Kingdomware Technologies, Inc. v. United States

Background

Kingdomware Technologies is a service-disabled veteran-owned small business that lost a bid when the Department of Veterans Affairs bought emergency-notification services through the Federal Supply Schedule (FSS). Kingdomware protested to the GAO, then sued in the Court of Federal Claims after the VA awarded the work to a non-veteran company; the Federal Circuit upheld the VA’s approach but was divided. The dispute centers on a 2006 law that says the VA “shall award” contracts to veteran-owned small businesses when two or more can provide the work at a fair price — a rule called the Rule of Two — with limited dollar-value exceptions Congress wrote into the statute.

Reasoning

The Court addressed whether the VA must apply the Rule of Two every time it awards contracts or only to meet annual veteran-contracting goals. The Justices relied on the statute’s plain language, noting Congress used the word “shall,” while two subsections use “may” for limited noncompetitive or sole-source awards. The Court also said orders placed under the FSS are still “contracts” and are covered by the Rule of Two. Because the statute is unambiguous, the Court declined to defer to the agency’s contrary interpretation and held the Rule of Two is mandatory except for the specific exceptions Congress wrote.

Real world impact

Going forward, the VA must test whether at least two veteran-owned small businesses can do the work before buying through open competition or placing FSS orders, which will likely increase contracting opportunities for veteran-owned firms. The Court did not decide exactly how broad a market search must be, and the decision leaves past completed procurements unaffected while remanding for further proceedings.