services procured by VA. See 48 C.F.R. § 819.7002 (); Angelica Textile Servs., Inc. v. United States, 95 Fed. Cl. 208, 222 (2010). The 2006 Act requires VA to set goals for SDVOSB and VOSB participation in VA contracts, and provides for several contracting tools, including set-asides and non-competitive procurement procedures, to achieve the goal of increasing SDVOSB and VOSB participation. Plaintiff's protest centers on whether, under § 8127(d) of the 2006 Act, VA is required to conduct market research to determine if VA procurements should be set aside for SDVOSBs or VOSBs before VA acquires supplies and services using the FSS. Section 8127 of the 2006 Act reads, in relevant part:
To continue reading
Request your trial