VA and the “Rule of Two”, Round Three: Ding. Ding.

By Heather Seftel-Kirk

This time last year, the fight between Kingdomware and the Department of Veterans Affairs (VA) was still being played out in the Supreme Court.

This time last year, a set of new large business prime contract awardees on VA’s $22.3B Transformation Twenty-One Total Technology Next Generation (T4NG) IDIQ were staffing up and preparing for what promised to be a busy summer and fall. With a roughly $4 Billion IT budget alone, prime positions on VA contract vehicles such as these have historically been worth their weight in gold to large business awardees.

This time last year, we were weeks away from the June 16 unanimous decision in favor of Kingdomware and the Service Disabled Veteran Owned Small Business (SDVOSB) and Veteran Owned Small Business (VOSB) community.

Kingdomware is the name of a company, Kingdomware Technologies. For many, the name of this SDVOSB has become synonymous with the VA’s “Rule of Two”, rather than the company who, in spite of set back after set back, continued to challenge the VA, and would not let the case die. The underpinnings for the “Rule of Two” (RoT) came about almost a decade before the Supreme Court ruling came to be; when a provision was inserted into the 2006 Veterans Benefits, Health Care and Information Technology Act. The provision stated that to meet the goals under subsection (a) “a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by Veterans will submit offers and that the award can be made at a fair and reasonable price.”

“The challenge,” according to Denniston, “has always been that the law is broad and the VA has selectively applied it.”
We will not rehash the history of the Kingdomware case here, as that is a well-worn path that has been addressed elsewhere with more eloquence. What we will point out, is that for the 10 years between the RoT language being put into law and the Supreme Court ruling, the VA was inconsistent in how they viewed and abided by the language and any legal or GAO rulings along the way, largely deferzring towards ensuring they met their small business goals for Veterans. According to Scott Denniston, current Executive Director of the National Veteran Small Business Coalition (NVSBC) and former Veterans Affairs Director for Small Business Programs, these pieces of legislation placed an obligation on the VA to contract with Veteran-Owned Businesses if products or services could be provided at reasonable prices. “The challenge,” according to Denniston, “has always been that the law is broad and the VA has selectively applied it.”

Ostensibly, that all changed June 16, 2016, when the Supreme Court handed down a unanimous ruling, siding with the Veteran-Owned Small Businesses while declaring that the RoT is mandatory, and applies to all VA procurements. Many noted legal experts, such as Steven Koprince, the Managing Partner for Koprince Law LLC were quick to declare victory for the Veteran community, even going so far as to predict this would be a “boon to SDVOSBs and VOSBs, ultimately resulting in billions of extra dollars flowing to veteran-owned companies,” and that “the long battle is over–and SDVOSBs and VOSBs have won.”1

If That Ruling Was the End, a Proverbial TKO, This Article Would Need Not Be Written

The Veteran community won that round, but not all are content or satisfied with the result. While many are starting to exit the arena, the fight quietly continues as those who were negatively impacted work to get up off the mat. Why quietly? What person, company or group wants to openly challenge the Veteran community? These are our war fighters, our heroes who have sacrificed so much. The answer to who would challenge this group is simple: No one.

The process of even writing this article with no “dog in the hunt” is uncomfortable.

Said one senior executive from a large government contractor who asked to remain anonymous, “VA has historically been one of our biggest accounts. We have staff that have been at VA for 20 years and who bleed the mission. We will walk away if we have to, but not without evaluating our options.”

But it is not just industry, it is Government too. Said one current VA executive, “I don’t believe this was the intent of the language, but we will abide by it. If I had my druthers, of course, we would like the language to be less restrictive.” Added one recently retired VA acquisition executive, “VA is evaluating all options for how to bend the rules. The current environment greatly limits the ability to make the best decision on behalf of the taxpayer, and that makes this unsustainable.”

It is unclear where and when this brawl will take place or when the bell will ring, but some potential options include:

With GAO. VA acquisition leads continue to test the boundaries around some of the language, such as what is “reasonable” price or expectation. Compared to 6 months ago, the VA is more aggressively competing and awarding tasks in an unrestricted capacity. Will they push far enough to warrant a challenge? Only time will tell.

In Federal Court. The VA is figuring out some work arounds. Examples include contracts being awarded based on programs such as AbilityOne, or of dollars being funneled to and contracts awarded through other Federal agencies as a way of circumventing the ruling, with these agencies not being bound by Vets First.

On Capitol Hill. For fiscal year 2018, discretionary spending is expected to reach close to $80B at VA, (yes, Billion, with a B). There is a lot on the line. Heavy lobbying by large firms is taking place. Said one former VA exec who now works for a SDVOSB, “I give it one year. Wait until after the mid-terms and you will see an attempt to change the law, but not until then.”

 

The Veteran Small Business Community is Not Sitting Back 

According to the NVSBC’s Denniston, “We believe we have the law on our side. We’re working now on a formal strategy.”

As David Blackburn, CEO for G2Xchange Health said, “There is a lot at stake here. At a recent Veterans focused event I attended, there was a passionate plea, and I mean passionate, made by more than one (SD/VOSB) exec – to band together and fight” the well-funded and better organized large business lobbying efforts on Capitol Hill. Continues Blackburn, “if any member of Congress tries to make changes to the law, they will need to weigh the consequences as this group, and others like it, are prepared to rain down the shame on such efforts.” This is not likely to be the type of attention anyone with re-election aspirations desires.

This time next year, will the next round be underway to challenge the “Rule of Two”?

This time next year, will large business be back to “business as usual” on contracts such as T4NG?

This time next year, will we be waiting on a new ruling from some group that will impact the future of contracting at VA?

We don’t know what round this is, but this fight does not appear to be over.


1 Source: Victory! SDVOSBs Win In Kingdomware Supreme Court Decision, Posted on June 16, 2016, By Steven Koprince, – See more at:
http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/victory-sdvosbs-win-in-kingdomware-supreme-court-decision/#sthash.mh2rkpTS.dpuf

Please follow and like us:

Leave a Reply