The United States Supreme Court recently held that the Department of Veteran Affairs' use of the Rule of Two was mandatory—a victory for small businesses and veteran-owned businesses.
The Rule of Two is a provision enacted by Congress in 2006 to encourage federal contracting with service-disabled veteran-owned small businesses (SDVOSBs). It requires the VA to award contracts to SDVOBs when there is a “reasonable expectation” that two or more such businesses will bid for the contract at “a fair and reasonable price that offer best value to the United States.” 38 U.S.C. § 8127(d).
Veteran Affairs initially prevails in GAO bid protest
In the procurement at issue, the VA awarded a contract to a non-veteran owned business under a request for quotations through the Federal Supply Schedule (FSS) system. Kingdomware, a veteran owned business filed a GAO bid protest, which was granted, holding that the VA’s failure to employ the Rule of Two was unlawful and recommended that the VA conduct market research to determine whether there were two veteran-owned businesses that could fulfill the procurement. The VA disagreed with the decision and prevailed in a suit in the Court of Federal Claims, which was affirmed by the Federal Circuit before reaching the U.S. Supreme Court..
Supreme Court ruling turns on use of “may” vs. “shall”
In ruling in favor of the veteran owned business, reversing the Fed. Cir., the S.Ct. held that the Rule of Two is mandatory, not discretionary. The text of the law requests the VA to apply the Rule of Two to all contracting determinations, regardless of whether the VA has met its small business or veteran owned business contracting goals or if the VA has placed an order through the Federal Supply Schedule.
In reaching its decision, the S.Ct. looked at the plain language of the law, noting in other subsections the text used the word “may.” The S.Ct. reasoned that unlike “may,” which implies discretion, “shall” usually connotes a requirement.
The S.Ct.’s reasoning will provide persuasive authority on similar procurement interpretation decisions involving solicitations that use “may” and “shall.” The S.Ct. also rejected the VA’s arguments that FSS orders are not contracts or that FSS orders are only used for simplified acquisitions.
Additionally, even though the underlying contract had been performed, the S.Ct. held that the case was not moot based on an exception for a controversy that is “capable of repetition, yet evading review.”
A victory for small businesses and SVOBs
The S.Ct.’s decision is a victory for small businesses and veteran-owned businesses. Indeed, it is disappointing that the VA would even have fought to restrict the use of VA owned businesses in more procurements.
Any business that may qualify for the additional protections and benefits of being a small business or veteran-owned small business should contact us for assistance in becoming certified by the Small Business Administration or VA.
Resources
- Partner
Joseph M. Goldstein is the Managing Partner of the Fort Lauderdale office of Shutts & Bowen LLP, where he is a member of the Business Litigation Practice Group. Joseph also practices out of the Tallahassee office.
A ...
Search Blog
Follow Us
Recent Posts
- Breaking News: FinCEN Postpones Beneficial Ownership Reporting Deadlines for Companies Impacted by Recent Major Storms
- What You Need to Know About the U.S. Department of Transportation’s Build America TIFIA Loan
- Breaking News: Federal Judge Blocks Nationwide Implementation of the FTC’s New Rule Banning Noncompete Agreements
- September 4th is Almost Here: How Employers Can Prepare for the Upcoming Effective Date of the FTC’s Non-Compete Rule
- Florida’s New Statutory Home Warranty: What Home Builders Need to Know
- Orange County Proposes Temporary Suspension Ordinance on New Development Applications
- Raising the Roof: The U.S. Department of Labor Announces Rule Raising Salary Thresholds for Overtime Exemptions
- New Guidelines Anticipated Following HHS’s Health Cybersecurity Concept Paper
- SECURE 2.0 and Protecting Your Designated Beneficiaries
- Florida Appellate Court Provides Further Guidance Regarding New Summary Judgment Rule
Popular Categories
- Employment and Labor
- Construction
- Business of Real Estate
- Construction Litigation
- Landlord-Tenant
- Litigation (Labor & Employment)
- Real Estate Law
- Competition
- Cybersecurity
- Intellectual Property
- Appeals
- Construction
- Public Private Partnership
- Litigation
- Contracts
- Trusts and Estates
- Development/Land Use
- Data Security
- Business
- Supreme Court
- Privacy
- Technology
- Public Finance
- IP Litigation
- Litigation (Appellate)
- Patents
- Business
- Regulatory Compliance
- Florida Government Contracts
- Foreclosures
- Trademark
- Health Care
- Contracting
- Financial Institutions
- Compliance
- Estate planning
- International Dispute Resolution
- Property Tax
- Florida Public Contracts
- Government Contracting
- Government Contracts
- Conveyances
- Government
- Lease
- Appellate Blog
- Patent Office
- Insurance
- Wealth planning
- Federal Government Contracting
- Florida Bid Protests
- Public Contracts
- Infringement
- Cyber fraud
- Proposal Writing
- Public Bidding
- GAO
- International Arbitration and Litigation
- Bid Protest
- Arbitration
- Americans with Disabilities Act
- International
- Restrictive Covenants
- Grant Writing
- Copyright
- Promissory Notes
- Title
- Small Business
- Florida Procurement
- Public procurement
- Consumer Privacy
- PTAB
- General Liability
- Technology
- International Arbitration
- Liens
- Liens and encumbrances
- Creditor's Rights
- Bidding
- Attorneys' Fees
- Inter Partes Review
- Power Generation
- Consumer Protection
- Regulation
- Contracting
- Government Vendor
- State Government Contracts
- Venue
- Ad Valorem Assessments
- Florida Administrative Law
- Attorneys' Fees
- Florida Rules of Appellate Procedure
- Bankruptcy
- Florida Public Procurement
- Russia-Related Arbitration
- Mortgages
- FINRA
- Record on Appeal
- Eviction
- Rehearing
- Loan guaranties
- Patents - Assignor Estoppel
- Dispute Resolution
- Statute of limitations
- Statute of repose
- Maritime
- Liens
- Damages
- Briefing
- Patents - Obviousness
- Request for Proposal
- Commercial Brokerage
- Department of Labor
- Trade Secrets
- Bid Writing
- Florida Bidding Strategies
- Renewal
- Attorneys' Fees
- Florida County Lands
- Florida Economic Incentive Packages
- Jury Instructions
- Stay
- Certiorari
- Design Professionals
- email hacking
- Forum Selection
- Offers of Judgment
- Prevailing Party
- Settlements
- Assignment of Contract
- Assignment of Proceeds
- Banking
- Designer Liability
- Finality
- Fintech
- Lis Pendens
- Appellate Jurisdiction - Deadlines
- Evidence
- Evidence
- Expert
- Expert Science
- Federal Rules of Appellate Procedure
- Marketing/Advertising
- Preservation
- Unlicensed Contracting
- Federal Supply Schedule
- Florida Public Records Law
- Mootness
- Socio-Economic Programs
- Sunshine Law
- Veteran Owned Business
- Homestead
- Partnerships and LLCs
- Standing
Editors
- Of Counsel
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Associate
- Partner
- Partner
- Partner
- Partner
- Senior Associate
- Partner
- Associate
- Partner
- Senior Associate
- Partner
- Associate
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Partner
- Of Counsel
- Senior Associate
- Partner
- Associate
- Partner
- Partner
- Associate
- Partner
- Partner
- Partner
Archives
- October 2024
- September 2024
- August 2024
- June 2024
- May 2024
- February 2024
- November 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- October 2019
- August 2019
- July 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016