Amicus Curiae Brief — Winston-Salem Industries for the Blind, Petitioner v. PDS Consultants, Inc., et al.

No. 19-329

In the Supreme Court of the United States

WINSTON-SALEM INDUSTRIES FOR THE BLIND,

Petitioner,

v.

UNITED STATES OF AMERICA; PDS CONSULTANTS, INC.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF AMICUS CURIAE

SOURCEAMERICA IN SUPPORT OF

PETITIONER

ROBERT REEVES ANDERSON

Counsel of Record

ARNOLD & PORTER

KAYE SCHOLER LLP

370 Seventeenth St., Ste. 4400

Denver, CO 80202

(303) 863-1000

Reeves.Anderson@arnoldporter.com

CRAIG A. HOLMAN

ARNOLD & PORTER

KAYE SCHOLER LLP

601 Massachusetts Ave., NW

Washington, DC 20001

(202) 942-5000

QUESTIONS PRESENTED

1. Whether the Tucker Act’s grant of bid-protest jurisdiction to the Court of Federal Claims extends to suits

that challenge the lawfulness of a federal agency’s acquisition regulations and their underlying statutory foundation.

2. Whether Congress intended 38 U.S.C. § 8127(d)’s

competitive-bidding preference for providers owned and

controlled by veterans to trump the mandatory requirements of the Javits-Wagner-O’Day Act, 41 U.S.C. § 8501–

06, that dictate that agencies must acquire goods and services in the first instance using the AbilityOne Procurement List.

(i)

TABLE OF CONTENTS

Page

Interest of Amicus Curiae ................................................. 1

Introduction and Statutory Framework ........................... 2

Summary of Argument ........................................................ 6

Argument .............................................................................. 7

I. The Court’s intervention is needed to address

two critical issues relating to government

procurements. ............................................................... 7

A. The Tucker Act does not give the Court of

Federal Claims jurisdiction to review the

validity of agency regulations................................ 7

B. The decision below misinterprets the

interplay between JWOD and the VBA’s Rule

of Two, which now extends to all VA

procurements. ....................................................... 12

II. The Federal Circuit’s decision has precipitated

immediate and nationwide harm to the country’s

most vulnerable workers............................................ 17

Conclusion ........................................................................... 21

(ii)

TABLE OF AUTHORITIES

Cases

Page(s)

BNSF Ry. Co. v. Loos,

139 S. Ct. 893 (2019) ........................................................ 17

Emery Worldwide Airlines, Inc. v. United States,

264 F.3d 1071 (Fed. Cir. 2001) ......................................... 8

Fire-Trol Holdings, LLC v. U.S. Forest Serv.,

209 F. App’x 625 (9th Cir. 2006) ...................................... 8

Fire-Trol Holdings, LLC v. United States,

62 Fed. Cl. 440 (Fed. Cl. 2004) ......................................... 9

N. Pipeline Const. Co. v. Marathon Pipe Line Co.,

458 U.S. 50 (1982) ............................................................ 11

Patchak v. Zinke,

138 S. Ct. 897 (2018) .................................................. 10–11

Southfork Systems, Inc. v. United States,

141 F.3d 1124 (Fed. Cir. 1998) ................................... 8, 10

Stern v. Marshall,

564 U.S. 462 (2011) .................................................... 10, 11

Constitution & Statutes

U.S. Const. art. III ............................................................. 10

15 U.S.C. § 644(g) ........................................................... 4, 19

15 U.S.C. § 657f(b)................................................................ 4

28 U.S.C. § 171 .................................................................... 10

28 U.S.C. § 1491(b)(1) .......................................................... 7

38 U.S.C. § 8127 .............................................................. 5, 13

41 U.S.C. § 8501 .................................................................. 20

41 U.S.C. § 8503(a) ............................................................... 1

41 U.S.C. § 8503(c) ............................................................... 1

41 U.S.C. § 8504 .................................................................... 2

41 U.S.C. § 8504(a) ............................................................... 1

Act of June 23, 1971, Pub. L. No. 92-28, 85 Stat. 77 ......... 2

(iii)

iv

Constitution & Statutes—Continued

Page(s)

