SUPREME COURT UPHOLDS RULE OF TWO FOR VA SCHEDULE BUYS:
The Supreme Court ruled last week in Kingdomware that the Department of Veterans Affairs must buy from veteran-owned small businesses where two or more such firms are able to do the work, even when buying from VA Federal Supply Schedule contracts. This is the first time the “rule of two” has been applied to Multiple Award Schedule contracts. Although the Court essentially upheld a special veterans-preference law that applies only to VA buys, the precedent set may inspire other small firms to take their own action to expand the rule of two to GSA Schedule contracts or other IDIQ’s. The Government Accountability Office (GAO), for example, previously issued a ruling in the Delex case stating that the rule should apply to all non-schedule IDIQ contracts where there are two or more small business prime contractors. GSA and other agencies that manage IDIQ contracts promptly issued legal guidance intended to circumvent the GAO ruling, but that precedent, along with the Supreme Court decision, means that businesses with substantial IDIQ portfolios need to pay close attention to any movement to automatically set-aside IDIQ task orders for small businesses. Companies of all sizes, as well as federal agencies, have made substantial investments in IDIQ contracts as an efficient means of acquisition. The Kingdomware ruling, in and of itself, does not mean the rule of two will be broadly applied outside of the VA. Only time will tell, though, whether this case moves agencies closer to wider use of set-asides when using IDIQ contracts.