[Congressional Record Volume 165, Number 204 (Tuesday, December 17, 2019)]
[Extensions of Remarks]
[Pages E1597-E1599]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 DEPARTMENT OF VETERANS AFFAIRS CONTRACTING PREFERENCE, CONSISTENCY ACT

                                 ______
                                 

                               speech of

                           HON. DAVID P. ROE

                              of tennessee

                    in the house of representatives

                       Monday, December 16, 2019

  Mr. DAVID P. ROE of Tennessee. Madam Speaker, I have determined it 
necessary to include in the Record the following views on H.R. 4920, 
the Department of Veterans Affairs Contracting Preference Consistency 
Act in the absence of a committee report.


    VIEWS ON H.R. 4920, DEPARTMENT OF VETERANS AFFAIRS CONTRACTING 
                       PREFERENCE CONSISTENCY ACT

   HON. DAVID P. ROE, RANKING MEMBER, COMMITTEE ON VETERANS' AFFAIRS

       I.--PURPOSE AND SUMMARY: H.R. 4920, the Department of 
     Veterans Affairs Contracting Preference Consistency Act, was 
     introduced by Representative Mark Takano on October 30, 2019. 
     H.R. 4920 is the ultimate result of a discussion draft that 
     members of the Committee on Veterans' Affairs began 
     circulating in October 2017. H.R. 4920 clarifies the 
     relationship between the AbilityOne Program and the 
     Department of Veterans Affairs' (VA) Veterans First Program.
       Congress established the AbilityOne Program through the 
     passage of the Javits-Wagner-O'Day Act, P.L. 92-98, codified 
     at 41 U.S.C. Sec. Sec. 8501-8506 (JWOD Act). The AbilityOne 
     Program is designed to provide employment opportunities to 
     individuals who are blind or who are severely disabled. 
     Pursuant to the JWOD Act, the U.S. AbilityOne Commission 
     (formerly known as the Committee for Purchase from People Who 
     Are Blind or Severely Disabled) maintains the Procurement 
     List, which lists the products and services made by qualified 
     NonProfit Agencies (NPAs) for the blind or severely disabled 
     that the U.S. AbilityOne Commission deems suitable for the 
     federal government to procure. If the federal government 
     intends to purchase products or services on the Procurement 
     List, it must purchase them from the qualified NPAs 
     designated by the U.S. AbilityOne Commission. Therefore, the 
     AbilityOne Program is often referred to as a ``mandatory 
     source'' in federal contracting.
       Congress created the Veterans First Contracting Program 
     (Vets First Program) through the passage of the Veterans 
     Benefits, Health Care, and Information Technology Act of 
     2006, P.L. 109-461, codified at 38 U.S.C. Sec. Sec. 8127-8128 
     (VBA of 2006). The Vets First Program encourages increased 
     levels of contracting by VA with Service Disabled Veteran 
     Owned Small Businesses (SDVOSBs) and Veteran Owned Small 
     Businesses (VOSBs), in descending order of priority, through 
     a combination of noncompetitive, sole-source, and restricted 
     competition authorities. The restricted competition 
     authority, reflected in U.S.C. Sec. 8127(d) is known as the 
     ``Rule of Two.'' The Rule of Two states that, ``a contracting 
     officer ofthe Department shall award contracts on the basis 
     of competition restricted to [SDVOSBs or VOSBs] if the 
     contracting officer has a reasonable expectation that two or 
     more [such SDVOSBs or VOSBs] will submit offers and that the 
     award can be made at a fair and reasonable price that offers 
     best value to the United States.''
       Whereas the VBA of 2006 is silent as to the relationship 
     between the AbilityOne Program as a mandatory source and the 
     Rule of Two, H.R. 4920 states that, notwithstanding the Rule 
     of Two, VA contracting officers shall continue procuring from 
     qualified NPAs those products or services that were included 
     on the Procurement List on or before December 22, 2006, the 
     date of enactment of the VBA of 2006.
       II.--BACKGROUND AND NEED FOR LEGISLATION: VA, like other 
     federal agencies establishes contracts with private 
     businesses for needed products and services. Federal 
     contracting has the additional objective of promoting small 
     business, including socioeconomic subcategories, principally 
     through a system of government-wide participation goals 
     administrated by the Small Business Administration. Congress 
     established such a goal for SDVOSBs in the Veterans 
     Entrepreneurship and Small Business Development Act of 1999, 
     P.L. 106-50, codified at 15 U.S.C. Sec. 644(g)(l)(A)(ii). The 
     government-wide SDVOSB goal remains three percent, 
     representing a minimum, though individual agencies have opted 
     for higher goals. Due to agencies', including VA's, inability 
     to achieve the three percent SDVOSB goal, Congress enacted 
     the Veterans Benefits Act of 2003, P.L. 108-183, codified at 
     15 U.S. Code Sec. 657f, which among other purposes, granted 
     agencies the authority to restrict competition to SDVOSBs and 
     to award sole-source contracts to SDVOSBs under certain 
     circumstances. The Veterans Benefits Act of 2003 (in section 
     308 of P.L. 108-183) was specific as to the relationship 
     between the AbilityOne Program as a mandatory source and the 
     newly created SDVOSB sole-source authority, ``Relationship To 
     Other Contracting Preferences.--A procurement may not be made 
     from a source on the basis of a preference provided under 
     subsection (a) or (b) if the procurement would otherwise be 
     made from a different source under section 4124 or 4125 of 
     title 18, United States Code, or the Javits-Wagner-O'Day Act 
     (41 U.S.C. 46 et seq.).'' However, due to VA's specific 
     inability to achieve its SDVOSB goal, Congress enacted the 
     VBA of 2006. In contrast to the Veterans Benefits Act of 
     2003, the VBA of 2006 contained no language clarifying the 
     intended treatment of the AbilityOne Program or other 
     contracting preference programs.
       VA initially implemented the VBA of 2006 on June 20, 2007, 
     and issued a final rule implementing the Act through changes 
     to the