Act of June 25, 1938, 52 Stat. 1196 ..................................... 2

Administrative Dispute Resolution Act of 1996,

Pub. L. No. 104-320, 110 Stat. 3870 ............................. 7–8

Veterans Benefits Act of 2003,

Pub. L. No. 108-183, 117 Stat. 2651 ............................. 3–4

Regulations

41 C.F.R. § 51-1.1(a)............................................................. 1

41 C.F.R. § 51-6.15 ............................................................... 2

48 C.F.R. §§ 801–873............................................................ 3

48 C.F.R. § 1.101................................................................... 3

48 C.F.R. § 1.103................................................................... 3

48 C.F.R. § 8.002............................................................. 3, 16

48 C.F.R. § 8.002(c) ........................................................ 6, 16

48 C.F.R. § 8.003............................................................. 3, 16

48 C.F.R. § 8.004............................................................. 3, 16

48 C.F.R. § 8.701................................................................... 1

48 C.F.R. § 8.704(b) ............................................................ 16

74 Fed. Reg. 64,619 (Dec. 8, 2009) ...................................... 5

84 Fed. Reg. 29,389 (June 24, 2019) ..................... 10, 14, 15

Other Authorities

2 Records of the Federal Convention of 1787

(M. Farrand ed. 1911) ..................................................... 11

152 Cong. Rec. H8995-02 (daily ed. Dec. 8, 2006) ............. 4

A2Z Supply Corp. & A2Z PromoZone,

No. B-415006 (U.S. GAO filed July 31, 2017) ............... 20

A2Z Supply Corp. & A2Z PromoZone,

No. B-415006.2 (U.S. GAO filed July 31, 2017) ............ 20

AbilityOne Commission, Fiscal Year 2017

Performance and Accountability Report,

https://bit.ly/2IBwqOs .............................................. 19–20

v

Other Authorities—Continued

Page(s)

Dep’t of Veterans Affairs, Applying the VA Rule

of Two (July 25, 2016), https://bit.ly/335y7eU .............. 13

Dep’t of Veterans Affairs, FY 2017 Small Business

Procurement Scorecard (Feb. 20, 2018),

https://bit.ly/2mp3v8o ..................................................... 19

Dep’t of Veterans Affairs, Memorandum: Class

Deviation (May 20, 2019), https://bit.ly/30Mb7Qn ...... 14

Dep’t of Veterans Affairs, VA Acquisition Update

No. 2008-03 (Aug. 29, 2017), https://bit.ly/2B2Ee7C ..... 5

Exec. Order No. 13,360 (2005) ............................................ 4

H.R. Rep. No. 109-592 (2006) .............................................. 5

Matthew W. Brault, U.S. Census Bureau, Americans

with Disabilities: 2010 (July 2012),

https://bit.ly/2FC5VEt .................................................... 18

McKinley Strother, Dozens of Disabled Workers

Face Layoffs After Alabama Flag Manufacturer’s

Federal Contract Ends (July 1, 2019, 4:40 PM),

https://bit.ly/2nUXYHf ................................................... 18

U.S. AbilityOne Program Website FAQs,

https://bit.ly/2nD4Hpt .................................................... 20

VA Press Release (Apr. 8, 2019),

https://bit.ly/2v1QnHd .................................................... 19

INTEREST OF AMICUS CURIAE 1

Congress enacted the Javits-Wagner-O’Day Act

(“JWOD”), 41 U.S.C. § 8501–06, “to increase employment

and training opportunities for persons who … have

[significant] disabilities.” 41 C.F.R. § 51-1.1(a). To achieve

that goal, JWOD created an independent federal agency,

the U.S. AbilityOne Commission, to “maintain and publish

in the Federal Register a [P]rocurement [L]ist” of goods

and services that can be provided by those with significant

disabilities. 41 U.S.C. § 8503(a). JWOD provides that any

“entity of the Federal Government intending to procure a

product or service on the procurement list … shall procure the product or service from a qualified nonprofit

agency for the blind or a qualified nonprofit agency for

other severely disabled” individuals in accordance with

regulations established by the Commission. Id. § 8504(a).

The AbilityOne Commission designated amicus curiae SourceAmerica as the nationwide central nonprofit

agency “to represent … nonprofit agencies serving people

with [significant] disabilities other than blindness.”

48 C.F.R. § 8.701; 41 U.S.C. § 8503(c). In this role,

SourceAmerica represents more than 400 nonprofits that

participate in the AbilityOne program, including large

national nonprofits, such as Goodwill Industries, and

smaller

local

nonprofits.

Federal

regulations

implementing JWOD grant SourceAmerica the authority

No counsel for a party authored this brief in whole or in part.

No one other than amicus curiae, its members, or amicus’s counsel

made a monetary contribution intended to fund the preparation or

submission of this brief. Letters from the parties consenting to the

filing of this brief have been filed with the Clerk of the Court.

Counsel of record for the petitioner and respondents received notice

at least ten days prior to the due date of amicus’s intention to file

this brief.

1

(1)

2

to address “[d]isputes between a nonprofit agency and a

contracting activity.” 41 C.F.R. § 51-6.15.

The decision below and consequent actions taken by

the Department of Veterans Affairs threaten the viability

of nonprofits represented by SourceAmerica, as well as

the livelihoods and independence of the vulnerable workers they support. Accordingly, SourceAmerica participated as amicus curiae in this case before the Federal

Circuit. SourceAmerica also has brought its own action

against the VA and the United States in the U.S. District

Court for the District of Colorado, raising similar legal

questions. See Bayaud Enters., Inc. v. U.S. Dep’t of Veterans Affairs, No. 17-cv-1903 (D. Colo.).

SourceAmerica respectfully offers this amicus brief

to focus on three issues relevant to certiorari: (1) the urgent need to clarify the jurisdictional framework that governs challenges to procurement regulations; (2) the chaos

caused by the decision below to the long-standing and cohesive statutory framework of government procurements, and (3) the nationwide harms precipitated by the

Federal Circuit’s misapplication of JWOD.

INTRODUCTION AND STATUTORY FRAMEWORK

In 1938, Congress passed the Wagner-O’Day Act to

leverage the federal procurement system to create jobs

for the blind. Act of June 25, 1938, ch. 697, 52 Stat. 1196.

