Office of Small & Disadvantaged Business Utilization
Veterans First Contracting Program Adjustments to Reflect the Supreme Court Kingdomware Decision
Implementation of the VA Rule of Two
On June 16, 2016, the U.S. Supreme Court ruled that consistent with Public Law 109-461 (38 U.S.C. 8127 and 8128), the VA shall award contracts based upon competition restricted to SDVOSBs or VOSBs when a contracting officer has a reasonable expectation, based on market research, that two or more firms listed as verified in Vendor Information Pages database are likely to submit offers and an award can be made at a fair and reasonable price that offers best value to the United States. This is known as the “VA Rule of Two.”
Veterans First Contracting Post-Kingdomware Webinars
The VA Office of Small and Disadvantaged Business Utilization (OSDBU) is presenting a series of webinars to help VOSBs understand how the Kingdomware decision affects them. Webinars also cover how VOSBs can improve their competitive position in responding to set-asides and what VOSBs can do to take advantage of increased opportunities.
VA Veterans First Contracting–Post Kingdomware Industry Webinar Presentation
- Q & A September 7, 2016 Post Kingdomware Industry Webinar »
- Q & A September 19, 2016 Post Kingdomware Industry Webinar »
- Q & A September 26, 2016 Post Kingdomware Industry Webinar »
- Q & A October 3, 2016 Post Kingdomware Industry Webinar »
- Q & A October 11, 2016 Post Kingdomware Industry Webinar »
- Q & A October 18, 2016 Post Kingdomware Industry Webinar »
- Veterans First Contracting-Post-Kingdomware Webinar Slides »
Veterans First Contracting Post-Kingdomware FAQs
Select a category below to view:
1. Did the SCOTUS decision create the Veterans First Contracting Program?
No, the Veterans First Contracting Program (the Program) was created by 38 U.S.C. 8127 and 8128 and implemented in 2009 as VAAR 819.70. Prior to the 2016 SCOTUS decision, the VA believed and two lower courts agreed, the Program did not apply when placing orders under FAR subpart 8.4, the Federal Supply Schedule (FSS) program. The VA’s use of the FSS program was the same as other federal agencies where set-asides against the FSS are discretionary, not mandatory. The SCOTUS decision overruled the lower courts and decided the Program does apply to FSS orders and is mandatory not discretionary. The VA is fully complying with the SCOTUS decision through the implementation of policy, procedures, and a robust training program to ensure the acquisition workforce fully understands the Veterans First Contracting Program and specifically applying the “VA Rule of Two.”
2. Wasn't the name of the program "Vets First?"
Yes. The Program was informally known as “Vets First” when it was implemented. The Class Deviation dated July 25, 2016, attachment 9 implements revised language in VAAR subpart 819.70 and other VAAR parts necessary to address the SCOTUS decision. Also, Attachment 1 to the Class Deviation includes definitions to standardize the name of the program as the “Veterans First Contracting Program” and defined key terms included in the statute.
3. Will the PPM and Class Deviations be the only policy issued to address the SCOTUS decision?
No. The department already has in place a VAAR Integrated Product Team (IPT) made up of representatives from all the Heads of Contracting Activities (HCAs) and key department stakeholders to address revisions to the entire VAAR. This group has drafted VAAR draft parts and internal procedures, guidance and instruction that will go in to a Veterans Affairs Acquisition Manual (VAAM). Proposed VAAR revisions will go through formal rulemaking and the public will have an opportunity to formally provide comments and feedback that will be considered. As necessary, HCAs will implement required internal guidance to ensure the acquisition workforce has the requisite internal policy and procedures to help them execute our important mission.
1. What is the VA Rule of Two?
The VA Rule of Two is the process prescribed in 38 U.S.C. 8127(d) whereby 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.”
2. What is the process to limit competition to only SDVOSBs/VOSBs when two or more verified & capable SDVOSBs/VOSBs are identified? And, if two or more verified & capable SDVOSBs/VOSBs are not identified, is the process then to utilize the list of priorities identified in FAR 8.002?
1. First, contracting officers must review the mandatory sources in FAR 8.002 and 8.003 External link to a government website, then VAAR 808.002.
2. If there are no mandatory sources, or other unique VA statutory authority for non-competitive acquisitions (as identified in VAAR subpart 806.3), contracting officers shall conduct market research to determine whether there is a reasonable expectation that two or more verified and capable SDVOSBs or VOSBs are likely to provide a fair and reasonable price providing best value to the Government, then the acquisition must be a SDVOSB or VOSB set-aside.
