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Appeals Court Further Expands Small Business Opportunities with the VA

On Behalf of | Oct 18, 2018 | Business Litigation

When the VA was looking for vendors who could provide glasses for its veterans, the VA faced a dilemma. One law said the VA “shall” use Ability First as its eyewear vendor. Another law said the VA “shall” first consider vendors who were veteran owned small businesses or service disabled veteran owned small businesses. A recent decision of the U.S. Court of Appeals for the Federal Circuit is a good example of how courts resolve flat-out conflicts in laws Congress has passed.

The decision is another attempt by the courts to resolve the interplay—and sometimes the conflict – between the numerous procurement laws Congress has passed. Several years ago, the U.S. Supreme Court resolved a similar controversy, holding that the VA had to apply the “Rule of Two” even in procurements involving the GSA Federal Supply Schedule, which in general does not require use of the Rule of Two. Kingdomware Techs., Inc. v. U.S., 136 S. Ct. 1969 (2016). In resolving these legal conflicts, the courts opened additional VA opportunities to veterans.

Although the decision includes an excellent discussion of the various laws impacting how an agency makes its buys, the court focused on the two laws primarily involved. The first is the Javits-Wagner O’Day Act (“JWOD”) that says agencies “shall” buy items identified on a procurement list from “a qualified nonprofit agency for the blind or a qualified nonprofit agency for other severely disabled.”  The AbilityOne Program is a socioeconomic program that provides products and services to the federal government through a network of such nonprofit agencies.  The conflicting law is the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “VBA)” that says that, with two minor exceptions, the VA “shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if” the Rule of Two is met.

To resolve the conflict, the court used several legal principles. One was that a specific law takes precedence over a more general law. Here, the VBA was specific in that it applied only to the VA while the JWOD was more general because it applied to all federal agencies. So that principle favored the VBA’s trumping of the JWOD. Second, the court applied the principle that “when two laws statutes conflict, the later-enacted law controls.”  Because the VBA was enacted over 30 years after the JWOD was last amended, the court “can infer that Congress intended the VBA to control in its narrower arena, and the JWOD to dictate broader procurements outside of the VA.” Again, the VBA trumped the JWOD.

Although the decision opens the door to more veteran small businesses getting more VA work, it does not apply more broadly to all agencies: “agencies outside of the VA must still comply with the JWOD, as does the VA when the Rule of Two is not implicated.”

PDS Consultants, Inc. v. United States, No. 2017-2379, 2017-2512 (Fed. Cir. Oct. 17, 2018).

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Terry O’Connor is a Partner at Berenzweig Leonard. Terry and Stephanie Wilson  lead the firm’s Government Contracts practice. Terry can be reached at [email protected].