Supreme Court Rules Against VA in Small Business Contracting Case
Yesterday, the Supreme Court issued a unanimous decision that requires the U.S. Department of Veterans Affairs to give a preference to veteran-owned small business for VA contracts, as long as there are two or more small businesses that can meet the requirements. This is also known as the “rule of two”.
In the case, the VA argued that the rule of two only applied prior to the agency meeting its annual VOSB contracting goal. The VA also claimed that orders made under the Federal Supply Schedule are exempt from small business rules, as a task order issued against a schedule is not a contract. The Supreme Court did not agree with either of these arguments and made it clear the rule of two must be applied to all VA contracts, regardless of whether goals have been met. Agency contract goals are a floor, not a ceiling. The Court also made it clear that a task order under an existing contract, is itself a contract. Therefore, there is no longer an exception to using VOSB on the Federal Supply Schedules, if two or more small businesses can complete the contract.
While this ruling applies directly to VOSBs at the VA, the message in the decision is clear. The Rule of two is a powerful tool for small businesses seeking contracts in the federal marketplace. Agencies should not ignore small businesses on opportunities where small business can compete. The Court was clear that task orders under indefinite delivery contracts are themselves contracts and should be treated as such. This decision lays clear groundwork to ensure all small business are given a fair shot on indefinite delivery contracts moving forward.