Kingdomware Technologies, Inc. v. United States
2014 U.S. App. LEXIS 10236
| Fed. Cir. | 2014Background
- Kingdomware, a SDVOSB, was certified by the VA in 2010 and recertified in 2012.
- VA policy promotes veteran-owned small businesses and uses FAR/VAAR in contracting.
- Congress amended the Small Business Act in 2003 and 2006 to emphasize SDVOSB/VOSB goals, including § 8127.
- § 8127(d) requires Rule of Two for purposes of meeting goals; VA regulations implement SDVOSB/VOSB set-asides.
- In 2012 the VA awarded an FSS contract for Emergency Notification Service; Kingdomware protested as noncompliant with § 8127(d).
- GAO and court proceedings followed, with the Court of Federal Claims ruling for the VA and Kingdomware appealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 8127(d) requires a Rule of Two in all procurements. | Kingdomware: ‘shall’ mandates Rule of Two in every case. | VA: Rule of Two applies to meeting § 8127(a) goals; not universal for all procurements. | Not universal; contingent on meeting goals under (a). |
| How to read the phrase ‘for purposes of meeting the goals under subsection (a)’ within § 8127(d). | Kingdomware: language does not limit Rule of Two to goal-satisfying cases. | VA: phrase ties the Rule of Two to goal achievement and preserves FSS use otherwise. | Phrase limits Rule of Two to cases needed to meet goals. |
| Whether VA regulations and GAO practice support deference to VA’s reading of § 8127(d). | Kingdomware: deference to VA interpretations is improper if not faithful to text. | VA: Skidmore deference and long-standing interpretations support its view. | VA interpretation receives Skidmore deference; within Chevron framework. |
| Whether the majority’s reliance on prefatory language is proper in statutory construction. | Kingdomware: prefatory language cannot override operative text. | VA: prefatory language informs purpose and must be read with operative language. | Prefatory language does not defeat the operative § 8127(d) command. |
| Effect of FAR Rule of Two and VA’s regulatory framework on § 8127(d) in practice. | Kingdomware: statute must predominate; FACs not compel FSS avoidance. | VA: Rule of Two interacts with FAR and goal-setting; not overridden by goals met. | Statutory design harmonizes with FAR; goals may be met without universal Rule of Two. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984) (two-step framework for agency interpretations)
- Whitman v. Am. Trucking Ass’ns, 531 U.S. 457 (U.S. 2001) (statutory interpretation and deference standards)
- Santa Fe Indus., Inc. v. Green, 430 U.S. 462 (U.S. 1977) (textual interpretation and statutory structure)
- CMS Contract Mgmt. Servs. v. United States, 745 F.3d 1379 (Fed. Cir. 2014) (agency deference in bid protests)
- Harbison v. Bell, 556 U.S. 180 (U.S. 2009) (context on judicial review and statutory interpretation)
- Dominion Res., Inc. v. United States, 681 F.3d 1313 (Fed. Cir. 2012) (Chevron standard applied in bid-protest context)