Senator Javits broadened the Act in 1971 to cover people

with other significant disabilities. Act of June 23, 1971,

Pub. L. No. 92-28, 85 Stat. 77. In its current form, JWOD

requires federal agencies and contractors to procure specified products (such as interment flags) and services (such

as cafeteria maintenance or mailroom services) listed on

an official “Procurement List” from designated nonprofit

agencies that employ the blind and significantly disabled.

41 U.S.C. § 8504 (excepting only supplies available from

3

Federal Prison Industries).2 The U.S. AbilityOne Program employs more than 45,000 people who are blind or

significantly disabled, including more than 3,000 veterans.

The Federal Acquisition Regulation (“FAR”),

48 C.F.R. ch. 1, is the principal set of rules that govern

procurements by U.S. agencies. 48 C.F.R. § 1.101 (purpose of FAR is to create “uniform policies and procedures

for acquisition”).3 The FAR divides all supplies and services procured by the federal government into two categories: mandatory sources and non-mandatory sources.

Compare 48 C.F.R. §§ 8.002, 8.003 (mandatory sources,

including “inventories of the requiring agency”) with

48 C.F.R. § 8.004 (non-mandatory sources, including competitive “set-aside” categories like veteran-owned small

businesses). The FAR identifies the AbilityOne Program

as a mandatory source that agencies must utilize before

considering competitive (non-mandatory) sources. All

small business preference programs—such as disadvantaged small businesses, women-owned small businesses,

historically underutilized small businesses, and veteranowned small businesses—are within the non-mandatory,

competitive framework.

Within the context of this existing procurement system, Congress amended the Small Business Act in 2003 to

give government contracting officers discretion to prioritize service-disabled veteran-owned small businesses

(SDVOSBs) over other small business concerns when deciding competitive procurements. Veterans Benefits Act

The current Procurement List is available at https://www.abilityone.gov/procurement_list/.

2

The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration jointly

issue the FAR. 48 C.F.R. § 1.103. Other agencies may issue supplemental regulations. For example, the VA issues the Veterans Affairs Acquisition Regulation (“VAAR”), codified at 48 C.F.R.

§§ 801–873.

3

4

of 2003, Pub. L. No. 108-183, § 308, 117 Stat. 2651.

SDVOSBs are for-profit business that are owned by, but

are not required to employ, veterans. The 2003 Act states

that contracting officers “may award contracts on the basis of competition restricted to small business concerns

owned and controlled by service-disabled veterans,” provided “the contracting officer has a reasonable expectation that not less than 2 small business concerns owned

and controlled by service-disabled veterans will submit offers and that the award can be made at a fair market

price.” 15 U.S.C. § 657f(b). This benchmark is known as

the “Rule of Two.” For its part, the VA’s goal was to award

at least 3% of annual procurements to SDVOSBs.

15 U.S.C. § 644(g)(1)(A)(ii); see also Exec. Order No.

13,360, 3 C.F.R. § 13360 (2005).

Following the 2003 amendment, however, the VA

failed to meet its goal through discretionary, restricted

competition. Legislators did not hide their disappointment: “There would be a reasonable expectation, Mr.

Speaker, that [ ] of [all] the Federal Government’s agencies [ ] the Department of Veterans Affairs would be a

leader in achieving the President’s goal for annual procurement from at least 3 percent of the disabled veteranowned businesses. Sadly, our most recent data from fiscal

year 2005 indicates that the VA did barely over half of

what the President directed and the public law required.”

152 Cong. Rec. H8995-02, H9014 (daily ed. Dec. 8, 2006)

(statement of Rep. Buyer).

In response to this shortcoming, Congress passed the

Veterans Benefits, Health Care, and Information Technology Act of 2006 (“VBA”) to “improve[] the status of veteran and disabled veteran small businesses when competing for contracts at the Department of Veterans Affairs.”

Id. (emphasis added). In contrast to the 2003 Act’s provision for discretionary use of restricted competition, the

VBA provided that VA contracting officers “shall award

5

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.” 38 U.S.C.

§ 8127(d) (emphasis added).

The VBA’s Rule of Two was designed to “establish

priority of veteran and service-disabled veteran small

businesses relative to other set-aside groups” (such as disadvantaged small businesses and women-owned small

businesses), and to ensure “that any veteran or servicedisabled veteran-owned small business that also qualifies

under another category be given priority within that category in VA procurement.” H.R. Rep. No. 109-592, at 17

(2006). In other words, the new Rule of Two promoted veteran-owned small businesses (VOSBs) to the top of the

non-mandatory source list when the VA engaged in restricted competition on the open market.

Notably, the VBA did not address (much less change)

how the VA makes procurement decisions with respect to

mandatory sources under JWOD. Rather, the VBA applied only to priorities among competitive procurements

from other sources like VOSBs and SDVOSBs. Thus, for

over a decade following the VBA’s passage in 2006, the VA

recognized that the VBA’s Rule of Two did not affect the

AbilityOne Procurement List process. VA Acquisition

Regulation: Supporting Veteran-Owned and ServiceDisabled Veteran-Owned Small Businesses, 74 Fed. Reg.

