Kingdomware Technologies, Inc. v. United States ( 2016 )

(Slip Opinion) OCTOBER TERM, 2015 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
KINGDOMWARE TECHNOLOGIES, INC. v. UNITED
STATES
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
No. 14–916. Argued February 22, 2016—Decided June 16, 2016
The Veterans Benefits, Health Care, and Information Technology Act of
2006 requires the Secretary of Veterans Affairs to set annual goals
for contracting with service-disabled and other veteran-owned small
businesses. 38 U. S. C. §8127(a). To help reach those goals, a sepa-
rate set-aside provision known as the “Rule of Two” provides that a
contracting officer “shall award contracts” by restricting competition
to veteran-owned small businesses if the officer reasonably expects
that at least two such businesses will submit offers and that “the
award can be made at a fair and reasonable price that offers best
value to the United States.” §8127(d). Two exceptions provide that
the contracting officer “may” use noncompetitive and sole-source con-
tracts for contracts below specific dollar amounts. §§8127(b), (c).
In 2012, the Department procured an Emergency Notification Ser-
vice for four medical centers for a one-year period, with an option to
extend the agreement for two more, from a non-veteran-owned busi-
ness. The Department did so through the Federal Supply Schedule
(FSS), a streamlined method that allows Government agencies to ac-
quire particular goods and services under prenegotiated terms. After
the initial year, the Department exercised its option for an additional
year, and the agreement ended in 2013.
Petitioner Kingdomware Technologies, Inc., a service-disabled vet-
eran-owned small business, filed a bid protest with the Government
Accountability Office (GAO), alleging that the Department procured
multiple contracts through the FSS without employing the Rule of
Two. The GAO determined that the Department’s actions were un-
lawful, but when the Department declined to follow the GAO’s non-
binding recommendation, Kingdomware filed suit, seeking declarato-
2 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Syllabus
ry and injunctive relief. The Court of Federal Claims granted sum-
mary judgment to the Government, and the Federal Circuit affirmed,
holding that the Department was only required to apply the Rule of
Two when necessary to satisfy its annual goals.
Held:
1. This Court has jurisdiction to reach the merits of this case. For
a federal court to have Article III jurisdiction “an actual controversy
must exist . . . through all stages of the litigation.” Already, LLC v.
Nike, Inc., 568 U. S. ___, ___. Here, no court is capable of granting
petitioner relief initially sought in the complaint because the short-
term FSS contracts have been completed by other contractors. How-
ever, the controversy is “ ‘capable of repetition, yet evading review.’ ”
Spencer v. Kemna, 523 U. S. 1, 17. The procurements were fully per-
formed in less than two years after they were awarded, and it is rea-
sonable to expect that the Government will refuse to apply the Rule
of Two in a future bid by Kingdomware. Pp. 6–8.
2. Section 8127(d)’s contracting procedures are mandatory and ap-
ply to all of the Department’s contracting determinations. Pp. 8–12.
(a) Section 8127(d)’s text unambiguously requires the Depart-
ment to use the Rule of Two before contracting under the competitive
procedures. The word “shall” usually connotes a requirement, unlike
the word “may,” which implies discretion. Compare Lexecon Inc. v.
Milberg Weiss Bershad Hynes & Lerach, 523 U. S. 26, 35, with United
States v. Rodgers, 461 U. S. 677, 706. The use of the word “may” in
§§8127(b) and (c) confirms this reading; for when a statute distin-
guishes between “may” and “shall,” the latter generally imposes a
mandatory duty. Pp. 8–9.
(b) Alternative readings of §8127(d) are unpersuasive. First,
§8127(d)’s prefatory clause, which declares that the Rule of Two is
designed “for the purposes of” meeting §8127(a)’s annual contracting
goals, has no bearing on whether §8127(d)’s requirement is mandato-
ry or discretionary. The prefatory clause’s announcement of an objec-
tive does not change the operative clause’s plain meaning. See Yazoo
& Mississippi Valley R. Co. v. Thomas, 132 U. S. 174, 188. Second,
an FSS order is a “contract” within the ordinary meaning of that
term; thus, FSS orders do not fall outside §8127(d), which applies
when the Department “award[s] contracts.” Third, to say that the
Rule of Two will hamper mundane Government purchases misappre-
hends current FSS practices, which have expanded well beyond sim-
ple procurement to, as in this case, contracts concerning complex in-
formation technology services over a multiyear period. Finally,
because the mandate §8127(d) imposes is unambiguous, this Court
declines the invitation to defer to the Department’s declaration that
§8127 procedures are inapplicable to FSS orders. See Chevron
Cite as: 579 U. S. ____ (2016)
3
Syllabus
U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S.
