Source: https://supreme.justia.com/cases/federal/us/579/14-916/
Timestamp: 2019-11-14 01:32:53
Document Index: 591125152

Matched Legal Cases: ['§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§502', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127', '§8127']

Kingdomware Techs., Inc. v. United States :: 579 U.S. ___ (2016) :: Justia US Supreme Court Center
Justia › US Law › US Case Law › US Supreme Court › Volume 579 › Kingdomware Techs., Inc. v. United States
Kingdomware Techs., Inc. v. United States, 579 U.S. ___ (2016)
The Veterans Benefits, Health Care, and Information Technology Act requires the Secretary of Veterans Affairs to set annual goals for contracting with service-disabled and other veteran-owned small businesses, 38 U.S.C. 8127(a). The “Rule of Two” provides that a contracting officer “shall award contracts” by restricting competition to veteran-owned small businesses if the officer reasonably expects that at least two such businesses will submit offers and that “the award can be made at a fair and reasonable price.” A contracting officer “may” use noncompetitive and sole-source contracts for contracts below specific dollar amounts. In 2012, the Department used the Federal Supply Schedule (FSS), a streamlined method for acquisition of goods and services under prenegotiated terms, to procure medical center Emergency Notification Services from a non-veteran-owned business. The agreement ended in 2013. A service-disabled-veteran-owned small business filed a Government Accountability Office (GAO) bid protest, alleging that the Department procured multiple contracts through the FSS without employing the Rule of Two. The GAO determined that the Department’s actions were unlawful. The Department declined to follow the GAO’s nonbinding recommendation. The Federal Circuit held that the Department was only required to apply the Rule when necessary to satisfy its annual goals. The Supreme Court reversed, first holding that it had jurisdiction because the controversy is “capable of repetition, yet evading review.” Section 8127(d)’s contracting procedures are mandatory and apply to all of the Department’s contracting determinations. An FSS order is a “contract” within the ordinary meaning of that term and does not fall outside Section 8127(d). The Court rejected an argument that the Rule of Two will hamper mundane Government purchases as misapprehending current FSS practices, which have expanded beyond simple procurement to contracts concerning complex services over a multiyear period.
The contracting procedures provided by the Veterans Benefits, Health Care, and Information Technology Act apply to all of the contracting decisions taken by the Secretary of Veteran Affairs. Even when the contracting process is streamlined, such as in orders under the Federal Supply Schedule, the contracting procedures remain mandatory.
1. This Court has jurisdiction to reach the merits of this case. For a federal court to have Article III jurisdiction “an actual controversy must exist . . . through all stages of the litigation.” Already, LLC v. Nike, Inc., 568 U. S. ___, ___. Here, no court is capable of granting petitioner relief initially sought in the complaint because the short-term FSS contracts have been completed by other contractors. However, the controversy is “ ‘capable of repetition, yet evading review.’ ” Spencer v. Kemna, 523 U. S. 1 . The procurements were fully performed in less than two years after they were awarded, and it is reasonable to expect that the Government will refuse to apply the Rule of Two in a future bid by Kingdomware. Pp. 6–8.
(a) Section 8127(d)’s text unambiguously requires the Department to use the Rule of Two before contracting under the competitive procedures. The word “shall” usually connotes a requirement, unlike the word “may,” which implies discretion. Compare Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U. S. 26 , with United States v. Rodgers, 461 U. S. 677 . The use of the word “may” in §§8127(b) and (c) confirms this reading; for when a statute distinguishes between “may” and “shall,” the latter generally imposes a mandatory duty. Pp. 8–9.
(b) Alternative readings of §8127(d) are unpersuasive. First, §8127(d)’s prefatory clause, which declares that the Rule of Two is designed “for the purposes of” meeting §8127(a)’s annual contracting goals, has no bearing on whether §8127(d)’s requirement is mandatory or discretionary. The prefatory clause’s announcement of an objective does not change the operative clause’s plain meaning. See Yazoo & Mississippi Valley R. Co. v. Thomas, 132 U. S. 174 . Second, an FSS order is a “contract” within the ordinary meaning of that term; thus, FSS orders do not fall outside §8127(d), which applies when the Department “award[s] contracts.” Third, to say that the Rule of Two will hamper mundane Government purchases misapprehends current FSS practices, which have expanded well beyond simple procurement to, as in this case, contracts concerning complex information technology services over a multiyear period. Finally, because the mandate §8127(d) imposes is unambiguous, this Court declines the invitation to defer to the Department’s declaration that §8127 procedures are inapplicable to FSS orders. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 –843. Pp. 9–12.
