Action Required

8. Action Required: To implement changes required as a result of the U.S. Supreme Court decision in Kingdomware, concerning the Veterans First Contracting Program and proper implementation of 38 U.S.C. § 8127 and § 8128. Effective immediately, contracting officers and members of the acquisition workforce shall comply with the following policy and procedures:

a. Review of Existing HCA policy or guidance. Additionally, effective with the issuance of this PPM, Head of the Contracting Activities (HCA) shall review all HCA level or lower policy, procedures, or guidance to ensure compliance with this PPM and the Class Deviation with the same subject.

b. General Information and Guidance.

1) Veterans First Contracting Program and the VA Rule of Two. In developing the acquisition strategy for any contract, the contracting officer shall take into consideration the impact of the VA Rule of Two and the best method of successfully implementing that requirement. Contracting officers must first research the VIP database to determine the availability of eligible sources in a specific NAICS code, then consider the VAAR, other internal agency policy, and the guidance in this PPM and the Decision Tree tool (see Attachment 2). The Decision Tree tool and this PPM seek to aid contracting officers in evaluating alternatives, determining the most effective acquisition strategy to employ, and documenting that decision. VA has a wide range of effective acquisition vehicles and methodologies to employ while also providing opportunities to verified SDVOSBs and VOSBs. Market research is a critical input for making these decisions. The contracting officer shall evaluate alternatives, comprehensively document them in an acquisition plan as required by FAR part 7 and VAAR part 807 or internal agency guidance, and determine the most effective acquisition strategy.

2) VA strategic sourcing program and consideration of VA existing contracts before other sources. The Veterans First Contracting Program is an important socioeconomic program that will help VA support our nation’s veterans. Along with the mandate to consider SDVOSBs and VOSBs, VA, through previous acquisition reform initiatives, has implemented key strategic sourcing vehicles principally in the medical supplies, Federal Supply Classification (FSC) 65 & 66 area. Contracting officers shall consider all strategic sourcing vehicles and document in the market research report that these vehicles were examined when performing market research. Contracting officers shall consider existing VA contracts and apply the VA Rule of Two requirements set forth in VAAR subparts 819.7005 and 819.7006, as well as the requirements set forth in VAAR 808.004-70, Use of Non-Mandatory Sources by VA and VAAR 808.404-70, Use of Federal Supply Schedules—the Veterans First Contracting Program.

4) Market Research/Acquisition Planning. Market research and acquisition planning are critical functions in promoting the award of contracts to SDVOSBs and VOSBs. FAR part 7, Acquisition Planning, and FAR part 10, Market Research, as supplemented by the VAAR, provide contracting officers guidance on how to appropriately apply the VA Rule of Two.  FAR part 10 requires agencies to conduct market research. Market research is a collaborative responsibility. The contracting officer is ultimately responsible for ensuring the market research will assist in supporting his or her decision whether there is a reasonable expectation of receiving two or more offers to justify a setaside decision. OSDBU reviews market research as part of its Small Business Procurement Review Process, and may be able to provide insights into the results of market research from previous acquisitions, as well as the results of OSDBU outreach efforts. VA contracting officers and program offices should use the following procedures during acquisition planning and consider SDVOSBs and VOSBs, in the contracting order of priority set forth in VAAR 819.203-70, Priority for SDVOSB/VOSB Contracting Preferences, for each procurement requirement:

a) Market Research Roles and Responsibilities

(i) Program Offices. Program offices should conduct initial market research as part of their effort to develop an identified need into a specific contracting requirement. Program offices are encouraged to use the VIP database to conduct market research to identify verified and capable SDVOSBs and VOSBs. Before a specific requirement is defined, program offices are encouraged to engage with industry. Attendance at small business conferences and outreach events, meetings with small business vendors, engagement with professional and trade associations, and similar activities can lead to a more fully developed acquisition package. Program offices shall also supply information about an anticipated need to VA’s Forecast of Contracting Opportunities, and provide contact information to enable vendors to meet with program office personnel.

(ii) OSDBU. OSDBU has a statutory mandate to make recommendations to the contracting officer whether an action should be set-aside, and this decision is documented using VA Form 2268, Small Business Program and Contract Bundling Review. This review process is more effective when conducted collaboratively and early, both as the program office develops its acquisition package and as the contracting officer conducts the acquisition. As part of its VA Form 2268 reviews, OSDBU examines market research developed as part of other acquisitions from other offices. OSDBU seeks to make this information available to the extent possible, to avoid duplication of efforts among multiple offices pursuing similar requirements.

