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.

The session started on a somber note.  Kingdomware was the first case to be heard after Justice Scalia’s passing.  Justice Scalia’s chair was left empty and draped in black.  Justice Roberts began the session with a brief tribute to his longtime colleague.  Then, the Court shifted right into Kingdomware.

Shall Means Shall

First, the good news.  At least two of the justices signaled that they read the 2006 VA Act as establishing a mandatory SDVOSB and VOSB preference.  After a lengthy question to Kingdomware’s counsel, Tom Saunders, Justice Breyer stated that he didn’t see an exception for the Federal Supply Schedule in the statute.

The Justices pressed the government’s counsel, Zachary Tripp, who argued that other set-aside statutes (those implemented in FAR Part 19) do not apply to GSA Schedule buys.  In fact, Mr. Tripp argued, one of the main points of the GSA Schedule system is to avoid the burdens of following the set-aside process.  In reply, Kingdomware’s counsel reminded the Court that the VA Act was passed by Congress precisely because the discretionary set-asides under FAR Part 19 were not enough.

An Order is a Contract

The Justices also seemed skeptical of the VA’s new argument–that an “order” isn’t a “contract,” and therefore the Rule of Two is inapplicable to GSA Schedule orders.  After Mr. Tripp conceded that an order, ordinarily, is a “contract,” Justice Kagan asked why that concession doesn’t “answer the case.”  After all, if an order is a contract, and the Rule of Two applies to all contracts, there doesn’t seem to be much left to debate.  In my view, Mr. Tripp didn’t have a particularly substantive answer.

Policy, Policy, Policy

Mr. Tripp’s argument centered primarily around policy.  He argued that it would be difficult and cumbersome for the VA to apply the Rule of Two in every setting, and that forcing the VA to follow the Rule of Two could harm the VA’s mission.

In my view, Mr. Tripp went to the “policy” well too often, including when the questions asked weren’t about policy.  As Mr. Saunders pointed out more than once, it is up to the Congress–not the Court–to make policy.  If the VA Act is clear, then the Court’s job is to enforce it as written, not muse about whether the underlying policy is correct.

That said, Mr. Tripp’s policy concerns did not appear to be falling on entirely deaf ears.  Some of the justices seemed concerned that ruling against the Government could create unnecessary and unintended burdens for the VA.  I have long thought that the VA’s policy-based arguments are overblown and largely a case of “the sky is falling!” litigation, but for an audience of Justices who are not experts in the field (more on that below), these arguments could prove compelling.

A Difficult Subject

Supreme Court Justices are asked to rule in cases stretching across the entire field of law, and they cannot possibly be experts in all legal fields.  Some of that lack of expertise was on display today.

For instance, one or two of the Justices seemed confused about the preferences under the VA Act, seeming to believe that they apply to all individual veterans, rather than the limited pool of verified SDVOSBs and VOSBs.  Justice Sotomayor asked whether ruling in Kingdomware’s favor would destroy the Federal Supply Schedule (no, of course not).

Some of the Justices seemed confused about what the VetBiz database is and what information it contains.  Others wondered whether ruling in Kingdomware’s favor would mean that 100% of VA contracts would go to SDVOSBs and VOSBs, to the exclusion of everyone else (not likely given that the FAR has had a mandatory small business Rule of Two for years and the government still has trouble hitting its annual 23% goal, even with a pool of small businesses much, much larger than the pool of verified SDVOSBs and VOSBs.)

While I certainly don’t expect the Justices and their clerks to become government contracting experts overnight, I am concerned that some of the government’s policy-based arguments might seem more compelling to those without a deeper background in the subject area.

In my mind, the government’s arguments about a burdensome and unworkable result are much less impressive when one understands how simple a Rule of Two analysis can be (for example, simply consulting the VetBiz database), and recognizes the many tools still available to the VA to deal with urgent circumstances and award contracts without undue burden.  Without this broader context, the government may be playing Chicken Little, but I worry that the “sky is falling” policy arguments may hit home with some of the Justices.

No Real Explanation for the Government’s Legal “Switcheroo”

When Mr. Tripp stepped to the podium, Justice Ginsburg immediately asked the question I’ve been wondering for several months–why did the government belatedly abandon its winning legal theory about the goal-setting component of the statute?

In my opinion, Mr. Tripp’s answer was convoluted and contradictory.  He stated that the lower courts’ “rationale was right” but “incomplete.”  But the government’s current position is that the Rule of Two applies regardless of whether the VA meets its goals.  This necessarily means that the VA believes that the lower courts’ rationale was wrong, even if those courts reached the right result.

Mr. Tripp should have anticipated the question and had a better answer prepared, but I suppose I can’t blame him for avoiding the likely truth–that the government switched positions after evaluating its case and deciding that the goaling argument was a loser at the Supreme Court.  (Which, I’ve speculated, could have been due in part to Justice Scalia).

Another Lower Court Decision?

Justice Ginsburg followed her question about the switcheroo by expressing concern that the Supreme Court is the first court to ever consider the government’s new argument.  In a typical case, the Court reviews and analyzes the lower court’s record, but that is of little use when the government’s entire legal theory has changed.

Justice Ginsburg suggested the possibility of sending the case back to the lower courts to consider the new argument.  One or two other justices also picked up on this possibility.  I, for one, would like the Court to put an end to the Rule of Two debate once and for all, but there is the very real possibility that the case could continue.

Finally, I was hoping to come out of the Court with a good sense of how this case will be decided, but no such luck.  Most of the Justices did little to tip their hands, and this is not the sort of case where votes can be predicted based on a Justice’s liberal or conservative leanings.  In other words, we’re just going to have to wait and see.  There should be a decision by the end of the Court’s term in June.