[Federal Register Volume 84, Number 121 (Monday, June 24, 2019)]
[Rules and Regulations]
[Pages 29389-29391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13217]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Part 808

[Docket VA-2019-VACO-0018]


Issuance of Class Deviation From VA Acquisition Regulation (VAAR) 
Part 808--Required Sources of Supplies and Services and Conforming 
Amendments

AGENCY: Department of Veterans Affairs (VA).

ACTION: Temporary rule; request for comments.

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SUMMARY: VA provides notification that the agency has issued a class 
deviation from VA Acquisition Regulation (VAAR) Part 808--Required 
Sources of Supplies and Services. VA is amending the VAAR to implement 
the Federal Circuit's mandate. VA has determined that publication of 
this notification in the Federal Register would be beneficial to both 
the agency's acquisition workforce and industry stakeholders. The class 
deviation, which is effective May 20, 2019, was issued to immediately 
implement the Federal Circuit's mandate, and this publication is to 
further notify the public in order to avoid confusion regarding 
applicable policy and to make conforming amendments to the CFR. The 
public is invited to submit comments on VA's approach to implementing 
the Federal Circuit mandate, as set forth in the class deviation and 
the conforming amendments to the CFR set forth in this publication.

DATES: The rule is effective June 24, 2019 through July 1, 2021. The 
class deviation is effective as of May 20, 2019. Comments: Interested 
parties are invited to submit comments in writing by July 24, 2019.

ADDRESSES: Written comments may be submitted through http://www.regulations.gov; by mail or hand delivery to the Director, Office 
of Regulation Policy and Management (00REG), Department of Veterans 
Affairs, 810 Vermont Avenue NW, Room 1064, Washington DC 20420; or by 
fax to 202-273-9026. Comments should indicate that they are submitted 
in response to Docket #VA-2019-VACO-0018, titled--``Issuance of Class 
Deviation from VA Acquisition Regulation (VAAR) Part 808 -- Required 
Sources of Supplies and Services.'' During the comment period, comments 
may also be viewed online through the Federal Docket Management System 
at www.regulations.gov. The full class deviation text is available at: 
https://www.va.gov/oal/docs/business/pps/deviationVaar20190520.PDF.

FOR FURTHER INFORMATION CONTACT: Sheila P. Darrell, Ph.D., CFCM, Office 
of Acquisition and Logistics (003A), Procurement Policy and Warrant 
Management Service (003A2A) via email at [email protected] 
or (202) 632-5288. (This is not a toll-free number).

SUPPLEMENTARY INFORMATION: On October 17, 2018, the Federal Circuit, 
which has nationwide appellate jurisdiction over challenges to federal 
agency procurement decisions, issued a decision in PDS Consultants, 
Inc., v. The United States, Winston-Salem Industries for the Blind (PDS 
Consultants), 907 F.3d 1345 (Fed. Cir. 2018). In the decision, the 
Federal Circuit noted that in 2016 the United States Supreme Court, in 
its decision in Kingdomware Technologies, Inc. v. United States, held 
that, ``[e]xcept when the [VA] uses the noncompetitive and sole-source 
contracting procedures in subsections (b) and (c), Sec.  8127(d) 
requires the [VA] to use the Rule of Two before awarding a contract to 
another supplier.'' However, the Federal Circuit acknowledged that 
Kingdomware did not directly address the interaction between 38 U.S.C. 
8127 and the Javits-Wagner O'Day Act (JWOD), 41. U.S.C. 8504, and, 
instead focused on whether VA had the discretion to place orders under 
a preexisting Federal Supply

[[Page 29390]]

Schedule before resorting to the Rule of Two.
    The Federal Circuit further found that, under 38 U.S.C. 8128(a), 
the Secretary of Veterans Affairs, when ``procuring goods and services 
pursuant to a contracting preference under [title 38] or any other 
provision of law . . . shall give priority to a small business concern 
owned and controlled by veterans, if such business concern meets the 
requirements of that contracting preference.'' (emphasis added). The 
Federal Circuit found that the phrase ``or any other provision of law'' 
by its terms encompasses the JWOD. Therefore, the Federal Circuit found 
that where a product or service is on the Procurement List and 
ordinarily would result in the contract being awarded to a nonprofit 
qualified under the JWOD, 38 U.S.C. 8127(d) would require VA to apply 
the VA Rule of Two before awarding a contract to a qualified nonprofit 
organization.
    VA provides notice that the agency has issued a class deviation 
from VA Acquisition Regulation (VAAR) Part 808--Required Sources of 
Supplies and Services on May 20, 2019. The class deviation from the 
VAAR supersedes and effectively updates the language previously set 
forth in Class Deviation from 808.002, Priorities for Use of Mandatory 
Government Sources, dated February 9, 2018. On May 20, 2019, the United 
States Court of Appeals for the Federal Circuit (the Federal Circuit) 
issued a mandate effectuating the October 17, 2018 decision in PDS 
Consultants, Inc., v. The United States, Winston-Salem Industries for 
the Blind, (PDS Consultants) and creating a binding circuit precedent 
which necessitated immediate policy change. Accordingly, the class 
deviation authorizes contracting officers to deviate from VAAR 808.002 
and 808.603 to reflect language consistent with the decision of the 
Federal Circuit.
    Specifically, the class deviation requires VA contracting officers 
to apply the VA Rule of Two, as implemented in VAAR subpart 819.70, 
before awarding a contract to a qualified nonprofit organization under 
the Javits-Wagner O'Day Act (JWOD) or making a contract award to 
Federal Prison Industries, Inc. (FPI). The deviation clarifies that if 
VA is unable to award to a Vendor Information Pages (VIP)-listed and 
verified service-disabled veteran-owned small business (SDVOSB) or a 
veteran-owned small business (VOSB) using the procedures set forth in 
VAAR subpart 819.70, AbilityOne nonprofit organization and FPI would 
retain their mandatory source status.
    VA has determined that this publication in the Federal Register is 
necessary to make conforming edits to the CFR in order to clarify 
existing requirements to both the agency's acquisition workforce and 
industry stakeholders.
    This document provides a comment period of 30 days in which 
commenters may address VA's approach to implementing the Federal 
Circuit mandate, as set forth in the class deviation and the conforming 
amendments to the CFR set forth in this publication. VA believes 30 
days is sufficient to provide comments given the litigation history and 
the information being requested. As discussed above, the Federal 
Circuit's mandate required that the agency's acquisition workforce 
immediately comply with the binding precedent. This demonstrates that a 
delay of the effective date of the rule on the public would be 
unnecessary. Accordingly, the Secretary finds good cause to dispense 
with the opportunity for advanced notice and opportunity for public 
comment and to publish this temporary rule with an effective date of 
June 24, 2019.