3. Contracting officers are required to follow the contracting order of priority set forth in the Class Deviation, dated July 25, 2016, Attachment 9, VAAR 819.7004.
3. If an existing VA vehicle has two or more verified and capable SDVOSBs/VOSBs, any acquisition utilizing that vehicle would be set-aside for SDVOSBs/VOSBs. Any small businesses that are also contract or BPA level awardees will not have any real opportunity for future orders, correct?
Competition will be restricted to SDVOSBs and VOSBs where these entities are determined verified and capable and the contracting officer has a reasonable expectation of receiving offers at fair and reasonable prices that offer best value to the Government. However, if the contracting officer does not determine the above is true, follow the contracting order of priority set forth in the Class Deviation, dated July 25, 2016, Attachment 9, VAAR 819.7004. This process was already in place prior to the SCOTUS decision. As a result of the SCOTUS decision, it now applies to all competitive acquisitions including orders against FSS.
4. What is the process for soliciting when only one verified and capable SDVOSB or VOSB is identified?
It is the Department’s policy that to the maximum extent practicable contracting officers shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans (see VAAR 819.7005 and VAAR 819.7006). Where only one verified and capable SDVOSB or VOSB is identified, the contracting officer may consider using the unique VA sole authority in 38 U.S.C. 8127(b) and (c) for contracts not exceeding $5,000,000, if appropriately justified and approved pursuant to FAR 6.302-5(c)(2)(ii). See PPM 2016-05, dated June 25, 2016 and Class Deviation Attachment 9, VAAR 819.7007 and VAAR 819.7008.
To ensure that opportunities are available to the broadest number of verified Veteran-owned small businesses, the VA sole source authority is to be used judiciously and only when in the best interest of the Government. In accordance with FAR 6.302-5(c)(2)(ii), contracts awarded using this authority shall be supported by a written justification and approval described in FAR 6.303 and 6.304 External link to a government website, as applicable.
Alternatively, contracting officers should give consideration to other small business set-asides or utilizing full and open competition (unrestricted) based on market research, giving SDVOSBs/VOSBs priority and preferences as set forth in VAAR 815.304.
5. With hundreds of entities listed in the VIP database, can just two be selected and then immediately proceed to soliciting these entities?
The VA Rule of Two only indicates whether the acquisition is a set-aside. Once the contracting officer decides to set-aside, follow the competition procedures applicable to the FAR part the acquisition is under, i.e., FAR subpart 8.4 External link to a government website, FAR Part 13 External link to a government website, FAR Part 14 External link to a government website, or FAR Part 15 External link to a government website.
6. Does the VA Rule of Two apply to other socioeconomic categories in addition to SDVOSB/VOSB?
The VA Rule of Two applies only to SDVOSBs and VOSBs. To the extent that SDVOSBs/VOSBs are not available, follow the guidance in VAAR 819.203-70 (see PPM 2016-05, dated June 25, 2016 and Class Deviation Attachment 9).
7. If three SDVOSBs or VOSBs identified as verified and capable are on a GSA schedule, but do not indicate interest in submitting a quote, can the acquisition be identified as a woman owned small business or HUBZone if there are adequate sources in those socioeconomic categories?
The scenario in the question above is limiting sources based on a vehicle rather than conducting market research. Contracting officers are required to first conduct market research to determine whether there is a reasonable expectation that two or more verified and capable SDVOSBs or VOSBs are likely to provide a fair and reasonable price providing best value to the Government. Per PPM 2016-05, page 6, Market Research, “In performing market research, the VIP database must be used as the initial source to identify verified SDVOSBs and VOSBs that meet the eligibility requirement.” The results of the market research could result in a number of entities being available on various contracting vehicles and/or open market. The contracting officer may select one of these vehicles and then if, as stated in the question above, the SDVOSBs or VOSBs are not interested in submitting a quote, SDVOSBs or VOSBs in the open market or on other contracting vehicles should be considered.
8. Does applying the VA Rule of Two mean that an acquisition should be made from verified and capable SDVOSBs/VOSBs over a more cost effective acquisition process, e.g., unrestricted?
All awards must be made based upon a determination of fair and reasonable prices offering best value to the Government and must be documented as to how the determination was made. The determination or judgement at the stage the contacting officer must make a decision to set-aside is whether there is a likelihood or “reasonable expectation” by the contracting officer 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.” (38 U.S.C. 8127(d)).” That is a different requirement than the final determination at the time before execution of the contracting officer’s signature and the determination that the prices are fair and reasonable and represent overall best value which is performed in accordance with FAR 15.504 External link to a government website.
