In a unanimous decision that read like a 5-4 vote, the Supreme Court handed down its decision in Kisor v. Wilke this week. All nine justices agreed that the case should be remanded to the lower court, but they expressed dramatically different reasoning.
What it means, essentially, is that for now courts will continue to defer to agencies’ reasonable interpretation of their own regulations. For contractors facing off against agencies, it means that the agencies still have the upper hand—however, SCOTUS did try to limit it some.
Government contractors seeking to be certified through the Vets First Verification Program under the VA’s Center for Verification and Evaluation have to submit a number of documents. We’ve recently been hearing that CVE is taking a closer look at some of these documents, and this is in line with VA’s recent rule change expanding its list of required documents for verification.
Specifically, CVE will examine franchise agreements and similar documents like distributor agreements. Depending on the language in those agreements, this could lead to a denial of CVE verification. Because of that, we offer a reminder of CVE’s position on these types of agreements, which seems to still be quite strict in spite of regulatory changes implemented last fall.
For service-disabled veteran owned small businesses, or SDVOSBs, contracting with the VA, verification by the VA’s Center for Verification and Evaluation, or CVE, is essential. CVE verification is mandatory to compete for VA SDVOSB set-asides and listing on the VA’s Vendor Information Pages (VIP).
The SBA Office of Hearings and Appeals recently confirmed that notice and opportunity to respond to allegations is required before a business’ verification is cancelled.
In late 2017, we wrote that the VA was considering using tiered evaluations to simultaneously 1) comply with the VA’s statutory Rule of Two (and Kingdomware), and 2) address situations in which SDVOSBs and VOSBs might not offer “fair and reasonable” pricing.
Since then, the VA has instituted the tiered evaluation process for certain solicitations, using one of three approaches:
Oral arguments are to be held today (March 27, 2019) on a U.S. Supreme Court case that may dramatically reduce federal agency power.
The case, Kisor v. Wilkie, asks the Supreme Court to overturn longstanding precedent which established that an agency’s interpretation of its own regulation deserves deference so long as it is reasonable. If the Supreme Court overturns this precedent, it could change the balance of power—in favor of government contractors—in certain disputes with agencies.
Amidst the news cycle focusing on the government shutdown, there is some other action in the House of Representatives that recently caught our eye.
The House recently passed a bill called the “Expanding Contracting Opportunities for Small Businesses Act of 2019.” If the bill becomes law, we will see a dramatic expansion in the size of sole source contracts for SDVOSBs, WOSBs, and HUBZones.
While most of the rules for SDVOSB eligibility now reside with the SBA, the VA is still responsible for verification of entities for inclusion into its database of verified SDVOSBs and VOSBs. A recent Court of Federal Claims case describes what sort of conduct might get a business removed from the VA’s database–even if that conduct doesn’t run afoul of the SBA’s SDVOSB rule.
While the conduct in this case is somewhat egregious, it is a good reminder that VA has the power to thoroughly investigate the eligibility of an SDVOSB and can revoke the verified status based on inaccurate statements in an application.