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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


June 2017
Vol. XVIII, No. 6
[pdf version]

CONTENTS


GSA Evaluating Regulations to Identify Those Suitable for Repeal, Replacement, or Modification
Phase Two of VAAR Revision Proposed
VA VOSB Set-Asides Take Precedence Over AbilityOne



GSA Evaluating Regulations to Identify Those
Suitable for Repeal, Replacement, or Modification

General Services Administration’s (GSA) Regulatory Reform Officer (RRO) Michael Downing is seeking comments on GSA’s regulations that may be appropriate for repeal, replacement, or modification. The GSA regulations on which Mr. Downing is seeking comments are the GSA Acquisition Regulation (GSAR), the GSA Acquisition Manual (GSAM), the Federal Travel Regulations (FTR), the Federal Management Regulation (FMR), and the Federal Property Management Regulations (FPMR) (which is being superseded and replaced by the FMR).

These requests for comments are in response to President Trump’s Executive Order 13777, Enforcing the Regulatory Reform Agenda, which requires each agency to appoint an RRO and to establish a “Regulatory Reform Task Force,” the function of which is to attempt to identify regulations that:

“(i) eliminate jobs, or inhibit job creation;

“(ii) are outdated, unnecessary, or ineffective;

“(iii) impose costs that exceed benefits;

“(iv) create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;

“(v) are inconsistent with the requirements of…those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or

“(vi) derive from or implement Executive Orders or other presidential directives that have been subsequently rescinded or substantially modified.”

Section 3(e) of Executive Order 13777 requires the Regulatory Reform Task Force of each agency to “seek input and other assistance, as permitted by law, from entities significantly affected by federal regulations, including state, local, and tribal governments, small businesses, consumers, non-governmental organizations, and trade associations.” These requests by the GSA RRO comply with the direction provided in Section 3(e). (For more on Executive Order 13777, see the March 2017 Federal Contracts Perspective article “Trump’s Executive Order Fleshes Out Regulatory Freeze Procedures.”)

The following are the areas of the RRO’s concern for each request:



Phase Two of VAAR Revision Proposed

The Department of Veterans Affairs (VA) is proposing a second phase of its revision and streamlining of the VA Acquisition Regulation (VAAR). This effort is intended to revise or remove any policy that has been superseded by changes in the Federal Acquisition Regulation (FAR), to remove any procedural guidance that is internal to the VA, and to incorporate new regulations and policies. In addition, VA is proposing to correct inconsistencies within the VAAR, remove redundant and duplicate material already covered by the FAR, delete outdated material or information, and appropriately renumber VAAR text, clauses and provisions to conform to the FAR format, numbering, and arrangement.

The first phase of the VAAR revision addressed VAAR part 816, Types of Contracts, VAAR part 828, Bonds and Insurance, and the associated provisions and clauses in VAAR part 852, Text of Provisions and Clauses (see the April 2017 Federal Contracts Perspective article “Revision of VAAR to Adhere to FAR Proposed”).

This second phase addresses VAAR part 803, Improper Business Practices and Personal Conflicts of Interest; VAAR part 814, Sealed Bidding; and VAAR part 822, Application of Labor Laws to Government Acquisitions. In addition, this second phase would amend sections in VAAR part 801, Department of Veterans Affairs Acquisition Regulation System; VAAR part 802, Definitions of Words and Terms; VAAR part 812, Acquisition of Commercial Items; and VAAR part 852 to reflect changes made to, and ensure compliance with, the revised VAAR parts 803, 814, and 822. Procedural guidance that is proposed to be deleted from the VAAR will be considered for inclusion in VA’s internal agency operating procedures. In addition, delegations of authorities that are removed from the VAAR will be included in the VA Acquisition Manual (VAAM) as internal agency guidance. (NOTE: The VAAM is currently under development.)

