SBA to Interpret Supreme Court Contractor Ruling for Small Business

This month’s Supreme Court decision requiring the Veterans Affairs Department to expand set-asides for veteran-owned small businesses could affect broader procurement regulations across government, a Small Business Administration official said on Tuesday.

John Shoraka, associate administrator of SBA’s Office of Government Contracting and Business Development, told Government Executive at a contractors networking event that “the path forward is that we have to interpret how the decision impacts the Small Business Act.”

The court’s June 16 decision in Kingdomware Technologies Inc. v. the United States determined that the so-called “rule of two” requirement that the VA consider at least two bidding contractor firms (and apply a set-aside to the one that qualifies) must apply to supply orders as well as contracts.

“There was a perception that a [pre-existing schedule] order was not a contract, so the rule didn’t apply,” Shoraka told the audience. “But the Supreme Court says it is a contract, so now we know,” and the department must pick the veteran-owned small business assuming it offers a reasonable price.

Shoraka testified at a June 23 hearing on the Kindomware ruling at the Senate Small Business and Entrepreneurship Committee, noting that the high court was silent on whether that interpretation of the rule of two applies to set-asides at other agencies. “We are carefully reviewing the potential impact of the Kingdomware case, both in terms of small business goaling and the operation of the Small Business Act,” he told lawmakers. “SBA will be conferring with the Department of Justice, the [Small Business Procurement Advisory Council], the General Services Administration (as managers of the Federal Supply Schedules), the Federal Acquisition Regulatory Council, and others to discuss if any changes to regulations are needed.”

As the morning keynote speaker at the American Express OPEN “Summit for Success” in Washington, Shoraka—a former small business owner—commiserated with aspiring contractors who are “frustrated by the federal procurement process,” which he likened to a maze.

The “pipeline can be 18 months long,” he said, while the rulemaking process because of public commenting “can go on for three years.” But Shoraka encouraged the entrepreneurs to “take advantage of all the SBA’s free resources,” such as its procurement center representatives. “We can stop an acquisition in its tracks if the agency didn’t do its market research” on firms eligible for set-asides before awarding a contract, he said. He also touted a mentor-protégé program for which “Congress just gave us authority to expand” from the 8A set-aside program for disadvantaged businesses to encourage such partnerships among contractors in all government business.

Shoraka celebrated agencies’ meeting and exceeding their mandatory small business contracting goals, noting that SBA in fiscal 2016 for the first time will include international contracting in the agency goal measure.

He touted his office’s efforts to address the “horror stories” that make contracting tough to break into. In the program to boost contracts to women-owned firms, he said, “We’ve cut the number of requirements from 54 to 27,” and in some cases trimmed the agency response time from nine months to 10 days. “All the processes are automated and updated.”

Shoraka said he has a “great relationship” with the small business committees on Capitol Hill, adding that both the Obama administration and Congress understand that small business is important enough “to be on the front burner because it affects local economies.”

But his office doesn’t simply go to agencies and talk local economic development because “each agency has its mission,” he said. That means, when he goes, for example, to the Defense Department, he talks about how small business “affects the industrial base, what they will buy and their competition” over the coming five or 10 years.