Kingdomware Technologies, Inc. v. United States

Under 38 U.S.C. § 8127(d), the Department of Veteran Affairs is required to employ the Rule of Two in awarding contracts, even though the Department will otherwise meet its annual contracting objectives.

Respondent procured a bid from a nonveteran-owned company for Emergency Notification Services to be installed in four of its medical centers. Petitioner, a small, veteran-owned company that services the disabled filed a bid protest with the Government Accountability Office (GOA) challenging Respondent’s decision under the Rule of Two. The GOA then issued a nonbinding determination requiring the Respondent to employ the Rule of Two. Respondent disagreed and Petitioner filed suit in the Court of Federal Claims seeking declaratory and injunctive relief. The court granted summary judgment for Respondent and Petitioner appealed to the U.S. Court of Appeals. A divided Federal Circuit affirmed, holding that the application of the Rule of Two was limited and is to be used only as a means to achieve the Respondent’s annual contracting goals. Petitioner appealed and the U.S. Supreme Court granted certiorari. The Court reversed and held that Respondent must apply the Rule of Two before contracting with a nonveteran-owned business. The Court first determined that it had jurisdiction because an exception could be made to the doctrine of mootness. The Court then reasoned that Congress’s use of the word “shall” in § 8127(d) implies that the provision is mandatory and not discretionary and must be applied to all of Respondent’s contracting determinations. REVERSED AND REMANDED.