9. Does the VA Rule of Two apply to Letter Contracts?
FAR 16.603 states, “A letter contract is a written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services.” Typically, letter contracts are not competed actions; however, the sole source authorities under 38 U.S.C 8127(b) can be utilized if appropriate. If the letter contract is competitive, the VA Rule of Two applies.
10. Can an acquisition be restricted to VA FSS as long as there are two or more verified and capable SDVOSBs/VOSBs available on the vehicle?
Yes, per the Class Deviation, dated July 25, 2016, Attachment 4, VAAR 808.004-70, contracting officers shall consider the prime vendor and VA FSS for medical supplies in Federal Supply classification group 65 and 66 before using other existing contract vehicles.
11. Which takes precedence 38 U.S.C. 8127, VA Rule of Two, or 38 U.S.C. 8123, Procurement of Prosthetics?
The VA Rule of Two applies to all competitive actions. If a noncompetitive action for prosthetics pursuant to 38 U.S.C. 8123 and in accordance with VAAR 806.302-5(b)(1) can be justified, then the VA Rule of Two does not apply.
12. Does the VA Rule of Two apply only to the extent necessary to meet annual VOSB goals?
No. Per the SCOTUS decision and the Class Deviation, dated July 25, 2016, Attachment 9, VAAR 819.203-70(c) the attainment of goals does not relieve the contracting officer from using SDVOSB/VOSB set-asides.
13. If market research identifies only one verified and capable SDVOSB and one verified and capable VOSB, does that satisfy the VA Rule of Two? What is the process for proceeding with that acquisition?
The solicitation shall be set-aside for VOSBs since the SDVOSB is also a VOSB.
14. If the acquisition is a VOSB set-aside and quotes/proposals from both VOSBs and SDVOSBs, should preference be given to the SDVOSB(s) for award?
There is no VAAR prescribed solicitation provision at this time for providing preference to a SDVOSB in a VOSB set-aside. However, nothing prevents the contracting officer from including evaluation criterion that gives preference to an SDVOSB that submits a quote/proposal. The evaluation criterion needs to specifically identify how the preference will be evaluated. However, if the evaluation criteria were not included in the solicitation, there is no preference for the SDVOSB. The contracting officer shall ensure the market research is done diligently because a SDVOSB set-aside would have been appropriate if two or more verified SDVOSB’s was determined based upon the market research.
15. Does the VA Rule of Two apply to A/E contracts?
Yes, the VA Rule of Two applies to A/E contracts. Per PPM 2016-05, page 6, Market Research, “In performing market research, the VIP database must be used as the initial source to identify verified SDVOSBs and VOSBs that meet the eligibility requirement.” If eligible SDVOSBS or VOSBs are identified, then as required by FAR 36.213-2(b), the contracting officer must include in the pre-solicitation notice the specific small business restriction, i.e., whether SDVOSB or VOSB set-aside.
16. In implementing the VA Rule of Two, what is the process if two or more VOSBs are identified but are not in the VIP database?
In implementing the VA Rule of Two, only VIP verified entities may be considered as SDVOSBs or VOSBs in VA acquisitions. If SDVOSBs/VOSBs identified through market research are not VIP verified, these entities are not eligible for set-aside consideration.
17. If market research identifies at least two verified and capable SDVOSBs and a number of verified and capable VOSBs available to perform the requirement, can the acquisition be set aside for VOSB to create additional competition?
The VA Rule of Two requires that when two or more verified and capable SDVOSBs are identified, the acquisition must be set-aside for SDVOSBs, provided the contracting officer has a reasonable expectation that two or more verified SDVSOBs will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.
18. If the VA Rule of Two was satisfied on the base award of an IDIQ contract(s), does that satisfy the VA Rule of Two for each task/delivery order?
Yes for single award IDIQs; no for multiple award IDIQs.
19. How can the requirement that the SDVOSB or VOSB must perform 50% of the work be verified to ensure these entities will perform this amount of the work after award?
The Supreme Court decision did not change the requirement that entities who receive an award on the basis of a set-aside comply with the limitation on subcontracting requirements for set-asides. The contracting officer or the Contracting Officer’s Representative (COR) should be monitoring the contractor’s performance and/or invoices to ensure the contractor’s compliance.
20. How does the 38 U.S.C. 8127 affect emergency requisitions?
Emergency acquisitions should follow FAR Part 6 External link to a government website, or FAR part 18 External link to a government website as applicable.
