Rule of 2 Podcast

[Rule of 2 Video Transcript]

[Introduction]

Good afternoon, my name is Joe Whitcomb, founder and owner of Whitcomb Selinsky PC located in Denver, Colorado. Today we are going to discuss what is commonly referred to as the Rule of Two in government contracting. We will also talk about the statutes and regulations that govern the rule of two and issues that specifically affect veterans and service-disabled veteran business owners in the universe of government contracting. 

[What is the Rule of Two]

The Rule of Two, put most simply, states that the government must first satisfy the Rule of Two before it can “set aside” a contract for a particular socio-economic group. The policy reason behind that rule is that if there are at least two companies competing for a contract then by virtue of that competition, the government has some assurance that they will receive reasonable pricing for the goods or services that they are attempting to purchase.

In 2006, Congress passed a law that is known as the “Veterans Benefits, Health Care, and Information Technology Act of 2006.” That statute is listed as 38 USC 8127 subparagraph D. Our firm’s view of that statute is that Congress created a two-pronged test with that statute. First, the contracting officer is supposed to do market research to determine whether or not here she has a reasonable expectation of receiving two offers from either service disabled or veteran owned small businesses. Secondly, the contracting officer should determine in advance whether or not here she has a reasonable expectation of being able to make an award at a “fair and reasonable price.” If both of those criteria are satisfied, then the statute requires that the government award the contract to a service disabled or veteran owned small business as long as the agency receives one qualified offer from one of those two types of companies.

[Kingdomware II]

Our law firm has affectionately dubbed these cases Kingdomware Two because we believe that both the federal legislation and the Supreme Court in the Kingdomware decision has left the question of what constitutes an “fair and reasonable price” open to interpretation. Our argument is that the VA should not be in the business of frustrating Congress's intent, which was to award as many contracts as the VA could reasonably award to businesses owned and controlled by veterans or service-disabled veterans.

[Conclusion]

We will certainly be following up with this issue in the future. There are also some overlapping issues having to do with the rule of two like limitations and subcontracting. We have already created a separate video blog on that subject. We hope you learned something from this video and that the content has been informative. Of course, if you have any further questions, please reach out to us. If you have something you would like to speak to me about specifically, you can click the let’s talk but an at the bottom of our website and schedule a time to speak with me.

If you enjoyed the content and if you found it useful, I hope you'll subscribe to the video blog.