United States District Court, D. Colorado
OPINION AND ORDER DENYING MOTION FOR TEMPORARY
RESTRAINING ORDER
MARCIA
S. KRIEGER SENIOR UNITED STATES DISTRICT JUDGE.
THIS
MATTER comes before the Court pursuant to the
Plaintiffs' Emergency Motion for Temporary Restraining
Order (# 40).
FACTS
Although
this case involves complex questions of statutory analysis,
the operative facts, as set forth in the Amended Complaint
(# 39), are straightforward. Two federal
statutes, the Javits-Wagner-O'Day Act
(“JWOD”), 41 U.S.C. 46 et seq., and the
Veteran's Benefits, Health Care, and Information
Technology Act (“VBA”), 38 U.S.C § 8101
et seq., are arguably applicable and sometimes come
into conflict.
JWOD
seeks to create employment opportunities for the blind and
severely disabled, and does so by requiring federal agencies
seeking to purchase goods and services to make such
purchases, whenever possible, from eligible non-profit
agencies employing such persons. 41 U.S.C. § 8503-04.
JWOD is implemented through a statutorily-created agency
(“AbilityOne”) that maintains a
“procurement list.” The procurement list
identifies products and services made available by eligible
employers that meet the requisite statutory criteria. JWOD
requires that federal agencies intending to purchase goods or
services found on a procurement list obtain them from the
JWOD-eligible business(es).
The VBA
seeks to promote veteran-owned businesses, and does so by
requiring the Veteran's Administration (“VA”)
to purchase goods and services from such businesses in
certain circumstances. 38 U.S.C. § 8127. Needless to
say, in circumstances where the VA seeks to purchase goods
and services where there is both a supplier on the AbilityOne
procurement list and veteran-owned businesses seeking to
supply the products, the statutes appear to give conflicting
instructions as to which supplier must be given the contract.
The VA
has taken various steps and implemented various guidelines
and instructions that seek to resolve that the conflict. In
2017, the VA announced a policy (“the 2017 Class
Deviation”) that attempted to resolve the conflict by
prioritizing purchases from JWOD-eligible entities, but only
with regard to products and services that had been listed on
a procurement list as of January 7, 2010 or earlier; any
products or services the VA that were not on that 2010 list
would be purchased pursuant to the VBA's veteran
preferences.
Several
JWOD-affiliated entities, including the Plaintiffs herein,
commenced litigation in various fora challenging the 2017
Class Deviation. Bayaud Enterprises, one of the Plaintiffs
here, is an entity that employs blind and severely disabled
individuals in fulfilling several contracts with the VA,
providing medical transportation services, mailroom
operations, and switchboard services. SourceAmerica, the
other named Plaintiff here, is an agency that represents the
interests of JWOD-eligible employers generally, and sues here
in a representative capacity.
Although
Bayaud alleges that the services it provides have been listed
on the procurement lists since at least 2007, it contends
that the VA informed it that, due to the 2017 Class
Deviation, the VA would be considering whether veteran-owned
businesses were providing the same services when it came time
to renew Bayaud's contracts. As a consequence, the
Plaintiffs commenced this action (# 1),
alleging that the 2017 Class Deviation was impermissible in
various respects, including that it violated the requirements
of JWOD and that it was promulgated without adequate
notice-and-comment procedures in violation of the
Administrative Procedures Act and the Constitution's
guarantee of Due Process protections.
In the
interim, other legal challenges to the 2017 Class Deviation
were percolating through other federal courts. Most notably,
a veteran-owned supplier of eyewear challenged both the pre-
and post-2010 listings of various eyecare products and
services on the JWOD-favored procurement list and sought an
injunction requiring the VA to apply the VBA's
preferences for veteran businesses to its purchases of
eyewear products. The Court of Federal Claims agreed with the
supplier and enjoined the VA to apply the VBA's
provisions to any future contracts for the purchase of
eyewear. The U.S. appealed the matter to the Federal Circuit,
and in anticipation that the Federal Circuit's ruling on
the question would prove dispositive, this Court stayed
proceedings in this case pending the outcome of that appeal.
In
October 2018, the Federal Circuit affirmed the Court of
Claims. PDS Consultants, Inc. v. U.S., 907 F.3d 1345
(Fed. Cir. 2018). Although the Federal Circuit's
PDS opinion is central to this case, only a brief
summary is needed here. The court rejected the
government's argument that JWOD applied to all
contracting decisions, but determined that the VBA applied
only to competitive decisions - i.e. that
the VBA's preferences only came into play after a
contemplated contract had already passed through the
JWOD's mandatory contracting filter, and was then to be
competitively-bid. Instead, the Federal Circuit held that the
VBA applied to “all contracting determinations.”
907 F.3d at 1358. The court applied the canon of statutory
construction that a more specific statute (the VBA being
applied only to VA contracting decisions, and only where
sufficient numbers of veteran-owned businesses compete) takes
precedence over a more general one (JWOD applying to all
federal contracting decisions). 907 F.3d at 1359. It also
noted that Congress had included an exclusion for
JWOD-eligible contracts in prior legislation, but had not
included such language in the VBA. Id. Finally, the
court concluded that, where two statutes conflict, the
later-enacted statute - here, the VBA -- should be given
controlling effect. Id. Thus, the Federal Circuit
ruled that “where a product or service is on the
[procurement] list and ordinarily would result in the
contract being awarded to a nonprofit qualified under the
JWOD, the VBA unambiguously demands that priority be given to
veteran-owned small businesses. . . We find that, by passing
the VBA, Congress increased employment opportunities for
veteran-owned businesses in a narrow category of
circumstances, while leaving intact significant mechanisms to
protect such opportunities for the disabled.”
Id. at 1360.
Almost
immediately upon issuance of the Federal Circuit's
Mandate in PDS, the VA issued additional purchasing
guidance to its employees and suppliers (“the 2019
Class Deviation”). The 2019 Class Deviation, adopting
the language from PDS quoted above, concluded that
the VBA takes priority over JWOD in all VA contracting
decisions. Thus, it directs that VA contracting officers
first apply the provisions of the VBA, giving preference to
any eligible veteran-owned business, and to proceed to award
contracts to entities on the AbilityOne procurement list only
if no such eligible veteran-owned business bids. The
Plaintiffs here then filed an Amended Complaint (#
39), alleging that the 2019 Class Deviation violates
the APA, the Due Process clause, and the Rehabilitation Act.
The
Plaintiffs have also moved (# 40) for a
Temporary Restraining Order enjoining the VA from
implementing the 2019 Class Deviation and requiring it to
award contracts consistent with JWOD pending the outcome of
this case. They argue that this Court should conclude that
PDS was wrongly-decided, that JWOD's provisions
should be deemed to preempt the VBA's where the statutes
conflict, and that allowing the VA to reassign the contracts
Bayaud (and, more generally, those of SourceAmerica's
...