(iii) Contracting Officer. The contracting officer shall coordinate market research conducted on a specific acquisition package with the program office. This may include use of pre-solicitation and sources sought notices, Requests for Information (RFIs), draft Requests for Proposals (RFPs), preproposal conferences, site visits or other acquisition-specific approaches. The contracting officer is responsible for managing information on a specific acquisition package to ensure compliance with procurement integrity requirements (see FAR 3.104). The contracting officer shall prepare a market research memorandum to document market research findings. The scope of this memorandum may vary depending on the magnitude or complexity of the acquisition. This memorandum shall be included when the VA Form 2268 is submitted for review.

b) Industry Engagement. Contracting officers shall comply with the Acting Chief Acquisition Officer’s memorandum, “Encouraging Industry Engagement”, December 22, 2015, by initiating a proactive, appropriate and robust dialogue with industry.

c) Market Research. During the acquisition planning process, contracting officers, in cooperation with program offices, should survey the market to determine capabilities (lead-times, production, delivery, and estimated cost). The use of sources sought notices to identify SDVOSBs and VOSBs and sending requests for information to firms within the VIP is encouraged in conducting market research and should be used when appropriate to identify the capable businesses most likely to provide an offer. In performing market research the contracting officer must use the VIP database as the initial source to identify verified SDVOSBs or VOSBs that may meet VA eligibility requirements. The assessment of those businesses must consist of an examination of entities contained in the VIP database when determining whether VA must set the procurement aside under the VA Rule of Two. The assessment and all market research needs to be completed and thoroughly documented in the contract file, to memorialize compliance with the VA Rule of Two.

As companies grow or expand into new fields, they may exceed the NAICS size standards. Therefore, it is important that the contracting officer verify that an otherwise eligible firm meets the size standard applicable to the NAICS used for the particular procurement. Contracting officers should verify the size standard in System for Award Management (SAM).

If the contracting officer cannot locate a SDVOSB/VOSB concern for the agency’s requirement, the contracting officer may contact the OSDBU for assistance. Additionally, the contracting officer should include a statement in individual written acquisition plans, if required (see FAR 7.105(b), addressing whether or not OSDBU was able to identify any additional verified SDVOSBs and VOSBs.

Contracting officers shall ensure market research that considers SDVOSBs/ VOSBs is thoroughly conducted and comprehensively documented in the contract file. Contracting officers shall review the market research conducted and documented to ensure compliance with the VA Rule of Two requirement and that the VIP database has been reviewed. This is irrespective of whether an initial decision was made to set aside the acquisition for SDVOSBs or VOSBs.

If market research demonstrates that offers are likely to be received from two or more capable and verified SDVOSBs or VOSBs and award will be made at a fair and reasonable price that is the best value to the United States, the action  should be appropriately set aside in the contracting order of priority set forth in VAAR 819.7004. Contracting officers shall also ensure SDVOSBs or VOSBs have been listed as verified in the VIP database at the time of offer submission and before award on an SDVOSB or VOSB set-aside. Supporting documentation must be maintained in the contract file in the Electronic Contract Management System (eCMS).

d) Evaluation of Acquisition Strategy. The Contracting officer shall identify and consider using existing contracts where the requirement is within scope of the contract and represents the best business solution. The contracting officer will apply the results of market research to determine if two or more verified SDVOSBs or VOSBs can reasonably be expected to submit offers at a fair and reasonable price offering the best value to the Government. If an existing vehicle can support a set-aside, the CO shall set-aside on that vehicle if it represents the best business solution. If no existing vehicle can support a setaside, the contracting officer should pursue an open market set-aside. Alternatively, if otherwise justifiable and appropriate, consider use of a sole source award as authorized by 38 U.S.C. 8127(c). The contracting officer shall document this decision on VA Form 2268 and submit it with supporting documentation, as indicated in the OSDBU Small Business Procurement Review Program (PRP) Policy memorandum dated June 22, 2016.

e) VA Form 2268, Small Business Reviews. The contracting officer will document the market research results on the VA Form 2268. The OSDBU Small Business Procurement Review Program (PRP) Policy memorandum provides the most recent information on which requirements must have an OSDBU review and requires review of acquisitions not set-aside for SDVOSBs or VOSBs. For submission instructions for the eCMS, alternative submission guidelines, and OSDBU’s VA Form 2268 Decision Matrix see