Kingdomware Doesn’t Require Recertification For GSA Schedule SDVOSB Set-Aside Orders

The Supreme Court’s landmark ruling in Kingdomware Technologies, Inc. v. United States does not require SDVOSBs to recertify their eligibility in connection with individual GSA Schedule task orders.

In a recent decision, the SBA Office of Hearings and Appeals held that Kingdomware doesn’t affect the SBA’s SDVOSB eligibility regulation for multiple-award contracts, which specifies that if a company qualifies as an SDVOSB at the time of the initial offer for a multiple-award contract, it ordinarily qualifies as an SDVOSB for all orders issued under the contract.

OHA’s decision in Redhorse Corporation, SBA No. VET-263 (2017) involved a GSA RFQ seeking transition ordering assistance in support of the Network Services Program.  The RFQ contemplated the award of a task order under the GSA Professional Services Schedule.  The order was set aside for SDVOSBs under NAICS code 541611 (Administrative Management and General Consulting Services).  The GSA contracting officer did not request that offerors recertify their SDVOSB eligibility in connection with the order.

After evaluating quotations, the GSA announced that Redhorse Corporation was the apparent awardee.  An unsuccessful competitor subsequently filed a protest challenging Redhorse’s SDVOSB status.  The SBA Director of Government Contracting sustained the protest and found Redhorse to be ineligible for the task order.

Redhorse filed an SDVOSB appeal with OHA.  Redhorse argued that it was an eligible SDVOSB under the Professional Services Schedule and was not required to recertify its status for the order.  Therefore, Redhorse contended, the SDVOSB protest should have been dismissed. OHA agreed with Redhorse and granted the appeal.

The competitor then filed a request for reconsideration.  The competitor argued, in part, that OHA’s decision was at odds with Kingdomware.  According to the competitor, Kingdomware establishes that “any new order off of a multiple award contract . . . is an independent contract in and of itself,” and therefore requires a new SDVOSB certification.

OHA wrote that the competitor hadn’t discussed Kingdomware in its initial appeal, and couldn’t raise it belatedly in a request for reconsideration.  But for good measure, OHA addressed the issue anyway.

OHA wote that “because Kingdomware decided the narrow question of whether task orders must be set aside for veteran-owned small businesses pursuant to 38 U.S.C. 8127(d), Kingdomware does not affect SBA’s existing regulations pertaining to protests against task orders and recertification under long-term, multiple-award contracts.”  OHA continued:

Kingdomware, then, is not inconsistent with the regulation at issue here, 13 C.F.R. 125.18(e)(1), which states that “if an [SDVOSB] is qualified at the time of initial offer for a Multiple Award Contract, then it will be considered an [SDVOSB] for each order issued against the contract, unless a contracting officer requests a new [SDVOSB] certification in connection with a specific order.  The CO did not request recertification for the instant task order, so Redhorse remains an [SDVOSB] for this task order based on its earlier certification at the GSA Schedule contract level.

OHA dismissed the request for reconsideration and affirmed the original decision.

As we approach the one-year anniversary of Kingdomware next month, it remains to be seen how broadly the decision will affect government contracting.  So far, OHA has held that Kingdomware doesn’t affect size protest timeliness and–as it ruled in Redhorse Corporation–doesn’t require SDVOSBs to recertify for individual GSA Schedule task orders.  But the SBA has also taken the position that Kingdomware should apply to the FAR’s small business “rule of two,” not just the SDVOSB/VOSB “rule of two” under 38 U.S.C.  And in the meantime, the VA seems to have implicitly determined that Kingdomware doesn’t apply to acquisitions subject to SBA nonmanufacturer rule waivers, but hasn’t provided any legal rationale (at least not of which I am aware) for that position.

Needless to say, there will be plenty more protests, appeals and other decisions about the broader impact of Kingdomware.  Stay tuned.