When an agency acquires manufactured products or supplies, the agency need not set aside the solicitation for small businesses under the FAR’s “rule of two” unless the agency has a reasonable expectation of receiving offers from small businesses offering the products of two or more small manufacturers.
A recent GAO bid protest decision highlights a little-known provision of the FAR, which provides that the “rule of two” does not apply to acquisitions for manufactured products over $150,000 where two or more small business nonmanufacturers are likely to submit offers, but the small business nonmanufacturers will not offer the products of two or more small business manufacturers.
Good news for veteran-owned contractors: the VA’s SDVOSB and VOSB “Rule of Two” applies even when the VA issues a solicitation for a multiple-award IDIQ contract.
A recent GAO decision represents the latest instance where the VA’s failure to apply the Rule of Two and set-aside a procurement for SDVOSBs has been found to be unreasonable. In Spur Design, LLC, B-412245.3 (Feb. 24, 2016)*, GAO determined that the Rule of Two required the VA to set-aside a solicitation to award several multiple award indefinite-delivery/indefinite-quantity (“IDIQ”) contracts for SDVOSBs.
The Supreme Court heard oral arguments in Kingdomware Technologies Inc., v. United States this morning. I was in the courtroom as counsel for Kingdomware and the government did their best to answer the questions of eight Justices.
Here are my first impressions.
Where an agency buys manufactured goods, the FAR’s Rule of Two is satisfied when two or small business manufacturers of the end products exist. It is not enough, as GAO recently held, for two or more small business distributors of manufactured products to exist.
An offeror on an unrestricted solicitation was not entitled to “extra credit” in the evaluation on account of its small business status.
In a recent bid protest decision, the GAO held that an agency, during its evaluation of proposals under an unrestricted solicitation, had no obligation award extra credit to the protester just because the protester was a small business. In its decision, the GAO rejected the protester’s argument that a FAR clause establishing a policy of maximizing small business participation required the agency to give an evaluation preference to a prospective small business prime contractor.
The VA and Kingdomware Technologies Inc. haven’t agreed on much in recent years, but in briefs filed with the Supreme Court on November 20, 2015, they agree on one thing: the pending Kingdomware Supreme Court case is not moot.
Hopefully, the fact that neither party wants the case dismissed on a technicality will help convince the Court to decide Kingdomware on the merits.
In a stunning development in the Kingdomware SDVOSB/VOSB Supreme Court case, the Government has abandoned the argument that the statutory preference for veteran-owned companies applies only if the VA has not met its SDVOSB or VOSB contracting goals.
Although this argument was hotly debated, it was successful both at the Court of Federal Claims and again at the Federal Circuit. But now, just weeks away from oral arguments, the Government’s Supreme Court brief jettisons the Government’s own previously successful argument in favor of an entirely different rationale for refusing to honor the statutory SDVOSB and VOSB preferences.
The last-minute, wholesale substitution of arguments doesn’t say much for the Government’s confidence in its case. And on the merits, the Government’s new argument is no better than the one it has abruptly abandoned.