64,619, 64,622 (Dec. 8, 2009); Dep’t of Veterans Affairs, VA

Acquisition Update No. 2008-03 at 69–71 (Aug. 29, 2017),

https://bit.ly/2B2Ee7C.

6

SUMMARY OF ARGUMENT

The decision below upended this cohesive and longstanding procurement practice in two respects.

I.A. First, the Federal Circuit expanded the limited

jurisdiction of the Court of Federal Claims—an Article I

tribunal—to encompass respondent PDS Consultants’

challenge to the validity of VA regulations implementing

JWOD and the VBA. Such claims have historically and

properly been brought in Article III courts pursuant to

the Administrative Procedure Act. The Federal Circuit’s

ruling has injected uncertainty into the jurisdictional balance between the Tucker Act and the APA, with the

United States now using the decision below to argue that

federal district courts across the country lack jurisdiction

over APA claims involving new procurement regulations,

even when no specific procurement is at issue.

I.B. Second, after the decision below, the VA expanded the Federal Circuit’s erroneous merits ruling to

cover all VA procurements, rather than simply the goods

and regions challenged by PDS. In doing so, the VA’s new

policy haphazardly rearranges the order in which the VA

considers mandatory and non-mandatory sources—an approach that has no basis in the statutory text or the decision below. Compounding the oddity of the VA’s new approach, if a VOSB needs any item on the Procurement

List in order to perform a contract, the VOSB itself must

purchase the item from the Procurement List-designated

nonprofit agency, resulting in wasteful circular

purchasing. 48 C.F.R. § 8.002(c). The VA’s strained attempts to implement the decision below are a direct result

of the analytical errors made by the Federal Circuit.

II. The VA has already notified numerous AbilityOne

nonprofits that the VA will award work currently covered

by the AbilityOne Procurement List to SDVOSBs based

on the decision below. Scores of nonprofit agencies and

their disabled employees will suffer severe, imminent

7

harm from that errant ruling. Several nonprofits face the

devastating prospect of shuttering their doors, leaving

unemployed the significantly disabled workers that they

supported for decades. Many of the affected nonprofits

also will have to reduce or discontinue community support

services for the significantly disabled, including career

counseling and ADA compliance advocacy. And many disabled workers will have no choice but to rely on public assistance, contrary to Congress’s purpose in enacting

JWOD.

The Court should grant certiorari on these important

issues that affect our nation’s most vulnerable workers.

ARGUMENT

I.

The Court’s intervention is needed to address two

critical issues relating to government procurements.

A.

The Tucker Act does not give the Court of

Federal Claims jurisdiction to review the validity

of agency regulations.

This Court should grant certiorari to clarify whether

the Tucker Act’s grant of jurisdiction over bid protests extends to respondent’s challenge regarding the validity of

agency regulations. Although the United States initially

contested jurisdiction in the Court of Federal Claims, the

United States is now using the decision below to resist judicial review of the VA’s subsequent rule changes in federal district courts across the country. This Court’s intervention is warranted to resolve this important jurisdictional question.

The Tucker Act gives the Court of Federal Claims jurisdiction over, inter alia, an “alleged violation of statute

or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). With the enactment of the Administrative Dispute Resolution Act of

1996, Congress removed concurrent jurisdiction over

such actions from the federal district courts, beginning on

8

January 1, 2001. Pub. L. No. 104-320, § 12(d), 110 Stat.

3870, 3875 (1996).

Thereafter, courts followed a clear jurisdictional delineation between two types of actions with respect to government procurement disputes. First, a party objecting to

the validity of an agency’s rules or regulations relating to

procurements could seek relief under the Administrative

Procedure Act in an Article III court. See Fire-Trol Holdings, LLC v. U.S. Forest Serv., 209 F. App’x 625, 627

(9th Cir. 2006). Alternatively, when a party objected to

the proper application of those regulations—that is,

whether the agency followed its own rules in soliciting or

awarding a government contract—the action fell under

the Tucker Act and was pursued in the Court of Federal

Claims. See Emery Worldwide Airlines, Inc. v. United

States, 264 F.3d 1071, 1080 (Fed. Cir. 2001).

The Federal Circuit recognized this distinction in

Southfork Systems, Inc. v. United States, 141 F.3d 1124

(Fed. Cir. 1998). In Southfork, the protester claimed that,

by complying with binding regulations and negotiating

with the Texas Commission for the Blind for cafeteria

services, the Air Force acted contrary to statute. Id. at

1130. Affirming the dismissal of these claims, the Federal

Circuit agreed with the Court of Federal Claims’ assessment that, “[i]f these regulations extend the statute beyond the manifest intention of Congress, as [the protester] contends, then [the protester’s] recourse lies in a

suit against the Secretary, for it is the Secretary’s regulations that are the source of [the protester’s] injury, not the

actions of the contracting agency.” Id. at 1133. The Federal Circuit held, “If a bidder wishes to challenge the

validity of a regulation governing a procurement, the

proper method of doing so is to bring an action in federal

district court under the Administrative Procedure Act,

5 U.S.C. § 702.” Id. at 1135.

9

That same logic should have compelled the Federal

Circuit to dismiss this case for lack of jurisdiction. Respondent PDS’s lawsuit did not claim that the contracting

officer failed to follow governing provisions of the

AbilityOne Commission regulations, the FAR, or the

VAAR. Rather, respondent complained that the VA did

and would follow the governing regulations, which

required the contracting officer to prioritize the JWOD

Procurement List over the VBA Rule of Two. PDS thus

challenged the regulations themselves, arguing that the

regulations improperly implemented the VBA and

JWOD. See Pet. 14.

The Court of Federal Claims and the Federal Circuit

nevertheless found jurisdiction under the Tucker Act

(over the United States’ objection4), reasoning that “rather than challenge the validity of the VAAR and

AbilityOne programs … [PDS] alleged a statutory

violation—namely, that the VA acted in violation of the

VBA by awarding contracts without first conducting the

Rule of Two Analysis.” Pet. App. 18a–19a.5 But PDS was

See Pet. App. 44a–45a. The United States has consistently argued

that the Court of Federal Claims lacks jurisdiction over rulemaking

disputes. See, e.g., Fire-Trol Holdings, LLC v. United States,

62 Fed. Cl. 440, 443 (Fed. Cl. 2004) (“the Government argues that

this Court lacks jurisdiction over plaintiff’s claim relating to defendant’s alleged failure to comply with the APA because the Court lacks

jurisdiction to entertain suits challenging the validity of agency

rules under the APA”).

4

Although reaching the same result, the courts below applied different rationales. The Court of Federal Claims reasoned that because respondent was “seeking to prevent the VA from awarding

future contracts … without first performing a Rule of Two analysis,” the suit was “in connection with a procurement or a proposed

procurement.” Pet. App. 45a (emphasis added). The Federal Circuit,

by contrast, reasoned that respondent was challenging existing contracts previously awarded to petitioner, and that these contracts

were the “procurements” at issue. Id. at 19a. The fact that neither

5

10

transparent in its attack on the governing VA regulations.

See, e.g., Pet. App. 100a (Compl. ¶ 37) (challenging VA policy “in all VA contracting determinations”). The VA saw

things the same way. Following the decision below, the

VA has maintained that the judgment of the Court of Federal Claims and affirmance by the Federal Circuit compelled the VA to amend its regulations. See Issuance of

Class Deviation From VA Acquisition Regulation (VAAR)

Part 808—Required Sources of Supplies and Services and

Conforming Amendments, 84 Fed. Reg. 29,389, 29,390

(June 24, 2019) (“binding” ruling “necessitated immediate

policy change”). The upshot is, by allowing this case to

proceed, the Federal Circuit has effectively expanded the

Tucker Act’s carefully circumscribed bid-protest jurisdiction to cover a de facto APA challenge.

This approach upends the careful division between

Article I tribunals and Article III courts set by Southfork.

It also draws into question the Court of Federal Claims’

constitutional authority, as an Article I tribunal, 28 U.S.C.

§ 171, to declare invalid a regulation promulgated and enforced by the Executive Branch, based on that court’s construction of two statutes enacted by Congress. That authority is even more suspect when it is exercised not in

parallel, but to the exclusion, of Article III courts, which

alone wield the “judicial Power of the United States” to

decide “all Cases, in Law and Equity, arising under this

Constitution, the Laws of the United States, and Treaties.” U.S. Const. art. 3, §§ 1, 2; see Stern v. Marshall, 564

U.S. 462, 483–84 (2011). The legislative branch has the

power “‘to prescribe general rules for the government of

society,’ but ‘the application of those rules to individuals

in society’ is the ‘duty’ of the judiciary.” Patchak v. Zinke,

court could agree on what procurement is actually in dispute here

illustrates the sweeping and nebulous construction of Tucker Act

jurisdiction under the decisions below.

11

138 S. Ct. 897, 915 (2018) (Roberts, C.J., dissenting) (quoting Fletcher v. Peck, 6 Cranch 87, 136 (1810)). To permit

Article I jurisdiction under these circumstances would

flout the maxim “that the power of making ought to be

kept distinct from that of expounding, the laws.” 2 Records of the Federal Convention of 1787, p. 75 (M. Farrand

ed. 1911).

The “public rights” doctrine, see N. Pipeline Const.

Co. v. Marathon Pipe Line Co., 458 U.S. 50, 68 (1982) (plurality op.), does not resolve the constitutional concern.

“The public-rights doctrine is grounded in a historically

recognized distinction between,” on the one hand, “matters that could be conclusively determined by the Executive and Legislative Branches,” and, on the other hand,

“matters that are ‘inherently … judicial.’” Id. (quoting

Ex parte Bakelite Corp., 279 U.S. 438, 458 (1929)). The political branches may have the power to police themselves

to ensure compliance with their own rules and regulations, and the Tucker Act situates some of those disputes

in the Court of Federal Claims. But that is not this case.

Rather, the Court of Federal Claims here declared what

the law is, overturning the VA’s lawfully promulgated interpretation. This is the apex of an “inherently judicial”

act. Id. An Article I judge, vested and appointed by an Article I body, resolved the legal meaning of two Article I

statutes to effectively strike the Executive Branch’s interpretation and implementation of those same statutes.

Given the separation-of-powers risks posed by such action, the Court has cautioned “that even with respect to

matters that arguably fall within the scope of the ‘public

rights’ doctrine, the presumption is in favor of Art[icle]

III courts.” N. Pipeline, 458 U.S. at 69 n.23.6

Appellate review by an Article III court does not alone cure the

constitutional defect. Stern, 564 U.S. at 487, 500–01.

6

12

Unsurprisingly, the Federal Circuit’s ruling has already injected uncertainty into the jurisdictional balance

between the Tucker Act and the APA. The United States

has used the decisions below to argue that federal district

courts lack jurisdiction over APA claims involving new

procurement regulations, even when no specific procurement is at issue, because such claims could now be

brought in the Court of Federal Claims according to the

holdings below. See VA’s Opp’n to Mot. for Prelim. Inj. at

11–14, Nat’l Indus. for the Blind v. Dep’t of Veterans Affairs, No. 17-cv-992 (D.D.C. Aug. 22, 2017), ECF 30; VA’s

Mot. to Dismiss and Opp’n to Mot. for Prelim. Inj. at 11–

20, Bayaud Enters., Inc. v. U.S. Dep’t of Veterans Affairs,

No. 17-cv-1903 (D. Colo. Aug. 2, 2019), ECF 58.

By precipitously changing positions, the United

States is using the Federal Circuit’s erroneous jurisdictional ruling to strip the district courts of the critical role

they play in regulatory challenges. This Court should

grant certiorari to resolve this uncertainty over the scope

of Tucker Act jurisdiction.7

B. The decision below misinterprets the interplay

between JWOD and the VBA’s Rule of Two,

which now extends to all VA procurements.

This Court also should grant certiorari to address the

merits of the decision below. The petition forcefully describes why the Federal Circuit erred in holding that the

VBA’s Rule of Two takes priority over the VA’s obligation

to purchase goods and services on the Procurement List

from designated mandatory sources. See Pet. 22–34.

If the Federal Circuit’s jurisdictional holding is left undisturbed

and APA-type challenges relating to VA procurements are within

the exclusive jurisdiction of the Court of Federal Claims under the

Tucker Act, then a circuit split over the second question presented

is unlikely to arise. Under such circumstances, the Court should

grant certiorari since further percolation of the issue will not aid

this Court’s review.

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13

The immediate need for this Court’s plenary review is reinforced by the fact that, after the decision below, the VA

inexplicably expanded the Federal Circuit’s erroneous

holding to cover all VA procurements.

Prior to May 2019, the VA followed a cogent and

straightforward decision tree when purchasing goods or

services, reflecting the mandatory versus non-mandatory

source distinction that defines the traditional procurement process:

See Dep’t of Veterans Affairs, Applying the VA Rule of

Two (July 25, 2016), https://bit.ly/335y7eU. Consistent

with the text and history of the VBA, the VA recognized

that if mandatory sources were available, the VA had to

“proceed” with the procurement, and “38 U.S.C. 8127 [i.e.,

the VBA Rule of Two] does not apply.” Id. Only if all mandatory sources were unavailable to satisfy the VA’s needs

would the VA then apply the Rule of Two for competitive

procurements from nonmandatory sources. Id. The VA

acknowledged that the VBA implicated only the right side

14

of the decision tree—how the VA is required to conduct

competitive procurements. The VBA did not affect the

mandatory-source side of the decision tree.

The decision below upended that reasonable interpretation. When the Federal Circuit issued its mandate

on May 20, 2019, the VA simultaneously issued a Class

Deviation that “revise[d] VAAR 808.002 … to reflect language consistent with the Federal Circuit’s decision in

PDS Consultants, Inc., that the Veterans First Contracting Program takes precedence over AbilityOne and Federal Prison Industries.”8 But rather than limiting the deviation to the individual commodities at issue in PDS, the

VA took the radical step of changing its practices for all

future procurements, requiring contracting officers “to

apply the VA Rule of Two … prior to considering an

award to an AbilityOne non-profit organization.” Id. The

“new policy” went into effect immediately. Id.9

A month later, on June 24, 2019, the VA reacted to

criticism that the Class Deviation violated the APA’s requirement for notice and comment prior to rulemaking,

and published notice in the Federal Register of its intent

to “make conforming amendments to the CFR” to reflect

the Class Deviation and to “immediately implement the

Federal Circuit’s mandate.” 84 Fed. Reg. 29,389, 29,389

(June 24, 2019). The Federal Register notice states that

the decision below created “a binding circuit precedent

which necessitated immediate policy change,” and that

“the Federal Circuit’s mandate required that the agency’s

Dep’t of Veterans Affairs, Memorandum: Class Deviation (May

20, 2019), https://bit.ly/30Mb7Qn.

8

Because the proceedings below involved only eyeglass procurements covering two regional areas, the Federal Circuit’s mandate

required the VA only to issue two individual deviations, one for

each procurement at issue. Instead, the VA arbitrarily chose to implement an unnecessarily broad measure, issuing a class deviation

and then an amended rule.

9

15

acquisition workforce immediately comply with the binding precedent.” Id. at 29,390.

