GSA addresses impact of Court decision

The General Services Administration is addressing questions raised about the “Rule of Two” in small business federal contracting following the U.S. Supreme Court’s recent decision in the Kingdomware Technologies Inc. case.

In Kingdomware, the court ruled that the “Rule of Two” applies to all contracts at the Veterans Affairs Dept., even Federal Supply Schedule contracts. That means the VA must give preference to veteran-owned small firms if there are two or more such firms that are qualified and can fulfill the requirement at a reasonable price.

Small Business Administration officials are looking into the possible impacts on small business contracting at other agencies (see Set-Aside Alert edition of July 8).

Meanwhile, the GSA published a blog entry answering a number of questions about the potential impact of the decision. Here’s a summary of the GSA’s statements.

Q: Does the court action affect Federal Supply Schedule (FSS) task and delivery orders? And does it affect every agency?

GSA: “The very short answer is “no, not at this time.” That’s because “Rule of Two” is a term used for both the VA and U.S. Small Business Administration (SBA) statutes and regulations – but they’re different rules with the same name. At this time, the Supreme Court decision applies only to VA contracting rules and is specific to Veterans Affairs and to VA awarded contracts. Unless there is a regulatory change, agencies other than the VA should recognize that there has been no policy change in regard to the discretionary nature of FSS set-asides.”

Q: Are set-asides allowed against FSS contracts?

GSA: “Yes. FAR 8.405-5 allows for set-aside acquisitions on FSS contracts. In accordance with FAR 8.405-5(a), ordering activity contracting officers may, at their discretion, set aside orders or blanket purchase agreements for any of the small business concerns identified in FAR 19.000(a)(3).”

Q: Are ordering activity contracting officers required to set aside task or delivery orders against FSS contracts if the “Rule of Two” is met?

GSA: “No, it is not required unless agency specific statutes or regulations require set-asides. FAR 8.405-5(1) states “preference programs of part 19 are not mandatory in this subpart,” and ordering activity contracting officers are provided the discretionary authority to set aside FSS orders.”

Q: Could there be future policy changes in light of the Kingdomware decision?

GSA: “Yes. The Office of Federal Procurement Policy (OFPP) will coordinate meetings between GSA and SBA to discuss this decision. However, unless there is a regulatory change, agencies other than VA should continue to follow policies recognizing the discretionary nature of set-asides under the FSS.”

More Information: GSA blog : https://goo.gl/ybcZd4
GSA contact person: Steve Hutchinson, MAS Policy Division, steven.hutchinson@gsa.gov tel: (202) 573-6211.

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