In an opinion released late last week (KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES), the U.S. Supreme Court handed down a decision that will be of significant help to Veteran-Owned Small Businesses. In a rare opinion addressing federal procurement law, the U.S. Supreme Court recently resolved a dispute in the application of priority contracting for Veteran-Owned contractors seeking contracts with the Veterans Administration. In a law passed in 2006 (38 U. S. C. §8127(a)), Congress required the VA to give Veteran-Owned contractors the exclusive right to compete for VA awards whenever the VA determined there are two or more Veteran-Owned contractors who can provide the supplies or services at a fair and reasonable price (commonly referred to as “the Rule of 2”). When the VA drafted regulations to implement this rule (VAAR Part 819), they made an exception for purchases made through the GSA’s pre-negotiated Federal Supply Schedule contracts. Veteran-Owned contractors argued that the law did not allow for this exception and that Veteran-Owned contractors should have exclusive access on contracts in excess of $150,000 from the VA.

In a unanimous opinion for the Supreme Court, Justice Thomas sided with the SDVO contractors and held that the law passed by Congress did not allow for the FSS exception that the VA put in its regulations and that all VA procurements must utilize the Rule of 2 for Veteran-Owned contractors as Congress required. The Supreme Court decision was a great victory for Veteran-Owned contractors competing for work within the VA. This is especially true since the Court of Federal Claims and the Court of Appeals for the Federal Circuit had all sided with the VA and against the Veteran-Owned contractors.

This should be seen as a significant win for the Veteran-Owned Small Business community because we can expect to see a significant increase in the use of the Rule of 2 under the FSS program, thereby increasing contracting dollars flowing to Veteran-Owned Small Business contractors and away from non-Veteran-Owned businesses.