The following are the proposed changes to VAAR parts 803, 814, and 822 (and related changes to VAAR parts 801, 802, 812, and 852):

Comments on this proposed rule must be submitted no later than July 17, 2017, identified as “RIN 2900-AP50 – Revise and Streamline VA Acquisition Regulation to Adhere to Federal Acquisition Regulation Principles (VAAR Case 2014-V001 – parts 801, 802, 803, 812, 814, 822, and 852),” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; (2) mail or hand-delivery to: Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue NW, Room 1068, Washington, DC 20420; or (3) fax to: 202-273-9026.



VA VOSB Set-Asides Take Precedence Over AbilityOne

The Court of Federal Claims (COFC) has resolved a contradiction between the requirements of the Javits-Wagner-O’Day Act (JWOD – Title 41 of the U.S. Code, Sections 8501-8506), and the Veterans Benefits, Health Care, and Information Technology Act of 2006 (VBA – Title 38 of the U.S. Code, Section 8127) by ruling that the Department of Veterans Affairs (VA) must first employ the VBA’s requirement that the VA conduct a “rule of two” analysis to determine whether it must restrict the acquisition to veteran-owned small businesses (VOSBs) or service-disabled VOSBs (SDVOSBs) before complying with the JWOD requirement that the VA use the products and services on the AbilityOne List (PDS Consultants Inc. v. The United States and Winston-Salem Industries for the Blind, No. 16-1063C, May 30, 2017 [originally filed under seal on May 12, 2017]).

The VBA requires that the VA first determine whether there are at least two SDVOSBs or VOSBs capable of providing the products or performing the services. If so, the VA must limit competition to SDVOSBs or VOSBs accordingly. This process is known as the “rule of two.” (Paragraph (d) of 38 USC 8127, Small Business Concerns Owned and Controlled by Veterans: Contracting Goals and Preferences, states: “a contracting officer of the [VA] shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.”)

The JWOD requires government agencies, including the VA, to purchase products and services from designated non-profits that employ blind and otherwise severely disabled people (“AbilityOne”) when those products or services appear on the “AbilityOne List.”

A conflict arises when VA desires to procure a product or service that is on the List – should the VA acquire the product or service from the List, as required by the JWOD, or should it conduct the “rule of two” analysis as required by the VBA and set-aside the acquisition for competition restricted to SDVOSBs or VOSBs? Which statute takes precedence for VA?

Regarding this case, AbilityOne added eyewear and eyewear prescription services provided by Winston-Salem Industries for the Blind, to the List prior to the passage of the VBA in 2006. The eyewear and eyewear prescription services were added with the VA’s concurrence.

PDS Consultants is an SDVOSB that provides eyewear and other vision-related products to the VA under a number of contracts. When VA attempted to acquire eyewear from Winston-Salem Industries for the Blind, PDS protested, citing the recent unanimous Supreme Court decision Kingdomware Technologies, Inc. v. United States (No. 14-916), in which the Court noted that 38 USC 8127(d) contains the word “shall,” and “unlike the word ‘may,’ which implies discretion, the word ‘shall’ usually connotes a requirement...Accordingly, the [VA] shall (or must) prefer veteran-owned small businesses when the rule of two is satisfied” (emphasis in original) (for more on Kingdomware Technologies, Inc. v. United States, see the July 2016 Federal Contracts Perspective article “Supreme Court Issues Two Acquisition-Related Decisions”).

Senior Judge Nancy Firestone of the Court of Federal Claims found in favor of PDS Consultants. “The court finds that the VBA requires the VA to perform the rule of two analysis for all new procurements for eyewear, whether or not the product or service appears on the AbilityOne List, because the preference for veterans is the VA’s first priority. If the rule of two analysis does not demonstrate that there are two qualified veteran-owned small businesses willing to perform the contract, the VA is then required to use the AbilityOne List as a mandatory source...The VA is ordered not to enter into any new contracts for eyewear...from the AbilityOne List unless it first performs a rule of two analysis and determines that there are not two or more qualified veteran-owned small businesses capable of performing the contracts at a fair price.”





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