837, 842–843. Pp. 9–12.
754 F. 3d 923, reversed and remanded.
THOMAS, J., delivered the opinion for a unanimous Court.
Cite as: 579 U. S. ____ (2016) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–916
_________________
KINGDOMWARE TECHNOLOGIES, INC., PETITIONER
v. UNITED STATES
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FEDERAL CIRCUIT
[June 16, 2016]
JUSTICE THOMAS delivered the opinion of the Court.
Petitioner Kingdomware Technologies, Inc., a veteran-
owned small business, unsuccessfully vied for a federal
contract from the Department of Veterans Affairs to pro­
vide emergency-notification services. Kingdomware sued,
arguing that the Department violated a federal law
providing that it “shall award” contracts to veteran-owned
small businesses when there is a “reasonable expectation”
that two or more such businesses will bid for the contract
at “a fair and reasonable price that offers best value to the
United States.” 38 U. S. C. §8127(d). This provision is
known as the Rule of Two.
In this case, we consider whether the Department must
use the Rule of Two every time it awards contracts or
whether it must use the Rule of Two only to the extent
necessary to meet annual minimum goals for contracting
with veteran-owned small businesses. We conclude that
the Department must use the Rule of Two when awarding
contracts, even when the Department will otherwise meet
its annual minimum contracting goals.
2 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
I
This case concerns the interplay between several federal
statutes governing federal procurement.
A
In an effort to encourage small businesses, Congress has
mandated that federal agencies restrict competition for
some federal contracts. The Small Business Act thus
requires many federal agencies, including the Department
of Veterans Affairs, to set aside contracts to be awarded to
small businesses. The Act requires each agency to set “an
annual goal that presents, for that agency, the maximum
practicable opportunity” for contracting with small busi­
nesses, including those “small business concerns owned
and controlled by service-disabled veterans.” 15 U. S. C.
§644(g)(1)(B). And federal regulations set forth proce­
dures for most agencies to “set aside” contracts for small
businesses. See, e.g., 48 CFR §19.502–2(b) (2015).
In 1999, Congress expanded small-business opportuni­
ties for veterans by passing the Veterans Entrepreneur­
ship and Small Business Development Act, 113 Stat. 233.
That Act established a 3% governmentwide contracting
goal for contracting with service-disabled veteran-owned
small businesses. 15 U. S. C. §644(g)(1)(A)(ii).
When the Federal Government continually fell behind in
achieving these goals, Congress tried to correct the situa­
tion. Relevant here, Congress enacted the Veterans Bene­
fits, Health Care, and Information Technology Act of 2006,
§§502, 503, 120 Stat. 3431–3436 (codified, as amended, at
38 U. S. C. §§8127, 8128). That Act requires the Secretary
of Veterans Affairs to set more specific annual goals that
encourage contracting with veteran-owned and service-
disabled veteran-owned small businesses. §8127(a). The
Act’s “Rule of Two,” at issue here, provides that the De­
partment “shall award” contracts by restricting competi­
tion for the contract to service-disabled or other veteran­
Cite as: 579 U. S. ____ (2016) 3
Opinion of the Court
owned small businesses. To restrict competition under the
Act, the contracting officer must reasonably expect that at
least two of these businesses will submit offers and that
“the award can be made at a fair and reasonable price that
offers best value to the United States.” §8127(d).1
Congress provided two exceptions to the Rule. Under
those exceptions, the Department may use noncompetitive
and sole-source contracts when the contracts are below
specific dollar amounts. Under §8127(b), a contracting
officer “may use procedures other than competitive proce­
dures” to award contracts to veteran-owned small busi­
nesses when the goods or services that are the subject of
such contracts are worth less than the simplified acquisi­
tion threshold. 38 U. S. C. §8127(b); 41 U. S. C. §134(establishing a “ ‘simplified acquisition threshold’ ” of
$100,000); see also §1908 (authorizing adjustments for
inflation); 75 Fed. Reg. 53130 (codified at 48 CFR §2.101(2010)) (raising the amount to $150,000). And under 38
U. S. C. §8127(c), a contracting officer “may award a con­
tract to a [veteran-owned small business] using procedures
other than competitive procedures” if the contract is worth
more than the simplified acquisition threshold but less
than $5 million, the contracting officer determines that
the business is “a responsible source with respect to per­
formance of such contract opportunity,” and the award can
be made at “a fair and reasonable price.” 38 U. S. C.