[[Page E1598]]

     Veterans Affairs Acquisition Regulation on January 7, 2010. 
     On April 28, 2010, VA issued a policy referred to as an 
     ``information letter'' to address the relationship between 
     the Vets First Program and the AbilityOne Program. This 
     policy stated the following:
       ``The Veterans First Contracting Program final rule does 
     not affect AbilityOne's order of priority in relation to the 
     Veterans First Contracting Program. Therefore, all items 
     currently on the AbilityOne Procurement List as of January 7, 
     2010, will continue to take priority over the contracting 
     preferences mandated by P.L. 109-461. However, all new 
     requirements will be subject to the contracting preferences 
     mandated by P.L. 109-461 prior to being considered for 
     placement with the AbilityOne Program. This policy provides 
     an equitable solution by ensuring VA's continued commitment 
     to AbilityOne, while also recognizing the changes to VA's 
     small business hierarchy.''
       The meaning and impact of the VBA of 2006 were challenged 
     in a series of bid protests. In one key protest to the 
     Government Accountability Office (GAO), In re Kingdomware 
     Techs., No. B-406507 (May 30, 2012), GAO determined that VA, 
     ``improperly used non-mandatory Federal Supply Schedule 
     procedures to procure services, rather than using a set-aside 
     for [SDVOSB] concerns, and improperly awarding a contract to 
     a non-SDVOSB concern.'' After VA declined to implement GAO's 
     decision, the protestor Kingdomware Technologies, Inc. 
     proceeded to file a similar protest at the Court of Federal 
     Claims, which granted summary judgment to VA upholding its 
     interpretation on November 27, 2012. Kingdomware Technologies 
     then appealed the Court of Federal Claims' ruling to the 
     Court of Appeals for the Federal Circuit, which affirmed the 
     earlier ruling in a split decision on June 3, 2014. The 
     Supreme Court agreed to hear the case on June 22, 2015. There 
     were two matters of controversy, which periodically rose and 
     fell in prominence, throughout these protests and appeals: 
     whether the Rule of Two should be in force at all times, or 
     only up to the point in time in each fiscal year when VA 
     has awarded sufficient contracts to SDVOSBs to satisfy its 
     SDVOSB goal, and whether the Rule of Two applies to orders 
     placed against Federal Supply Schedules. In the 
     government's brief, the solicitor general framed the 
     question presented as, ``whether the Department of 
     Veterans Affairs permissibly concluded that 38 U.S.C. 8127 
     did not require it to utilize a small-business contracting 
     preference before placing an order under a pre-existing 
     Federal Supply Schedule contract.'' On August 25, 2015, 
     forty-one members of Congress, including Rep. David P. Roe 
     and three other current members of the House Committee on 
     Veterans' Affairs, submitted an amici curiae brief, 
     reiterating congressional intent that the Rule of Two 
     shall apply continuously, not switch on and off throughout 
     each fiscal year depending on when the SDVOSB 
     participation goal is met. The Supreme Court, in a 
     unanimous opinion, Kingdomware Techs. v. United States, 
     No. 14-916, 136 S. Ct. 1969 (June 16, 2016) held the 
     following:
       ``Alternative readings of Sec. 8127(d) are unpersuasive. 
     First, Sec. 8127(d)'s prefatory clause, which declares that 
     the Rule of Two is designed ``for the purposes of' meeting 
     Sec. 8127(a)'s annual contracting goals, has no bearing on 
     whether Sec. 8127(d)'s requirement is mandatory or 
     discretionary. The prefatory clause's announcement of an 
     objective does not change the operative clause's plain 
     meaning. See Yazoo & Mississippi Valley R. Co. v. Thomas, 132 
     U.S. 174, 188. Second, an FSS order is a ``contract'' within 
