“Educating the Government Contracting Community”

U.S. Court of Federal Claims Overturns GAO Decision Requiring VA to Give Preference to Veterans over Vendors under FSS

On 27 November, 2012, the U.S. Court of Federal Claims announced a ground-breaking decision that could severely limit the effectiveness of the Department of Veterans Affairs’ “Veterans First” preference as set forth in the Veterans Benefits, Health Care, and Information Technology Act of 2006.

In Kingdomware Technologies, Inc. v. U.S.¸ the plaintiff sought court intervention after the VA notified the plaintiff that it would not follow an earlier bid protest decision by the Government Accountability Office (GAO) sustaining the plaintiff’s protest based upon the VA’s failure to consider service-disabled veteran owned businesses or veteran owned business before procuring goods from non-veteran status vendors under the Federal Supply Schedule in alleged violation of the 2006 Act’s “Veterans First” preference. The VA argued that the 2006 Act did not establish a mandatory set-aside program but was merely “goal-setting” statute giving the VA the discretion to manage its procurement in line with agency objectives.

In deciding the interplay of the 2006 Act and the Federal Supply Schedule, the Court of Federal Claims applied an earlier Supreme Court decision that established the legal framework of statutory interpretation and agency deference. After determining that Congress was silent on the matter under the Chevron analysis, the Court then analyzed whether the VA’s interpretation was reasonable. In overturning the GAO decision and ruling in favor of the VA, the Court noted that the VA’s interpretation was “consistent with the traditional relationship between set-asides and the FSS found in the FAR—namely, that agencies are not required to implement set-aside programs before or while using the FSS.”


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