21. The VA Rule of Two applies to what existing VA vehicles?
The Rule of Two applies to all competitive procurements that VA is attempting to award. To be clear, see FAR Part 6 to view all exceptions and competitive procedures regarding Full and Open Competition.
Furthermore, if VA has an existing contract with a firm and it comes time to exercise the option year that does not count as a competitive award. Existing contracts, whether involving Veteran-Owned Small Businesses or other firms, with VA may not be terminated due to the Rule of Two.
22. Is it required for the VA Rule of Two to be applied prior to placing orders under the prime vendor contracts?
No. Assuming that the VA Rule of Two was applied at the contract level or at the BPA level when awarding a BPA, it would not be required to apply the Rule of Two when placing orders under prime vendor contracts. We encourage you to reach out to your contracting officer for advice on how your contract may be impacted by this decision.
23. Is the VA Rule of Two required to be considered for every order under a multiple award contract? Does the VA Rule of Two apply if the multiple award contracts (other than FSS) allow for contractors to enter the pool throughout the life of the contract, or at just at the initial award phase?
If we have a multiple award task order contract does the Rule of Two apply to task order level? Yes, it does. And it applies to the orders that are awarded against those contracts. That was actually one of the major things that came out of the Supreme Court decision.
24. So what happens if we have a multiple award task order contract and there are no VOSBs on that MATOC (Multiple Award Task Order Contract)? What do we do then?
The contracting officer would need to do the market research to determine if there are VOSBs out there that are able to perform that work before they proceed with additional work under that contract. Again, I would encourage vendors to reach out to their contracting officers, particularly those of you that have contracts that have already been awarded, if you are concerned about the fate of your contract and what this decision means to you. I would encourage you to do that early on.
25. If the VA Rule of Two is required to be considered for every order under multiple award contracts, what happens when we onboard additional firms onto the contract?
We add them to the pool. If the original contract was initially set aside for SDVOSBs then those same rules will apply to any new contractors coming onboard. They will have to meet those criteria. If that was not the case, then we are going to have to do the market research to determine whether there are any SDVOSBs now that have entered the market that can provide the service if it was not originally set aside for SDVOSBs and VOSBs. For example, we have already seen an expansion in our T4 for IT services vehicle. We have now on boarded four additional SDVOSBs therefore expanding the supply base as we apply the Rule of Two to that multiple award contract vehicle.
26. If the VA Rule of Two is satisfied on the base award of an IDIQ contract, does that satisfy the VA Rule of Two for every task order under that multiple award contract?
It depends on whether it is a single award IDIQ or multiple awards IDIQ. If it is a single award IDIQ, then the answer would be yes. If it is a multiple order IDIQ, then the answer is no. The “yes” answer is a function of the fact that the task orders are non-competitive on a single award contract and 8127 applies to competitive contractual actions. But if it is a multiple award and there are Veteran-Owned Small Businesses on the task order contract, then we have to apply the Rule of Two.
1. Is a VA Form 2268 required to be submitted to OSDBU if the acquisition is not being set aside for SDVOSB or VOSB regardless of dollar value?
Refer to the latest OSDBU Policy Memorandum on VA small business procurement reviews. Procurements not set-aside for Veteran-owned small businesses shall be reviewed as outlined in this memorandum. Note that some acquisitions require review by OSDBU, some reviews are delegated to the Small Business Specialists/Liaisons, and some acquisitions require HCA review.
2. Is a VA Form 2268 required when the acquisition is not a SDVOSB/VOSB set-aside yet will be set-aside for small business?
Yes. In its surveillance reviews, the SBA expects a completed VA Form 2268 to be included in the official contract file for each acquisition regardless of dollar value. However, the routing/approvals of the VA Form 2268 differ depending on the acquisition. Refer to the current OSDBU Policy Memorandum located at http://www.va.gov/osdbu/docs/FY-2016-SB-PRP-Policy-Memo-Revised-VOSB-062216.pdf for specifics regarding routing of VA Form 2268.
1. What if there are two sources in the VIP database; however, the scope of what effort these entities have provided in the past and what the VA needs with the current requirement are different?
Sources that are verified in the VIP database then need to be determined capable of performing the work for the specific requirement. Contractors are not limited to being capable only for work previously performed for the VA. In this case described in the question, additional market research is needed in order to determine whether the identified entities are capable. Market research is required to be documented such that it supports the decision regarding whether two or more verified and capable SDVOSBs or VOSBs are likely to provide a fair and reasonable price providing best value to the Government.
