The Veterans First Program 38 U.S.C. 8127

Set-asides for SDVOBs are mandated under 38 U.S.C. 8127(d). It mandates service disabled set-asides where there are at least two SDVOB concerns that qualify for award and are reasonably expected to submit offers at a reasonable price.

(d) Use of Restricted Competition.undefined Except as provided in subsections (b) and (c), for purposes of meeting the goals under subsection (a), and in accordance with this section, a contracting officer of the Department shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.  Emphasis added.

This is the same language, “shall award”, used in the Small Business Act relating to HUBZone set-asides that the Court in   Mission Critical Solutions, found made HUBZone set-asides mandatory.

Based on the ruling in the Mission Critical Solutions case it is my opinion that the only reasonable interpretation of  38 U.S.C. 8127(d) is that an SDVOB set-aside is required when the conditions described therein are met. The court ruled that the word “shall” is ordinarily the language of command and when the same rule uses both “may” and “shall,” the normal inference is that each is used in its usual senseundefinedthe one act being permissive, and the other mandatory.    Here 38 U.S.C. §8127(d) uses “shall” for an SDVOB set-aside if there are two SDVOBs and “may” for 38 U.S.C. §8127(c) sole source awards.

The VA’s regulations adopt this approach and provide for a mandatory SDVOB set-aside if there is a likelihood of two SDVOB’s bidding on a requirement.

The VAAR §819.7005 provides:

(a) The contracting officer shall consider SDVOSB set-asides before considering VOSB set-asides. Except as authorized by 819.7007 [permissive sole source] and 819.7008 [veteran, but not disabled, owned business], the contracting officer shall set-aside an acquisition for competition restricted to SDVOSB concerns upon a reasonable expectation thatundefined

(1) Offers will be received from two or more eligible SDVOSB concerns; and

(2) Award will be made at a fair and reasonable price.

b) When conducting SDVOSB set asides, the contracting officer shall ensureundefined

(1) Eligibility is extended to businesses owned and operated by surviving spouses; and

(2) Businesses are registered and verified as eligible in Vendor Information Pages prior to making an award.

Therefore, when the conditions of 38 U.S.C. 8127(d) and VAAR §819.7005 are met, an SDVOB set-aside is mandatory .

Following the direction of the Mission Critical decision, a VA contracting officer first must determine whether a set-aside for SDVOSB concerns is required under 38 U.S.C. §8127(d) before considering any other acquisition method.

Part 2 will address when I believe VA may use a sole source award under 38 U.S.C. 3127(c).