When the Federal Government continually fell behind in achieving these goals, Congress tried to correct the situation. Relevant here, Congress enacted the Veterans Benefits, Health Care, and Information Technology Act of 2006, §§502, 503, 120Stat. 3431–3436 (codified, as amended, at 38 U. S. C. §§8127, 8128). That Act requires the Secretary of Veterans Affairs to set more specific annual goals that encourage contracting with veteran-owned and service-disabled veteran-owned small businesses. §8127(a). The Act’s “Rule of Two,” at issue here, provides that the Department “shall award” contracts by restricting competition for the contract to service-disabled or other veteran-owned small businesses. To restrict competition under the Act, the contracting officer must reasonably expect that at least two of these businesses will submit offers and that “the award can be made at a fair and reasonable price that offers best value to the United States.” §8127(d).[1]
Kingdomware Technologies, Inc., is a service-disabled veteran-owned small business. Around January 2012, the Department decided to procure an Emergency Notification Service for four medical centers.[2] In an emergency, this service sends important information to Department personnel. The Department sent a request for a price quotation to a non-veteran-owned company through the FSS system. That company responded with a favorable price, which the Department accepted around February 22, 2012. The agreement was for one year, with an option to extend the agreement for two more. The Department exercised the one option to extend the time, and performance was completed in May 2013. Decl. of Corydon Ford Heard III ¶8.
Petitioner then filed suit in the Court of Federal Claims and sought declaratory and injunctive relief.[3] The Court of Federal Claims granted summary judgment to the Department. 107 Fed. Cl. 226 (2012).
Although a case would generally be moot in such circumstances, this Court’s precedents recognize an exception to the mootness doctrine for a controversy that is “ ‘capable of repetition, yet evading review.’ ” Spencer v. Kemna, 523 U. S. 1, 17 (1998) . That exception applies “only in exceptional situations,” where (1) “the challenged action [is] in its duration too short to be fully litigated prior to cessation or expiration,” and (2) “there [is] a reasonable expectation that the same complaining party [will] be subject to the same action again.” Ibid. (internal quotation marks omitted; brackets in original).
That exception applies to these short-term contracts. First, the procurements were fully performed in less than two years after they were awarded. We have previously held that a period of two years is too short to complete judicial review of the lawfulness of the procurement. See Southern Pacific Terminal Co. v. ICC, 219 U. S. 498 –516 (1911). Second, it is reasonable to expect that the Department will refuse to apply the Rule of Two in a future procurement for the kind of services provided by Kingdomware. If Kingdomware’s interpretation of §8127(d) is correct, then the Department must use restricted competition rather than procure on the open market. And Kingdomware, which has been awarded many previous contracts, has shown a reasonable likelihood that it would be awarded a future contract if its interpretation of §8127(d) prevails. See Decl. of Corydon Ford Heard III ¶¶11–15 (explaining that the company continues to bid on similar contracts). Thus, we have jurisdiction because the same legal issue in this case is likely to recur in future controversies between the same parties in circumstances where the period of contract performance is too short to allow full judicial review before performance is complete. Our interpretation of §8127(d)’s requirements in this case will govern the Department’s future contracting.
In statutory construction, we begin “with the language of the statute.” Barnhart v. Sigmon Coal Co., 534 U. S. 438, 450 (2002) . If the statutory language is unambiguous and “the statutory scheme is coherent and consistent”—as is the case here—“[t]he inquiry ceases.” Ibid.
The surrounding subsections of §8127 confirm that Congress used the word “shall” in §8127(d) as a command. Like §8127(d), both §8127(b) and §8127(c) provide special procedures “[f]or purposes of meeting the goals under [§8127(a)].” §§8127(b), (c). But, in contrast to §8127(d), those latter two provisions state that “a contracting officer of the Department may use” (or, for §8127(c), “may award”) such contracts. §§8127(b), (c) (emphasis added). When a statute distinguishes between “may” and “shall,” it is generally clear that “shall” imposes a mandatory duty. See United States ex rel. Siegel v. Thoman, 156 U. S. 353 –360 (1895). We see no reason to depart from the usual inference here.
We therefore hold that, before contracting with a non-veteran owned business, the Department must first apply the Rule of Two.[4]
Finally and relatedly, the Department asks us to defer to its interpretation that FSS “orders” are not “contracts.” See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 –844 (1984) (establishing deference to an agency’s interpretation of an ambiguous statute). Even assuming, arguendo, that the preamble to the agency’s rulemaking could be owed Chevron deference, we do not defer to the agency when the statute is unambiguous. See id., at 842–843. For the reasons already given, the text of §8127(d) clearly imposes a mandatory duty. Thus, we decline the Department’s invitation to defer to its interpretation.
1 This provision reads in full: