Kingdomware Technologies, Inc. v. United States

Whether the VA must choose a veteran owned business or whether the VA is allowed to exercise discretion when selecting a contractor?

The Veterans Act of 2006 permits the Department of Veteran Affairs (“VA”) to use non-competitive means to fund veteran owned businesses in order to meet goals established by congress. Petitioner is a small, veteran owned business. The VA chose to use the Federal Supply Schedule (“FSS”) to find a contractor to implement a new system. The FSS is a tool to help government agencies search and obtain contractor services. The contract was awarded to a non-veteran FSS vendor rather than Petitioner. The Government Accountability Office (“GAO”) recommended the VA give up their contract with the FSS vendor in order to go with a veteran owned business, but the VA declined.

The federal claims court held that the VA was not in violation of the plain language of the statute. The court found that while the goal setting nature of the statute clouded the plain meaning, the VA had discretion in their decision. The federal circuit court affirmed, holding that “shall” and “may” combined in the statute to meet the goals set forth by Congress.

The Petitioner argues that “shall” means there is no choice and that the plain language of the statute does not leave the VA with discretion. The language creates an unintended loophole that favors the VA discretion over veteran owned businesses. The interpretation by the lower courts disregards the legislative history favoring the growth of veteran owned business. The statute is not designed to ensure that the VA meets certain goals; rather, it is designed to give veteran business owners a competitive edge. The current interpretation fails to meet the goal. Finally, the correct interpretation is important for thousands of veterans.