     the ordinary meaning of that term; thus, FSS orders do not 
     fall outside Sec. 8127(d), which applies when the Department 
     ``award[s] contracts.'' Third, to say that the Rule of Two 
     will hamper mundane Government purchases misapprehends 
     current FSS practices, which have expanded well beyond simple 
     procurement to, as in this case, contracts concerning complex 
     information technology services over a multiyear period. 
     Finally, because the mandate Sec. 8127(d) imposes is 
     unambiguous, this Court declines the invitation to defer to 
     the Department's declaration that Sec. 8127 procedures are 
     inapplicable to FSS orders.''
       The construction of and relationship between the VBA of 
     2006 and the JWOD Act were also challenged in a series of bid 
     protests. One key protest to the Court of Federal Claims, 
     Angelica Textile Servs., Inc. v. United States, 95 Fed. Cl. 
     208 (Oct. 26, 2010), concerned the necessity of VA performing 
     a Rule of Two analysis before adding a new product or service 
     to the Procurement List, in addition to other alleged 
     procedural irregularities. Angelica Textile Services, Inc. 
     was an SDVOSB and an incumbent VA contractor performing a 
     service which VA attempted to add to the Procurement List. 
     The Court of Federal Claims noted in its opinion that, ``Were 
     there a conflict between the two statutes, the more specific 
     Veterans Benefits Act would control. See NISH v. Rumsfeld, 
     348 F.3d at 1272; NISH v. Cohen, 247 F.3d at 205. Where, as 
     here, the statutes exist in tension, albeit not in direct 
     conflict, the Department was entirely reasonable in 
     concluding in its New Guidelines that the Veterans Benefits 
     Act should have priority.'' Angelica Textile Servs., Inc. v. 
     United States, 95 Fed. Cl. 208, 222 (Oct. 26, 2010). The 
     Court ordered that VA be enjoined from adding the services to 
     the Procurement List and proceeding to contract with an 
     AbilityOne NPA, and that VA must comply with its April 28, 
     2010 policy and apply the Rule of Two before making any such 
     decisions in the future.
       In another important protest, PDS Consultants, Inc. v. 
     United States, 132 Fed. Cl. 117 (May 30, 2017), the Court of 
     Federal Claims considered the question of ``which procurement 
     priority must the VA first employ: the requirement that the 
     VA conduct a Rule of Two analysis to determine whether it 
     must restrict the procurement to veteran-owned small 
     businesses under the VBA [of 2006] or the requirement that 
     the VA use the AbilityOne List under the JWOD, regardless of 
     whether the VA has conducted a VBA Rule of Two analysis.'' 
     The protestor was PDS Consultants, Inc., a SDVOSB. The holder 
     of the protested contracts was Winston-Salem Industries for 
     the Blind (now known as IFB Solutions) an NPA. This question 
     arose in the context of products and services which had been 
     included for many years on the Procurement List for two of 
     VA's regions, called Veterans Integrated Service Networks, as 
     well as products and services for two other regions which 
     were being performed within the Vets First Program but which 
     the AbilityOne Commission had recently added to the 
     Procurement List without VA conducting Rule of Two analysis. 
     Therefore, this protest concerned SDVOSB contracts which were 
     subject to move into the AbilityOne Program and NPA contracts 
     which were subject to move into the Vets First Program. The 
     Court of Federal Claims noted in its opinion that:
       ``The VA, faced with these potentially contradictory 
     contracting preferences, originally took the position in this 
     litigation that if a product or service appears on the 
     AbilityOne List for a particular region of the country the 
     JWOD requires the VA to purchase that product off of the List 
     without first performing a Rule of Two analysis. However, 