The proposed Amended Rule does much more than

implement the Federal Circuit’s mandate, however. The

Amended Rule haphazardly rearranges the order in

which the VA considers various mandatory and non-mandatory sources. The VA’s decision tree now looks like this:

See 84 Fed. Reg. 29,389, 29,390.

The VA’s new practice mixes and matches mandatory

and competitive sources in a manner that has no basis in

the statutory text. Notably, the VA has elected to arbitrarily apply the Rule of Two before some, but not all,

mandatory sources. The VA’s position appears to be in response to criticisms leveled by amicus curiae that it

would have been absurd for Congress to require competitive bidding under the Rule of Two for a commodity that

is already available in excess supply within the VA or at

another government agency. See, e.g., Br. of Amicus Curiae SourceAmerica in Supp. of Pet. for Reh’g at 11, PDS

Consultants, Inc. v. United States, No. 17-2379 (Fed. Cir.

Mar. 20, 2019), ECF No. 148. The VA’s new policy, while

mitigating one absurd result, is neither grounded in the

16

statutory text nor faithful to the decision below. Nowhere

does the VBA state that the Rule of Two shall take priority over some mandatory sources, such as Federal Prison

Industries and the Procurement List, but not over other

mandatory sources, such as excess from other agencies.

Nor does the new policy explain how other mandatory

sources will be treated, including public utilities, specified

strategic and critical item sources, and acquisition from

specified helium suppliers. See 48 C.F.R. §§ 8.002, 8.003.

The decision below casts a cloud over all these programs,

as well.10

The decision below leads to other irrational results.

Any procurement by a VOSB of an item on the

Procurement List would require wasteful circular

purchasing, as the VOSB itself would have to purchase the

item from the Procurement List-designated nonprofit

agency. See 48 C.F.R. § 8.002(c) (“The statutory

obligation for Government agencies to satisfy their

requirements for supplies or services available from the

Committee for Purchase From People Who Are Blind or

Severely Disabled also applies when contractors purchase

the supplies or services for Government use.”). In prioritizing veteran-owned businesses for competitive VA contracts, Congress could not have intended that nonsensical

result.11

The VA’s revised policy also violates 48 C.F.R. §§ 8.002, 8.003,

8.004, and 8.704(b). These provisions require the VA to first consider

whether it can meet its needs using any of the specified mandatory

sources, and only if the agency cannot use a mandatory source, to

consider competitive procurements sources. Id. At that point, the

VBA applies, and the VA must prioritize awards to VOSBs and

SDVOSBs above all other small business concerns.

10

In its textual analysis, the Federal Circuit found relevant that

the 2003 Act expressly excepted procurements under JWOD,

whereas the 2006 VBA did not contain similar language. Pet. App.

25a. The omission of clarifying statutory language does not change

11

17

The Court should grant certiorari now to resolve the

proper meaning of the VBA and restore the historical

framework of government procurements.

II. The Federal Circuit’s decision has precipitated

immediate and nationwide harm to the country’s most

vulnerable workers.

The fallout from the decision below is already materializing across the country. At least five AbilityOne nonprofit agencies that SourceAmerica represents have

received notice that the VA, after conducting a Rule of

Two market analysis, has identified at least two eligible

SDVOSBs capable of performing the contracts that these

nonprofits currently perform. Accordingly, those nonprofits will not be eligible to receive future work relating

to those goods or services under the AbilityOne program.

Numerous other nonprofit agencies expect similar notices

in the near future.

For example, the VA will award all contracts currently managed by Project HIRED, a California-based

nonprofit, to a veteran-owned business in March 2020.

Project HIRED depends on its Procurement List

contracts for 90% of its revenue. Without these contracts,

it cannot continue to employ 35 people, over 75% of whom

are significantly disabled. It will also cease to offer free

services in San Jose to approximately 200 significantly

disabled persons annually, including job search

consulting, one-on-one career counseling and plan

support, job skills workshops, ADA training, requesting

accommodations, job leads, introductions to employers,

and other disability-specific guidance. Eventually, Project

HIRED will close its doors altogether.

the overall procurement framework, especially in light of other textual indicia, a longstanding regulatory backdrop, and contemporary

agency guidance. BNSF Ry. Co. v. Loos, 139 S. Ct. 893, 901 (2019).

18

Other nonprofits that provide interment (burial) flags

to the VA, such as Phoenix in Huntsville, Alabama, have

already lost contracts to VOSBs. See McKinley Strother,

Dozens of Disabled Workers Face Layoffs After Alabama

Flag Manufacturer’s Federal Contract Ends, WCTV.com

(July 1, 2019, 4:40 PM), https://bit.ly/2nUXYHf (explaining that the decision below “ends a 25-year flag contract

for a Huntsville-based company”). Phoenix employs 791

people through its AbilityOne contracts, including 75 veterans. Nearly two dozen employees worked on interment

flags alone. Id.

These are just two examples of organizations across

the country that are already hurting as a result of the decision below. Several additional AbilityOne nonprofits

have received notice of the VA’s intent to conduct a Rule

of Two analysis. Due to the type of goods and services

provided under these contracts, such as mail delivery,

lawn mowing, and maintenance services, SourceAmerica

expects that the VA will have no trouble identifying

eligible VOSBs to take over these contracts from

AbilityOne nonprofits.

