Acquisition Policy Flash! 19-29 - Office of Acquisition and Logistics (OAL)
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Acquisition Policy Flash! 19-29

What's Changed?

VA Procurement Policy Memorandum (2016-05)(Revised AUG 2019) - Implementation of the Veterans First Contracting Program

Purpose:  The purpose of this Procurement Policy Memorandum (PPM) is to—

  1. Revise and reissue PPM 2016-05 (Revised AUG 2019) – Implementation of the Veterans First Contracting Program. This PPM revises PPM 2016-05 (Revised SEP 2018) dated September 28, 2018.
  2. Provide revised internal policy and procedures as a result of Class Deviation from VAAR 808.002, Priorities for Use of Government Supply Sources and VAAR Subpart 808.6, Acquisition from Federal Prison Industries, Inc., dated May 20, 2019; and the Temporary Rule published in the Federal Register on June 24, 2019 at 84 FR 29389. The Temporary Rule is effective June 24, 2019 through July 1, 2021.

VAAR Sections Impacted:  VAAR 808.002, subparts 808.6, 819.7001, 819.7003, 819.7009, 852.219-10, and 852.219-11.

Effective Date:  August 6, 2019..

Background:

  1. On June 16, 2016, the U.S. Supreme Court reversed a lower court decision impacting the Department’s original implementation of the Veterans First Contracting Program. In the Kingdomware case, the Court ruled that under 38 U.S.C. § 8127(d), VA must set aside procurements for competition among veteran-owned small businesses “if a contracting officer has a reasonable expectation that two or more small businesses owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers the best value to the United States.” This is known as the “Rule of Two.” Major Supreme Court holdings in the Kingdomware case were as follows:
    1. § 8127 is mandatory, not discretionary and its text requires the Department to apply the Rule of Two to all contracting determinations.
    2. The Rule of Two contracting procedures in 38 U.S.C. § 8127(d) are not limited to those contracts necessary to fulfill the Secretary’s goals under § 8127(a); and
    3. 38 U.S.C. § 8127(d) applies to orders placed against the Federal Supply Schedules (FSS). Thus, FSS orders fall within the mandate in 38 U.S.C. § 8127(d).
  2. On October 17, 2018, the United States Court of Appeals for the Federal Circuit (the Federal Circuit) affirmed the lower court’s decision that the VA Rule of Two takes precedence over procuring products or services found on the AbilityOne Procurement List. Therefore, VA has deviated from VAAR 808.002 to reflect a change to require contracting officers to apply the VA Rule of Two to determine whether a requirement should be awarded to service-disabled veteran-owned small businesses (SDVOSBs) and veteran-owned small businesses (VOSBs) under the authority of 38 U.S.C. 8127-28, by using the preferences and priorities in VAAR subpart 819.70 prior to considering an award to an AbilityOne non-profit organization or the Federal Prison Industry, Inc. A Temporary Rule was issued in the Federal Register on June 24, 2019 at 84 FR 29389. The Temporary Rule is effective June 24, 2019 through July 1, 2021, and provides notification of Class Deviation from 808.002, Priorities for Use of Government Supply Sources and VAAR Subpart 808.6, Acquisition from Federal Prison Industries, Inc., dated May 20, 2019, which revised these subparts to reflect language consistent with the decision of the Federal Circuit.
  3. Class Deviation from VA Acquisition Regulation Part 819—Small Business Programs and Part 852—Solicitation Provisions and Contract Clauses, dated July 12, 2019, incorporates the regulatory, legislative, and other required changes, and clarified the applicability of limitations on subcontracting and nonmanufacturer requirements to contracts awarded under the Veterans First Contracting Program (VFCP). These changes and clarifications are fully described in paragraph 7 of the class deviation.
  4. The “Decision Tree” tool is removed as it is outdated and no longer applicable.
  5. This PPM is being revised to provide clarity regarding the limitations on subcontracting and the non-manufacturing rule and align with the two class deviations discussed in paragraphs c. and d. above.

Applicability:  This PPM applies to HCAs, VA Contracting Officers, and other VA acquisition professionals. Additionally, this PPM applies to all acquisitions conducted by VA or on behalf of VA utilizing Interagency Acquisitions in accordance with FAR subpart 17.5, VAAR subpart 817.5 and FAR 8.404(b)(2).

Action Required:  Contracting officers shall comply with the revised PPM 2016-05 (Revised AUG 2019)

Additional Information:  Direct any questions or comments to Procurement Policy and Warrant Management Services via email at va.procurement.policy@va.gov or (202) 632-5288.