     during the pendency of the litigation, the VA changed its 
     position through regulation. The VA now agrees that if a 
     product or service was added to the AbilityOne List after 
     2010, the VA will perform the Rule of Two analysis before 
     purchasing off of the List. The new regulation provides, 
     however, that the VA will continue to purchase items off of 
     the AbilityOne List without first performing a Rule of Two 
     analysis for items added to the List before 2010.''
       The Court of Federal Claims held that, ``VA is required to 
     perform a Rule of Two analysis for all procurements after the 
     VBA was passed. Accordingly, the VA may not enter into future 
     contracts with IFB until it performs a Rule of Two analysis 
     and determines whether two or more veteran-owned small-
     businesses can perform the subject work.'' Winston-Salem 
     Industries for the Blind appealed this decision to the Court 
     of Appeals for the Federal Circuit. In PDS Consultants Inc. 
     v. United States, 907 F.3d 1345 (Oct. 17, 2018), the appeals 
     court upheld the lower court ruling and ``conclude[d] that 
     the requirements of the more specific, later-enacted VBA take 
     precedence over those of the JWOD when the two statutes are 
     in apparent conflict.'' The appeals court observed in its 
     opinion that, ``While the precise question we consider today 
     was not presented in Kingdomware, we may not ignore the 
     Court's finding that the VBA `is mandatory, not 
     discretionary,'' ' and, ``We assume that Congress was aware 
     that it wrote an exception into the agency-wide Veterans 
     Benefits Act in 2003 when it left that very same exception 
     out of the VBA only three years later.'' Since the appeals 
     court ruling, Winston-Salem Industries for the Blind filed a 
     petition for a writ of certiorari on September 9, 2019. 
     Recently, on December 9, 2019, the solicitor general filed a 
     brief in response in opposition, reasoning that although the 
     Supreme Court's decision in Kingdomware ``did not address the 
     question presented here,'' and ``although the government 
     agrees with petitioner that the relevant statutes taken 
     together are better read to give priority to JWOD's 
     specified-source requirements where those requirements apply, 
     the court of appeals' contrary holding also represents a 
     reasonable reconciliation of the competing interests that are 
     implicated here. And Congress of course remains free to 
     mandate a different approach in response to the court's 
     decision.''
       On May 20, 2019, in response to the Court of Appeals for 
     the Federal Circuit issuing a mandate effectuating its 
     decision in PDS Consultants Inc. v. United States, VA issued 
     a new policy in the form of a Veterans Affairs Acquisition 
     Regulation deviation replacing its April 28, 2010 policy. The 
     deviation's purpose was to ``require contracting officers to 
     apply the VA Rule of Two to determine whether a requirement 
     should be awarded to [SDVOSBs] and VOSBs under the authority 
     of 38 U.S.C. 8127-28, by using preferences and priorities in 
     subpart 819.70 prior to considering an award to an AbilityOne 
     non-profit organization or the Federal Prison Industry, 
     Inc.'' Impacts ensued from this policy.
       The AbilityOne Commission states on its website that, 
     ``providing employment opportunities to more than 45,000 
     people who are blind or have significant disabilities, 
     including approximately 3,000 veterans, the AbilityOne 
     Program is among the nation's largest providers of jobs for 
     people who are blind or have significant disabilities.'' The 
     AbilityOne Commission also cites on its website a 70 percent 
     unemployment rate among these populations and characterizes 
     this as ``unacceptably high.'' According to the AbilityOne 
     central nonprofit agencies

