Kingdomware Technologies, Inc. v. United States

PETITIONER: Kingdomware Technologies, Inc.
RESPONDENT: United States
LOCATION: Kingdomware Technologies, Inc.

DOCKET NO.: 14-916
DECIDED BY: Roberts Court (2016- )
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 579 US (2016)
GRANTED: Jun 22, 2015
ARGUED: Feb 22, 2016
DECIDED: Jun 16, 2016

ADVOCATES:
Thomas G. Saunders - for the petitioner
Zachary D. Tripp - Assistant to the Solicitor General, for the respondent

Facts of the case

Various policies, regulations, and statutes of the federal government are intended to promote small businesses, especially those run by veterans. Although agencies generally have wide discretion to decide what method of contracting to use, a 2003 amendment to the Small Business Act established a goal of awarding three percent of government contracts to service-disabled veteran-owned small businesses, and the Veterans Act of 2006 expanded the reach of the relevant provisions.

Kingdomware Technologies is a small business owned and controlled by a service-disabled veteran and has been certified as such by the Department of Veteran Affairs (VA). In 2012, Kingdomware filed a bid for a project, but the VA awarded the contract to a company that was not a veteran-owned business. Kingdomware filed a bid protest with the Government Accountability Office (GAO) and argued that the contract award was illegal. The GAO issued a recommendation that the VA cancel the contract and re-solicit bids. The VA refused to accept the recommendation, and Kingdomware sued in U.S. Court of Federal Claims, which held that there was sufficient ambiguity in the relevant statute and that the VA’s interpretation was reasonable, so therefore the contract award should stand. The U.S. Court of Appeals for the Federal Circuit affirmed.

Question

  1. Is this case moot if the contracts at issue have already been performed?
  2. Is the Department of Veterans Affairs’ “set-aside,” which restricts competition to veteran-owned businesses when there is a reasonable expectation that two or more such businesses will offer reasonable bids for the contract, mandatory?

Media for Kingdomware Technologies, Inc. v. United States

Audio Transcription for Oral Argument - February 22, 2016 in Kingdomware Technologies, Inc. v. United States

Audio Transcription for Opinion Announcement - June 16, 2016 in Kingdomware Technologies, Inc. v. United States

John G. Roberts, Jr.:

Justice Thomas has the opinion of the Court in two cases this morning.

Clarence Thomas:

The first case I have is Kingdomware Technologies, Inc. versus United States, 14-916.

This case comes to us on a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit.

The Veterans Benefits, Health Care, and Information Technology Act of 2006 requires the Secretary of Veteran Affairs to set annual goals for contracting with certain veteran-owned small businesses.

To help reach those goals the statute imposes a contracting set-aside provision known as the Rule of Two.

Under the Rule of Two, a contracting officer shall award contracts by restricting competition to veteran-owned small businesses if the officer reasonably expects that at least two such businesses will submit offers and that “the award can be made at a fair and reasonable price that offers best value to the United States.”

In 2012, the Department of Veteran Affairs procured emergency notification services from a non-veteran business.

This contract was for a one-year period with an option to extend the agreement for two additional years.

The department secured the contract through the Federal Supply Schedule, a streamline method that allows government agencies to acquire particular goods and services with pre-negotiated terms.

The agreement ended in 2013.

Petitioner Kingdomware Technologies, Inc., a service disabled veteran-owned business, filed suit alleging that the department should have used the Rule of Two for this and for similar contracts.

The Court of Federal Claims granted summary judgment to the department.

The Federal Circuit affirmed holding that the department was required to apply the Rule of Two only when necessary to satisfy its minimum annual goals.

We granted certiorari and in an opinion on file with the clerk today we reverse the Court of Appeals.

Because the contracts at issue have been fully performed, we first address whether we still have jurisdiction to consider this case.

Under Article III of the Constitution a case or controversy must exist through all stages of the litigation.

Here no court is capable of granting petitioner the relief initially sought in the complaint, because the short-term FSS contracts have been completed by other contractors.

Nevertheless, we hold that the controversy falls within the exception for cases capable of repetition yet evading review.

The procurements were fully performed in less than two years which is not enough time for judicial review, and it is reasonable to expect that the department will refuse to apply the Rule of Two in a future bid by Kingdomware.

Turning to the question presented, we hold that the department must use the Rule of Two when awarding contracts, even when the department will otherwise meet its annual minimum contracting goals.

The statutory text unambiguously requires the department to use the Rule of Two.

The word “shall” connotes a requirement unlike the word “may,” which implies discretion.

Finally, in this Court, the department raised a new argument.

The department argued that in the technical jargon of government procurement, the contracting officer does not award contracts when it places a mail order under a pre-existing Federal Supply Schedule contract.

We disagree.

An FSS order is a contract within the ordinary meaning of the term.

For these reasons and for others set forth in our opinion, we affirmed the judgment of the Federal Circuit.

The opinion of the Court is unanimous.

Sarah from Law Aspect

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