Sep 27, 2018

By David Warner,

“When Set Asides Collide!” Federal Circuit To Determine Precedence Of Kingdomware’s “Rule of Two” And Mandatory Procurements Under Javits-Wagner-O’Day

Earlier this month, the Federal Circuit heard oral argument in the matter of PDS Consultants, Inc. v. United States, App. No. 2017-2379, to determine whether statutory programs favoring veterans in procurements from the U.S. Department of Veterans Affairs take precedence over otherwise mandatory set asides for entities employing individuals with disabilities. While the dispute may have the whiff of uber-technical, government contracts “insider baseball,” the practical impact of the decision could be enormous and, depending on whose ox is gored, program altering.

By way of background, on June 16, 2016, the U.S. Supreme Court unanimously held in Kingdomware Tech., Inc. v. United States, No. 14-916, (U.S. 2016), that contracting officers within the Department of Veterans Affairs were required to abide by the “Rule of Two” – a set-aside provision of the Veterans Benefits, Health Care and Information Technology Act of 2006. In brief, the “Rule of Two” requires the award of VA contracts to veteran-owned small businesses if at least two such businesses will submit offers and an award can be made at a fair and reasonable price. Given that the VA contracted for roughly $26 billion in FY 2017, Kingdomware was a definite game-changer.

Enter Javits-Wagner-O’Day (“JWOD”). Or, perhaps more accurately, enter consideration of JWOD given that it predates the “Rule of Two” by more than 75-years. JWOD was first passed in 1938 to provide employment opportunities for the blind. In 1971, the act was amended to include individuals with severe disabilities and to allow the program to provide services (as well as goods) to Federal customers. The JWOD program is administered by the AbilityOne Commission and three central nonprofit agencies – National Industries for the Blind (NIB), SourceAmerica and The American Foundation for the Blind (AFB)– which oversee more than five hundred nonprofit agencies qualified to do business under JWOD. Central to the JWOD (now called the “AbilityOne Program”) is its priority – i.e., once a product or specific service has been brought under the AbilityOne umbrella, the government is presumptively required to purchase the product or service through the program unless there is no nonprofit agency to provide the product or service.

Per Bloomberg Government’s Federal Contracts Report, in FY 2017 the VA awarded nearly $82 million in contracts to thirty-six (36) different entities participating in the AbilityOne Program. Which brings us to the central conflict in PDS Consultants – i.e., which statutory requirement will take priority over the other? In brief, PDS Consultants is a veteran-owned small business that provides prescription eyewear; the company protested the award of a VA contract to an AbilityOne nonprofit in which the contracting officer did not perform a “Rule of Two” analysis. In essence, the Court will determine which of two “shalls” will control.

Centre Law & Consulting will be attending and sponsoring the inaugural Javits-Wagner-O’Day Legal Symposium this October! We are excited to be part of this vital event that covers the legal complexities, challenges, and future of the AbilityOne Program. Myself and Centre’s Managing Partner, Barbara Kinosky, will be participating on panels at the event.



Stop by our table during the luncheon!


About the Author:

David Warner | Centre Law & Consulting David Warner

David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices.

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