[[Page E1599]]

     SourceAmerica (formerly National Industries for the Severely 
     Handicapped) and National Industries for the Blind, 
     approximately 2,000 jobs of individuals who are disabled and 
     approximately 800 jobs of individuals who are blind, 
     respectively, are associated with VA contracts. In mid-2019, 
     there were roughly 90 such contracts held by NPAs located in 
     30 states and the District of Columbia. Some of these 
     contracts have passed from AbilityOne NPAs to SDVOSBs or 
     VOSBs since May 20, 2019. Available information indicates 
     that more contracts for products have been affected than 
     contracts for services, due to the fact that the particular 
     services that are prevalent in the AbilityOne Program, such 
     as custodial, food, and call center services, are relatively 
     less likely than products to pass the Rule of Two. Available 
     information indicates that many affected NPAs have furloughed 
     employees while attempting to secure work for them on other 
     contracts. However, the extent of layoffs that have already 
     occurred is unknown, while the Committee has been provided no 
     example of a SDVOSB or VOSB gaining a contract which was 
     formerly performed by an NPA and taking on the NPA's 
     employees who would otherwise be displaced.
       The destruction of employment and employment opportunities 
     for individuals who are blind or disabled is extremely 
     unsatisfactory; it is also unnecessary and avoidable. The 
     courts in the cases discussed above relied on the general 
     maxim of statutory interpretation that a specific statute 
     (the VBA of 2006) takes precedence over a general statute 
     (the JWOD Act), particularly when the specific statute was 
     later enacted. They also gave weight to the Veterans Benefits 
     Act of 2003's clarity as to the treatment of the JWOD Act in 
     contrast to the VBA of 2006's silence and imputed there 
     congressional intent to subsume the AbilityOne Program in VA. 
     The purpose of H.R. 4920 is to clarify Congress's intent. The 
     Vets First Program and the AbilityOne Program should coexist 
     in VA as they did after the enactment of the VBA of 2006, 
     through the April 28, 2010 policy, through the time of 
     Kingdowmare, until PDS Consultants fundamentally changed the 
     programs' alignment. However, recognizing the time that has 
     passed and the inherent fairness issue that informs the 
     relevant bid protests and cases, it is more appropriate to 
     use the date of enactment of the VBA of 2006, December 22, 
     2006, as a point of demarcation than the date of VA's former 
     policy, April 28, 2010. This legislation would exempt the 
     award of contracts in VA for products and services that were 
     placed on the Procurement List on or before December 22, 2006 
     from the Rule of Two and thereby preserve a substantial 
     amount of, though not all, employment in the NPAs that rely 
     on these contracts. All contracting for products and services 
     added to the Procurement List later must comply with the Rule 
     of Two. In effect, all future contracting opportunities will 
     flow through the Vets First Program.
       Finally, it should be emphasized that in contrast with PDS 
     Consultants, this intent is wholly consistent with the 
     Supreme Court's opinion in Kingdomware as well as the 
     congressional intent expressed in the amici curiae brief 
     submitted in conjunction with that case and the functioning 
     of the Vets First Program since Kingdomware. I share the 
     solicitor general's assessment, in his December 9, 2019 
     response to Winston-Salem Industries for the Blind's 
     petition, that the treatment of ordering against Federal 
     Supply Schedules, which was the matter at issue in 
     Kingdomware, is not generalizable to the AbilityOne Program's 
     mandatory source. It should also be noted that although the 
     AbilityOne Program's status as a mandatory source is directly 
     comparable to that of the Federal Prison Industries Program, 
     also known as UNICOR, and these two programs present a 
     similar question as to their relationship to the Vets First 
     Program, the volume of usage of Federal Prison Industries in 
     VA has declined to a minimal level and no longer represents a 
     significant controversy. For this reason, H.R. 4920 does not 
     address Federal Prison Industries.

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