2. How will market research be conducted for those orders issued by Ordering Officers who are outside of the contracting offices (example: Med/Surg PV and PPV and Subsistence NAC/Logistics Delegated Ordering Officers)?
The market research is conducted prior to establishing the contract and at the BPA level. Ordering Officers placing noncompetitive orders within established terms and conditions of the contract or BPA are not required to conduct further market research.
3. If a large number of SDVOSB or VOSB entities are identified in the VIP database, i.e., sometimes hundreds, is the contracting officer required to evaluate each firm until two more SDVOSBs or VOSBs are determined to be capable?
Generally with so many VIP verified SDVOSBs/VOSBs the acquisition would be set-aside unless there is reason to believe that at least two of these entities are not capable (e.g., recent similar requirement set-aside and no acceptable responses from VIP verified firms received).
4. Is cascading authorized?
Yes cascading authorized with SDVOSB as first tier and VOSB as second tier.
5. Will a new Market Research Report format/template be issued that addresses the requirements to comply with the 38 U.S.C. 8127 VA Rule of Two?
A Market Research Guide is being developed. In addition, market research training is planned.
6. Can the market research document be based on prior knowledge there is reasonable doubt that two or more verified SDVOSBs or VOSBs are capable of performing the requirement?
PPM 2016-05, dated July 25, 2016, page 6, states market research is to be comprehensively documented in the contract file. “Prior knowledge” may provide information that can be included in the market research documentation; however, it must be conclusive. Note that FAR 10.002(b)(1) External link to a government website states, “The contracting officer may use market research conducted within 18 months before the award of any task or delivery order if the information is still current, accurate, and relevant.” Per FAR 10.002(e) External link to a government website, the results of market research are to be documented in a manner appropriate to the size and complexity of the acquisition. If prior market research is applicable, as long as it appropriately documents the specific acquisition and was obtained with the last 18 months, it can be used.
7. In the market research phase should pricing be requested to determine whether the SDVOSBs or VOSBs can provide the VA with a fair and reasonable price or is this being documented after the solicitation is issued and quotes/proposals are being evaluated?
Pricing should not be requested during the market research phase. A fair and reasonable price determination at the proposal stage is different than at the “VA Rule of Two” set-aside determination stage. Properly conducted market research should determine if you have “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.
“Reasonable expectation” can be ascertained by determining whether verified entities have successfully performed in the past same or similar requirements, whether established catalog pricing is available, etc. FAR 10.002(b)(2) External link to a government website provides a list of techniques for conducting market research that can assist in this effort.
8. If a search using the VIP database has identified two or more SDVOSBs for the requirement NAICS code, should market research be stopped at this point and be set-aside?
The VIP only identifies verified SDVOSBs/VOSBs. Market research must also adequately document whether there is 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.” Therefore, additional market research, in addition to using the VIP must be conducted and documented.
9. What if VIP search resulted in two or more SDVOSB, and the CO posted sources sought notice on FBO, however, no SDVOSB or VOSB responded, do we still proceed to set-aside to SDVOSB/VOSB based on initial result thru VIP search?
Market research is required to be documented such that it supports the decision regarding whether two or more verified and capable SDVOSBs or VOSBs are likely to provide a fair and reasonable price providing best value to the Government. For the scenario described above, the market research must document the due diligence conducted to ensure the VIP verified entities are not interested in the requirement before a determination to not set-aside can be made.
10. During market research, what is the appropriate number of days to request a response to a SDVOSB/VOSB sources sought once posted?
The appropriate amount of time for responses to posted sources sought notices is at the contracting officer’s discretion. It is important that a sources sought notice provide clarity regarding the requirement, includes adequate time for responses, and does not require burdensome responses from interested parties.
11. When developing market research, can you ask for SDVOSBs and VOSBs in the same RFI and then make the decision to set-aside?
Yes, you may ask for SDVOSBs and VOSBs in the same RFI. However, if the result of the market research is that there are two or more SDVOSBs the requirement must be set-aside for SDVOSBs.
12. What if the North American Industry Classification System (NAICS) size status of a vendor in the Vendor Information Pages (VIP) database and System for Award Management (SAM) conflict?
The VIP NAICS codes are useful for purposes of market research. However, the official representation of business size is in SAM not VIP. To consider a VIP verified SDVOSB/VOSB under a particular NAICS code, contracting officers are to verify that the otherwise eligible firm has represented that it meets the size standard applicable to the NAICS code used for the specific acquisition via SAM or representation in the acquisition regardless of whether the NAICS is listed in the entity’s VIP profile. If the size conflict, the contractor must clarify and represent their current status for the particular procurement.
