The Veterans Benefits, Health Care, and Information Technology Act requires the Secretary of Veterans Affairs to set annual goals for contracting with service-disabled and other veteran-owned small businesses, 38 U.S.C. 8127(a). The “Rule of Two” provides that a contracting officer “shall award contracts” by restricting competition to veteran-owned small businesses if the officer reasonably expects that at least two such businesses will submit offers and that “the award can be made at a fair and reasonable price.” A contracting officer “may” use noncompetitive and sole-source contracts for contracts below specific dollar amounts. In 2012, the Department used the Federal Supply Schedule (FSS), a streamlined method for acquisition of goods and services under prenegotiated terms, to procure medical center Emergency Notification Services from a non-veteran-owned business. The agreement ended in 2013. A service-disabled-veteran-owned small business filed a Government Accountability Office (GAO) bid protest, alleging that the Department procured multiple contracts through the FSS without employing the Rule of Two. The GAO determined that the Department’s actions were unlawful. The Department declined to follow the GAO’s nonbinding recommendation. The Federal Circuit held that the Department was only required to apply the Rule when necessary to satisfy its annual goals. The Supreme Court reversed, first holding that it had jurisdiction because the controversy is “capable of repetition, yet evading review.” Section 8127(d)’s contracting procedures are mandatory and apply to all of the Department’s contracting determinations. An FSS order is a “contract” within the ordinary meaning of that term and does not fall outside Section 8127(d). The Court rejected an argument that the Rule of Two will hamper mundane Government purchases as misapprehending current FSS practices, which have expanded beyond simple procurement to contracts concerning complex services over a multiyear period.

Annotation