Government Contracts Federal Circuit Affirms Priority of Rule of Two Analysis for VA
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Monday, November 12, 2018

Federal Circuit Affirms Priority of Rule of Two Analysis for VA

By Government Contracts Editorial Staff

The Court of Appeals for the Federal Circuit affirmed a Court of Federal Claims decision holding the Veterans Benefit Act required the Department of Veterans Affairs to perform a Rule of Two analysis before entering into any new AbilityOne List contracts for eyewear because the VBA took precedence over conflicting provisions in the Javits-Wagner-O’Day Act. Section 8127(d) of the VBA provides that VA contracting officers “shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans,” provided they have a “reasonable expectation” (1) “that two or more small business concerns owned and controlled by veterans will submit offers” and (2) “that the award can be made at a fair and reasonable price that offers best value to the [government].” Section 8504(a) of the JWOD provides that a government entity “intending to procure a product or service on the [List] . . . shall procure the product or service from a qualified nonprofit agency for the blind or a qualified nonprofit agency for other severely disabled … if the product or service is available within the period required by the entity.”

Specific v. General. Both statutes contain mandatory language but could be reconciled under the basic tenet of statutory construction that a specific statute takes precedence over a more general one. While the JWOD applies to all government agencies, the VBA applies only to VA procurements and only when the Rule of Two is satisfied. Therefore, the express, specific directives in §8127(d) overrode the more general contracting requirements of the JWOD. This conclusion was reinforced by a comparison of the provisions and goals of the VBA with the predecessor Veterans Benefits Act of 2003, which applied to all agency procurement decisions involving service-disabled VOSBs and conferred discretion on COs to apply the Rule of Two.

Later Statute Controlling. In addition, the VBA lacks any exception for procurements that would otherwise be governed by the JWOD, and when two statutes conflict, the later-enacted statute controls. Because the VBA was enacted more than 30 years after the JWOD was last amended, the court could infer that Congress intended the VBA to control in its narrower arena. The Supreme Court’s decision in Kingdomware Technologies, Inc. v. U.S. (60 CCF ¶80,910) provided further support. In Kingdomware, the Court found that the VBA “is mandatory, not discretionary” and that §8127(d) “requires the [VA] to apply the Rule of Two to all contracting determinations and to award contracts to veteran-owned small businesses.” Placing an item on the List, or choosing an item from the List under the JWOD, is a form of awarding a contract, and under §8127(d) and Kingdomware, the VA must first conduct a Rule of Two analysis. (PDS Consultants, Inc. v. U.S., et al., CA-FC, 62 CCF ¶81,501).

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