13. Is there a method to determining availability of capable SDVOSBs/VOSBs without posting an RFI for each acquisition?
There are a number of ways capability can be determined, e.g., conducting industry days, reviewing websites, determining whether verified entities have successfully performed in the past same or similar requirements, etc. FAR 10.002(b)(2) External link to a government website provides a list of techniques for conducting market research that can assist in this effort.
14. If a VIP verified SDVOSB is large under a NAICS applicable to a specific acquisition, yet that vendor was awarded a relevant GSA schedule while it was small, can I rely on the size from the base GSA contract award and call them a capable source, or would I now need to reference the vendor's SAM and not use it as an eligible SDVOSB vendor for the purposes of determining sources and establishing strategy?
The contracting officer must verify both VIP status and small business status of the firms at the order level. The official representation of business size is in SAM not VIP. To consider a VIP verified SDVOSB/VOSB under a particular NAICS code, contracting officers are to verify that the otherwise eligible firm has represented that it meets the size standard applicable to the NAICS code used for the specific acquisition via SAM or its representation in the acquisition regardless of whether the NAICS is listed in the entity’s VIP profile.
1. How is a "fair and reasonable price that offers best value to the Government" determined prior to issuing a solicitation and receiving quotes/bids/proposals?
Prior to solicitation, use market research results to determine if there is reasonable expectation two or more SDVOSBs or VOSBs are capable of performing the work and likely to submit an offer/quote at a fair and reasonable price that offers best value to the Government. The market research should include any or all of the techniques identified in FAR 10.002(b)(2) External link to a government website such as reviewing the results of recent market research, publishing formal requests for information, obtaining source lists of similar items for other contracting activities or agencies, reviewing catalogs or other available product information published by manufacturers, etc.
2. What documentation is required in order to demonstrate a "fair and reasonable price that offers best value to the Government" is not likely to be received?
The market research must document due diligence in reviewing any or all of the techniques identified in FAR 10.002(b)(2) External link to a government website. The VA form 2268 must be include the documentation resulting from the market research and must be routed in accordance with the latest OSDBU policy guidance on small business procurement reviews.
3. Will policy be issued that standardizes the acceptable amount of difference in pricing between a SDVOSB/VOSB quote/proposal versus non-SDVOSB/VOSB quote/proposal?
The VA does not plan to issue policy that standardizes the acceptable amount of difference in pricing between a SDVOSB/VOSB quote/proposal versus non-SDVOSB/VOSB quote/proposal. The fair market price on a set-aside shall be the price achieved in accordance with the reasonable price guidelines in FAR 15.404-1(b) External link to a government website.
4. If proposals received from a SDVOSB/VOSB set-aside are higher than historical purchases for the same or similar items/services, is the price(s) received fair and reasonable?
The FAR provides guidance for determining a fair and reasonable price. For example, FAR 15.404(a)(1) External link to a government website, states, “The contracting officer is responsible for evaluating the reasonableness of the offered prices. The analytical techniques and procedures described in this section may be used, singly or in combination with others, to ensure that the final price is fair and reasonable. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required.” FAR 15.403-1(b) External link to a government website states, “When adequate price competition exists (see 15.403-1(c)(1)) External link to a government website, generally no additional data are necessary to determine the reasonableness of price.” The competitive proposals received may reflect the going market prices, but see FAR 15.403-1 External link to a government website.
1. What are some authorities that are considered exceptions to the VA Rule of Two?
The VA Rule of Two applies to competitive contracts, competitive orders, and competitive BPAs awarded by the VA. The VA Rule of Two does not apply when acquiring products or services pursuant to any of the below non-competitive alternatives:
1.38 U.S.C. 8127(b) or (c) — up to $5M
2.38 U.S.C. 8123
3.38 U.S.C. 8153
4.FAR subpart 6.3
1. Have the SDVOSBs/VOSBs identified in GSA eBuy been VIP verified?
TNo. The contracting officer must verify in VIP any SDVOSB/VOSB.
2. FSS requires a minimum of three entities be solicited. The VA Rule of Two states if at least two SDVOSBs/VOSBs are identified then that is adequate to set-aside. Will the FSS minimum be changed to accommodate the minimum of two sources for the VA Rule of Two?
