SBA Insists That Small Business Rule Of Two Applies To Some FSS Orders

Earlier this year, we wrote about an interesting issue brewing in federal contracting: whether the logic behind the Supreme Court’s June 2016 decision in Kingdomware Technologies means that the Small Business Act’s rule of two is mandatory for acquisitions under Federal Supply Schedules. In other words, does the Small Business Act require agencies to set aside orders under the FSS when two or more small business are likely to submit competitive offers?

The SBA believes that the rule of two (see FAR 19.502-2) is mandatory for such orders. GAO has disagreed, saying instead that the Small Business Jobs Act of 2010 and the exclusion of FSS contracts from the application of FAR Part 19 (see FAR 8.405-5(a)(1)(i)) make the small business rule of two discretionary for these orders.

This conflict—GAO believing the Small Business Act’s rule of two is discretionary for orders placed under multiple-award contracts; SBA believing it is mandatory—has existed for several years. But now the SBA is using the Supreme Court’s recent decision to bolster its case: according to a recent SBA internal memorandum, Kingdomware requires the small business rule of two to be given mandatory effect, at least with respect to orders valued between $3,500 and $150,000.

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2017 NDAA Requires GAO Report On DoD Minority And WOSB Contract Awards

The 2017 National Defense Authorization Act will require the GAO to issue a report about the number and types of contracts the Department of Defense awarded to minority-owned and women-owned businesses during fiscal years 2010 to 2015.

If the 2017 NDAA is signed into law, the GAO would be required to submit its report within one year of the statute’s enactment.

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SDVOSB Programs: 2017 NDAA Sharply Curtails VA’s Authority

The 2017 National Defense Authorization Act will essentially prevent the VA from developing its own regulations to determine whether a company is a veteran-owned small business.

Yes, you heard me right.  If the President signs the current version of the 2017 NDAA into law, the VA will be prohibited from issuing regulations regarding the ownership, control, and size status of an SDVOSB or VOSB–which are, of course, the key components of SDVOSB and VOSB status.  Instead, the VA will be required to use regulations developed by the SBA, which will apply to both federal SDVOSB programs: the SBA’s self-certification program and the VA’s verification program.

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Does Kingdomware Apply To Non-VA FSS Orders?

Earlier this year, the United States Supreme Court issued its decision in Kingdomware Technologies v. United States. As we’ve noted, this case was a monumental win for veteran-owned small businesses—it requires the Department of Veterans Affairs to set-aside solicitations for SDVOSBs or VOSBs where two or more such offerors will submit a proposal at a fair and reasonable price, even if that solicitation is issued under the Federal Supply Schedule.

A recent GAO decision suggests, however, that Kingdomware’s impact could be felt beyond the world of VA procurements. Indeed, the Supreme Court’s rationale in Kingdomware might compel every agency to set aside any FSS order (or any other order, for that matter) valued between $3,000 and $150,000.

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SBA OHA: No “Unfair Competitive Advantage” Appeals

The SBA Office of Hearings and Appeals lacks jurisdiction to consider whether an entity owned by an Indian tribe or Alaska Native Corporation has obtained a substantial unfair competitive advantage within an industry.

In a recent size appeal case, OHA acknowledged that an unfair competitive advantage is an exception to the special affiliation rules that tribally-owned companies ordinarily enjoy–but held that only the SBA Administrator has the power to determine that an Indian tribe or ANC has obtained, or will obtain, such an unfair advantage.

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Small Business Wins Contract Despite “Unacceptable” Key Personnel Score

A small business received an “unacceptable” score for its key personnel, but nevertheless was awarded the contract after the matter was referred to the SBA under the Certificate of Competency procedures.

A recent decision by the U.S. Court of Federal Claims demonstrates the breadth and power of the so-called “COC” process, which can allow an otherwise “unacceptable” business to wind up in the winner’s circle.

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Small Business “Rule Of Two” Doesn’t Apply To GSA Schedule

Agencies are not required to investigate the availability of small business offerors when ordering goods and services off the Federal Supply Schedule, even if multiple small business concerns would be able to compete for the contract.

As the GAO recently held in Walker Development & Trading Group, B-411357 (July 8, 2015), the small business preferences found in the Small Business Act do not apply when an agency uses the FSS.

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