Pds Consultants, Inc. v. United States
2017 WL 3821803
Fed. Cl.2017Background
- PDS Consultants (a service-disabled veteran-owned small business) protested the VA’s continued procurement of eyewear products/services from an AbilityOne nonprofit (IFB) without first applying the VA’s "Rule of Two" under the Veterans Benefits, Health Care, and Information Technology Act of 2006 (VBA).
- JWOD/AbilityOne requires agencies to buy listed products/services from qualified nonprofits that employ blind or severely disabled persons; VBA requires the VA to perform a Rule of Two to determine whether at least two VOSBs/SDVOSBs can perform the work at a fair price before restricting competition to them.
- The VA changed position during litigation, agreeing to apply the Rule of Two for items added to the AbilityOne Procurement List on or after January 7, 2010, but not for items added before that date; VISNs 6 and 8 were added after 2010, VISNs 2 and 7 before 2010.
- The Court held the VA must perform the Rule of Two before entering new purchasing agreements for VISNs 2 and 7 (items added before 2010), rejecting the argument that pre-2010 listings are forever exempt from VBA.
- IFB sought a stay pending appeal of the Court’s judgment; the Court granted the stay, permitting IFB to continue providing eyewear for VISNs 2 and 7 until appeal resolution.
Issues
| Issue | Plaintiff's Argument | Defendant / IFB Argument | Held |
|---|---|---|---|
| Whether VA must apply Rule of Two to AbilityOne-listed items added before Jan 7, 2010 | VBA’s plain text and Kingdomware require the VA to apply Rule of Two before procuring, regardless of AbilityOne listing date | JWOD (AbilityOne) mandates mandatory purchases from nonprofits for listed items; VA has no choice once listed | Court held VA must perform Rule of Two for VISNs 2 and 7 (pre-2010 listings) before new agreements; rejected permanent exemption for pre-2010 listings |
| Jurisdiction / standing to bring bid protest in Court of Federal Claims | PDS: challenge is "in connection with a procurement or proposed procurement" so 28 U.S.C. §1491(b) applies | IFB: challenge should be to AbilityOne listing in district court under APA | Court held CFC has jurisdiction because PDS challenges VA’s procurement decisions for future contracts |
| Irreparable harm from denying stay | PDS: loss of opportunity to compete is not unique; losing incumbency is ordinary | IFB: loss of contracts would cause severe, unique harm to its nonprofit mission and employment of blind persons—irreparable | Court found IFB’s harm unique and irreparable (risk to mission and employment) |
| Balance of equities & public interest | PDS: public interest favors VBA preference for VOSBs/SDVOSBs; harm to SDVOSBs if stay granted | IFB: public interest favors protecting employment of blind/severely disabled under JWOD; concrete harm to IFB outweighs speculative harm to PDS | Court found balance and public interest favor stay pending appeal; granted stay allowing continued procurement from IFB for VISNs 2 and 7 |
Key Cases Cited
- Kingdomware v. United States, 136 S. Ct. 1969 (2016) (VBA §8127 is mandatory; Department must apply Rule of Two)
- Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511 (Fed. Cir. 1990) (stay factors and equitable balancing)
- OAO Corp. v. United States, 49 Fed. Cl. 478 (2001) (movant bears burden for extraordinary relief such as injunction)
- Hilton v. Braunskill, 481 U.S. 770 (1987) (four-factor test for injunctions/stays pending appeal)
- Jacobson v. Lee, 1 F.3d 1251 (Fed. Cir. 1993) (importance of first-impression contracting questions)