The VA Rule of Two is a decision to set-aside. It does not replace the requirement to solicit a minimum of three sources when issuing a competitive solicitation under a FSS pursuant to FAR 8.405 External link to a government website. Currently, when soliciting using a FSS, per Class Deviation, dated July 25, 2016, Attachment 4, VAAR 808.405-70(a)(1), the RFQ shall:
1. Be posted on e-Buy to afford all verified SDVOSB or VOSB schedule contractors, depending on the set-aside, offering the required supplies or services under the appropriate multiple award schedule(s) an opportunity to submit a quote; or
2. Provide the RFQ to as many verified SDVOSB or VOSB schedule contractors as practicable, depending on the set-aside, consistent with market research appropriate to the circumstances. The requirements in FAR 8.405-1, 8.405-2 and 8.405-3 External link to a government website, apply, except only verified SDVOSBs or VOSBs, will be considered. For example, this includes the requirement under FAR 8.405-1 External link to a government website that the contracting officer must prepare a written determination explaining that no additional contractors capable of filling the requirement could be identified despite reasonable efforts to do so. The determination must clearly explain efforts made to obtain quotes from at least three schedule contractors.
3. What if there is a strategic sourcing vehicle, like FSS and there are no verified VOSBs on the vehicle?
It is the contracting officer’s responsibility to go out and do the market research to determine whether or not there are verified SDVOSBs or VOSBs that can do the work. What we are hearing is that the compliance with 8127 takes precedence over strategic sourcing if we cannot find those vehicles that have Veteran-Owned Small Businesses on them. The good news for VA and for Veterans is that particularly on a Federal Supply Schedule we have numerous Veteran-Owned Small Businesses on many of our critical Federal Supply Schedules.
4. GSA Schedules also include SDVOSBs and VOSBs. However, many of these entities are not in the VIP database. Can we use GSA schedule SDVOSBs and VOSBs when awarding orders against GSA schedules?
Prior to the Kingdomware decision, that was the approach that VA took. Subsequently to the clarification provided by the Supreme Court, we no longer take that approach. So if you are a VOSB on a Federal Supply Schedule or you are a VOSB on a multiple award task order contract, it is very important that you get verified in order to have the Rule of Two applied to you. We've done a lot of work on the Verification Program. Some of you may remember the days when it took four months to get verified. That is no longer the case. We have made a lot of changes to the program so I would encourage those of you who may have been verified long ago to come back, and go through the verification process so that you will be considered as we look to apply the Rule of Two.
1. What is the requirement regarding soliciting from FPI? Is FPI a mandatory source? Should items that can be purchased via FPI now be purchased via verified and capable SDVOSBs/VOSBs?
As provided by VAAR, items on Federal Prison Industries, Inc. (FPI) that can be provided by a verified SDVOSB/VOSB may be awarded under the Veterans First Contracting Program. This is not a new policy for VA and was not changed as a result of the SCOTUS decision as VAAR 808.603 FPI has been in place since the VAAR amendment of December 8, 2009.
2. If after evaluating quotes/proposals received by SDVOSBs or VOSBs it is determined that none are able to perform at a fair and reasonable price, is it then required that a Certificate of Competency (COC) be acquired from SBA prior to proceeding to award to other than an SDVOSB/VOSB?
A COC refers to responsibility versus fair and reasonable pricing, see FAR 15.404 External link to a government website for further guidance on determining price reasonableness. However if, before award of a contract involving a small business set-aside, the contracting officer considers that award would be detrimental to the public interest (e.g., payment of more than a fair market price), the contracting officer may modify the small business set-aside determination in accordance with the OSDBU FY 2016 Small Business Procurement Review Program Policy Memorandum.
3. Is AbilityOne required to be considered first prior to the application of the VA Rule of Two?
For items already on the Procurement List, the VA Rule of Two does not apply as acquisitions for these items are mandatory. For items not on the Procurement List, the policy outlined in Class Deviation, dated July 25, 2016, Attachment 4, section 808.002(a)(1)(iv) applies.
4. For DLA contracts, such as contracts for fuel, is it required to search for SDVOSBs or VOSBs first before using that DLA contract?
It is not required to search for SDVOSBs or VOSBs first before using DLA contract for fuel as DLA contracts for fuel are mandatory under the authority of FAR 8.002(a)(1)(v) External link to a government website, wholesale supply sources.
5. For the purchase of utilities in a non-regulated state, is it required to search for SDVOSBs or VOSBs prior to using the SAC Energy Center contracts?
Public utility services are mandatory sources under FAR 8.003(a) External link to a government website and FAR Part 41 External link to a government website, Acquisition of Utility Services.