Executive Orders 12866

    VA has examined the economic, interagency, budgetary, legal, and 
policy implications of this regulatory action, and it has been 
determined not be a significant regulatory action under E.O. 12866.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. Section 801 et 
seq.), the Office of Information and Regulatory Affairs designated this 
rule as not a major rule, as defined by 5 U.S.C. Section 804(2).

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on June 13, 2019, for publication.

    Dated: June 18, 2019.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of 
the Secretary, Department of Veterans Affairs.

    For the reasons set forth in the preamble, we amend 48 CFR part 808 
as follows:

PART 808--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
1. The authority citation for part 808 continues to read as follows:

    Authority: 38 U.S.C. 8127 and 8128; 40 U.S.C. 121(c) and (d); 
and 48 CFR 1.301-1.304.


0
2. In Sec.  808.002, revise the section heading and paragraphs (a) and 
(b) to read as follows:


Sec.  808.002  Priorities for use of mandatory Government sources.

    (a) Sources. Contracting activities shall satisfy requirements for 
supplies and services from or through the mandatory sources listed 
below in descending order of priority:
    (1) Supplies. (i) VA inventories including the VA supply stock 
program (41 CFR 101-26.704) and VA excess.
    (ii) Excess from other agencies (see FAR subpart 8.1).
    (iii) Federal Prison Industries, Inc. (see VAAR 808.603). Prior to 
considering award of a contract to Federal Prison Industries, Inc, 
contracting officers shall apply the VA Rule of Two to determine 
whether a requirement should be awarded to veteran-owned small 
businesses under the authority of 38 U.S.C. 8127-28, by using the 
preferences and priorities in subpart 819.70. If an award is not made 
to a VIP-listed and verified service disabled veteran-owned small 
business (SDVOSB)/veteran-owned small business (VOSB) as provided in 
subpart 819.70, FPI remains a mandatory source in accordance with FAR 
8.002.
    (iv) Supplies that are on the Procurement List maintained by the 
Committee for Purchase from People Who Are Blind or Severely Disabled, 
known as AbilityOne (FAR subpart 8.7). Prior to considering award of a 
contract under the AbilityOne program, contracting officers shall apply 
the VA Rule of Two to determine whether a requirement should be awarded 
to veteran-owned small businesses under the authority of 38 U.S.C. 
8127-28, by using the preferences and priorities in subpart 819.70. If 
an award is not made to a VIP-listed and verified SDVOSB/VOSB as 
provided in subpart 819.70, AbilityOne remains a mandatory source in 
accordance with FAR 8.002. All new VA requirements must be approved by 
the Chief Acquisition Officer, via the Senior Procurement Executive, 
before contacting the Committee to request addition of new items to the 
Procurement List.
    (v) Wholesale supply sources, such as stock programs of the General 
Services Administration (GSA) (see 41 CFR 101-

[[Page 29391]]

26.3), the Defense Logistics Agency (see 41 CFR 101-26.6), the 
Department of Veterans Affairs (see 41 CFR 101-26.704), and military 
inventory control points.
    (2) Services that are on the Procurement List maintained by the 
Committee for Purchase from People Who Are Blind or Severely Disabled, 
known as AbilityOne (FAR subpart 8.7). Prior to considering award of a 
contract under the AbilityOne program, contracting officers shall apply 
the VA Rule of Two to determine whether a requirement should be awarded 
to veteran-owned small businesses under the authority of 38 U.S.C. 
8127-28, by using the preferences and priorities in subpart 819.70. If 
an award is not made to a VIP-listed and verified SDVOSB/VOSB as 
provided in subpart 819.70, AbilityOne remains a mandatory source in 
accordance with FAR 8.002. All new VA requirements must be approved by 
the Chief Acquisition Officer, via the Senior Procurement Executive, 
before contacting the Committee to request addition of new items to the 
Procurement List.
    (b) Unusual and compelling urgency. The contracting officer may use 
a source other than those listed in paragraph (a) of this section when 
the need for supplies or services is of an unusual and compelling 
urgency (see FAR 6.302-2, 8.405-6 and 13.106-1 for justification 
requirements).
* * * * *

0
3. Revise Sec.  808.603 to read as follows:


Sec.  808.603  Purchasing priorities.

    A waiver from FPI is not needed when comparable supplies and 
services are procured in accordance with subpart 819.70.

[FR Doc. 2019-13217 Filed 6-21-19; 8:45 am]
BILLING CODE 8320-01-P