The Department of Veterans Affairs takes the position that it is not obligated to consider veteran-owned businesses on goods and services it buys through GSA’s Federal Supply Schedule, and now the VA has a court decision that backs its stance.

On November 27, 2012, the U.S. Court of Federal Claims ruled that the VA has discretion to procure goods and services from GSA’s Federal Supply Schedule without first considering a set-aside acquisition for service-disabled veteran-owned small businesses (SDVOSBs) or veteran-owned small businesses (VOSBs).

The ruling is a departure from several recent U.S. Government Accountability Office decisions.  The GAO has consistently ruled that the VA must comply with the Veterans Benefits, Health Care, and Information Technology Act of 2006 before conducting a GSA Schedule buy. The 2006 Act created the “Veterans First” contracting program that gives priority to SDVOSBs and VOSBs in VA acquisitions.  The VA has maintained that the GAO’s interpretation of the 2006 Act was wrong and instructed its contracting officers to not apply the “Veterans First” principles to Schedule contracting.

The Kingdomware case represents the first time a court has ruled on the question of whether the GSA Schedule program is influenced by the terms of the “Veterans First” program.

In siding with the VA’s position, the Kingdomware decision found that the 2006 Act “is at best ambiguous as to whether it mandates a preference for SDVOSBs and VOSBs for all VA procurements.”   The Federal Claims Court ruled:

• The [VA] Secretary’s discretion to set contracting goals for SDVOSBs and VOSBs under the [“Veterans First” Act] contradicts plaintiff’s interpretation of the statute as creating a mandatory SDVOSB and VOSB set-aside procedure for each and every procurement . . . the goal-setting nature of the statute clouds the clarity plaintiff would attribute to the phrase “shall award” . . . and renders the [“Veterans First”] ambiguous as to its application to other procurement vehicles, such as the FSS [GSA’s Federal Supply Schedule].

The bottom line of the Kingdomware decision is that the VA did not act arbitrarily and capriciously when it used GSA Schedule contracts without first determining the appropriateness of a set-aside for SDVOSBs or VOSBs.

The full decision can be downloaded here: Kingdomware Technologies, Inc. v. United States.