6. What percent disability rating is needed to be considered a SDVOSB?
Based on 38 CFR 74, a service-disabled veteran is a veteran who possesses either a disability rating letter issued by the Department of Veterans Affairs, establishing a service-connected rating between 0 and 100 percent, or a disability determination from the Department of Defense. However, note that the Office of Small and Disadvantaged Business Utilization’s (OSDBU) Center for Verification and Evaluation (CVE) verifies Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran-Owned Small Businesses (VOSBs). Contracting officers do not make eligibility determinations. Contracting officers are required to refer to the VIP database for SDVOSB/VOSB eligible firms.
7. If an offeror was previously certified in the VIP database as an SDVOSB, and the VIP database currently shows them “Pending Re-certification”, can this offeror be considered?
If you find someone in the VIP database pending re-verification, please inform our office. The only firms that are now visible in the VIP database are verified firms. Several years ago when we had a very large backlog and the implementation of Public Law 111-275, we had firms in the VIP database that were pending re-verification. That is no longer the case. So when contracting officers, program managers, or business people are looking for verified firms or to determine whether a firm is verified, if you find them in the VIP database they are verified. They can compete for contracts that are set aside and can be awarded set aside contracts. Additionally, the Rule of Two now becomes applicable to them. I would encourage you to make sure you get into VIP and get verified.
8. You mentioned that the T4NG added four SDVOSBs but as I understand they were already on the MATOC.
I believe we originally awarded 10 SDVOSBs on the original contract award; and subsequently, they added four additional ones. So there are now, if my memory serves me correctly, 14. You can go into the Technical Acquisition Center website and see the list of all the firms that have been awarded contracts under the T4NG vehicle.
Small Business Procurement Review Program Policy Memorandums
These memorandums establish VA’s Small Business Program procurement review policy and process and complement the Small Business Operating Plans prepared in accordance with VAAR 819.202-70. The Office of Small and Disadvantaged Business Utilization (OSDBU), in accordance with Section 15(k) of the Small Business Act (15 U.S.C. § 644(k)), is required to review proposed acquisition strategies and to make recommendations with respect to their anticipated impact on small business participation as prime and subcontractors.
In the Department of Veterans Affairs (VA), these responsibilities are conducted within the context of VA’s hierarchy of small business program preferences, established by section 8127(i) of Title 38, United States Code (the Veterans First Contracting Program). This law requires VA to consider preferences for verified Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) first, then preferences for verified Veteran-Owned Small Businesses (VOSBs). They are followed by certified HUBZone firms, 8(a) participants, and certified Woman-Owned Small Businesses (WOSB) (in no particular order of precedence); then Small Business, and finally full and open competitions (unrestricted). Small business program reviews are intended to ensure that Veteran-owned small businesses are considered in procurement strategies based on adequate market research. June 22, 2016 Procurement Review Program Policy Memorandum »
Procurement Policy Memorandum
This document provides roles and responsibilities for program offices, the contracting officer, and OSDBU in conducting market research to ensure compliance with the Rule of Two. It also provides guidance for evaluation of the acquisition strategy, to review existing contract vehicles for SDVOSB and VOSB sources. July 25, 2016 Procurement Program Policy Memorandum »
Class Deviations to the Veterans Affairs Acquisition Regulation (VAAR)
This memorandum transmits a package of deviations to the existing VAAR language to conform to the Supreme Court ruling. The deviations include mandatory use of SDVOSB and VOSB set-asides on orders against the Federal Supply Schedules when indicated by the Rule of Two, and requirements for offerors and awardees to be verified SDVOSBs or VOSBs to participate.
July 25, 2016 Class Deviation Memorandum »
Acquisition Policy Flashes
This announcement transmitted the Procurement Policy Memorandum and the Class Deviations to VA acquisition personnel and other users for immediate implementation. Acquisition Policy Flash 16-20 »
Market Research Resources
VA OSDBU Launches Business Intelligence Tool for Market Research – Introducing VA Business Intelligence Tool (VA BIT) The VA Business Intelligence Tool (VA BIT) is a new, web-based tool that connects businesses to procurement officials, program managers, and contracting officers in VA, other federal agencies, and in the commercial sector, who have procurement opportunities.
Federal Business Opportunities (FedBizOPPs)
Register with Federal Business Opportunities (also known as FedBizOpps) to research the many procurement opportunities available at VA and other federal agencies. Use the Search Agent within your registered account to locate NAICS-specific procurement opportunities, and much more. Create a ‘Watchlist’ to receive email notices related to potential procurement opportunities or requests for information.
For help with registering as a vendor and logging into FedBizOpps, view the Vendor Training Session video at https://www.fbo.gov/demos/vendor-registration/.