The repercussions are hard to overstate. Unless corrected, the decision below, which the VA expanded to

cover all procurements, threatens the livelihood and independence of thousands of significantly disabled workers

who rely on contracts under the AbilityOne program. The

U.S. Census Bureau reports that more than 38 million

people in the United States have a significant disability,

including more than 2 million who are blind or unable to

see, more than 1 million with severe hearing loss, and

more than 9.4 million non-institutionalized adults needing

assistance with at least one central activity of daily living

(e.g., bathing, dressing, or eating). Matthew W. Brault,

U.S. Census Bureau, Americans with Disabilities: 2010

at Tables 1, A-1 (July 2012), https://bit.ly/2FC5VEt.

19

As petitioner notes, Pet. 36, the effects are not limited

to cancelled government contracts. SourceAmerica and

the nonprofits it represents provide much-needed

employment and support services to significantly disabled

individuals in their communities. For many nonprofits,

like Project HIRED and Goodwill Industries of North

Louisiana, Procurement List contracts are the lifeblood of

the organization, which allow the nonprofits to provide

other additional vital services. AbilityOne nonprofits also

make staffing, budgeting, and hiring decisions in reliance

on the Procurement List contracts. Without these

contracts, agencies will inevitably cut back, lay off

employees, or in the case of nonprofits like Project

HIRED, close their doors permanently.

The disruption to these programs and to government

procurement priorities is not worth the candle. The U.S.

AbilityOne Program, while critically important to the disabled citizens it serves, is relatively modest in scope, comprising less than 1% of federal contracting dollars. By

contrast, the United States sets aside 23% of its

contracting dollars for small businesses, which includes

5% for women-owned businesses, 5% for small

disadvantaged businesses, and 3% for veteran-owned

small businesses. 15 U.S.C. § 644(g). Notably, in addition

to the 3% of government spending guaranteed to VOSBs,

those VOSBs also may compete for procurements set

aside for other small businesses. In 2017—prior to the decision below—the VA awarded 19.7% of the value of its

contracts to SDVOSBs, far exceeding the VA’s 3% annual

target.12

Dep’t of Veterans Affairs, FY 2017 Small Business Procurement

Scorecard (Feb. 20, 2018), https://bit.ly/2mp3v8o. The VA procures

over $26 billion in goods and services each year. In fiscal year 2017,

the VA awarded over $10 billion to VOSBs and SDVOSBs. VA Press

Release (Apr. 8, 2019), https://bit.ly/2v1QnHd. By contrast, the entire AbilityOne Program across all federal agencies provided

12

20

Nothing in the VBA’s text or history indicates Congress’s intent to transfer jobs from significantly disabled

persons to for-profit business that are owned by, but are

not required to employ, veterans. By contrast, Congress

had compelling reasons to maintain the viability of the

AbilityOne program. JWOD provides employment opportunities to tens of thousands of significantly disabled persons and over 3,000 significantly disabled veterans.

By statutory definition, these individuals suffer from a

disability so severe that it prevents them “from currently

engaging in normal competitive employment.” 41 U.S.C.

§ 8501. Thus, when AbilityOne loses these jobs, the significantly disabled individuals employed to do the work likely

will have no alternative besides public assistance. U.S.

AbilityOne

Program

Website

FAQs,

https://bit.ly/2nD4Hpt (“[C]ontracting with the AbilityOne Program allows people who are blind or have other

significant disabilities an opportunity to gain meaningful

employment, lead more independent lives, reduce dependence on government social programs and become

taxpayers.”). The AbilityOne program is a critical safety

net for the nation’s most underemployed workforce, a program that simultaneously serves the public’s interest by

reducing dependence on social programs. The VBA’s Rule

of Two is a service incentive for military members.

Both serve important purposes, but they are not fungible.

Finally, the decision below has ensnared

SourceAmerica and its nonprofits in a steady stream of

bid-protest and APA litigation, diverting scarce resources

away from service of the significantly disabled. See, e.g.,

A2Z Supply Corp. & A2Z PromoZone, Nos. B-415006 &

B-415006.2 (U.S. GAO filed July 31, 2017) (veteran-owned

$3.3 billion worth of products and services to the federal government in fiscal year 2016. AbilityOne Commission, Fiscal Year 2017

Performance and Accountability Report, https://bit.ly/2IBwqOs.

21

business protesting option awards and contract award to

various nonprofits that produce interment flags). This

case presents a clean, efficient, and timely vehicle to resolve two critically important aspects of the government

procurement system; deciding these issues now would

curtail wasteful and inevitable litigation.

CONCLUSION

The Court should grant the petition for a writ of certiorari.

Respectfully submitted,

ROBERT REEVES ANDERSON

Counsel of Record

ARNOLD & PORTER

KAYE SCHOLER LLP

370 Seventeenth St., Ste. 4400

Denver, CO 80202

(303) 863-1000

Reeves.Anderson@arnoldporter.com

CRAIG A. HOLMAN

ARNOLD & PORTER

KAYE SCHOLER LLP

601 Massachusetts Ave., NW

Washington, DC 20001

(202) 942-5000

OCTOBER 11, 2019