§8127(c).
——————
1 This provision reads in full:
“Except as provided in subsections (b) and (c), for purposes of meeting
the goals under subsection (a), and in accordance with this section, a
contracting officer of the Department shall award contracts on the basis
of competition restricted to small business concerns owned and con­
trolled by veterans if the contracting officer has a reasonable expecta­
tion that two or more small business concerns owned and controlled by
veterans will submit offers and that the award can be made at a fair
and reasonable price that offers best value to the United States.” 38
U. S. C. §8127(d).
4 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
In finalizing its regulations meant to implement the Act,
the Department stated in a preamble that §8127’s proce­
dures “do not apply to [Federal Supply Schedule] task or
delivery orders.” VA Acquisition Regulation, 74 Fed. Reg.
64624 (2009). The Federal Supply Schedule (FSS) gener­
ally is a streamlined method for Government agencies to
acquire certain supplies and services in bulk, such as
office supplies or food equipment. 48 CFR §8.402(a)
(2015). Instead of the normal bidding process for each
individual order, FSS contracts are ordinarily pre­
negotiated between outside vendors and the General
Services Administration, which negotiates on behalf of
various Government agencies. See §8.402(b); Sharp Elec-
tronics Corp. v. McHugh, 707 F. 3d 1367, 1369 (CA Fed
2013). Under FSS contracts, businesses agree to provide
“[i]ndefinite delivery” of particular goods or services “at
stated prices for given periods of time.” §8.402(a). Agen­
cies receive a list of goods and services available through
the FSS. Because the terms of purchasing these goods
and services have already been negotiated, contracting
officers can acquire these items and services simply by
issuing purchase orders.
B
Kingdomware Technologies, Inc., is a service-disabled
veteran-owned small business. Around January 2012, the
Department decided to procure an Emergency Notification
Service for four medical centers.2 In an emergency, this
service sends important information to Department per­
sonnel. The Department sent a request for a price quota­
tion to a non-veteran-owned company through the FSS
system. That company responded with a favorable price,
which the Department accepted around February 22,
——————
2 We use “Department” when referring to the Government as a party
in this litigation.
Cite as: 579 U. S. ____ (2016) 5
Opinion of the Court
2012. The agreement was for one year, with an option to
extend the agreement for two more. The Department
exercised the one option to extend the time, and perfor­
mance was completed in May 2013. Decl. of Corydon Ford
Heard III ¶8.
Kingdomware challenged the Department’s decision to
award the contract to a non-veteran-owned company by
filing a bid protest with the Government Accountability
Office (GAO). See 31 U. S. C. §3552(a). Kingdomware
alleged that the Department procured multiple contracts
through the FSS without restricting competition using the
Rule of Two, as required by §8127. Kingdomware con­
tended that the Department could not award the contracts
at issue here without first checking to see whether at least
two veteran-owned small businesses could perform the
work at a fair and reasonable price. The GAO issued a
nonbinding determination that the Department’s failure to
employ the Rule of Two was unlawful and recommended
that the Department conduct market research to deter­
mine whether there were two veteran-owned businesses
that could fulfill the procurement. The Department dis-
agreed with the recommendation.
Petitioner then filed suit in the Court of Federal Claims
and sought declaratory and injunctive relief.3 The Court
of Federal Claims granted summary judgment to the
Department. 107 Fed. Cl. 226 (2012).
A divided panel of the Federal Circuit affirmed. 754
F. 3d 923 (2014). In the majority’s view, §8127 did not
require the Department to use the Rule of Two in all
contracting. Id., at 933–934. Instead, the court concluded,
——————
3 Petitioner’s complaint additionally stated claims for two other bid
protests. To simplify the proceedings, the parties entered into a joint
stipulation of facts concerning only the one bid protest described above.
The details concerning the two other disputed bids are relevant only for
mootness analysis since the work related to both bids has been per­
formed. See Part II, infra.
6 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
mandatory application of the Rule of Two was limited to
contracts necessary to fulfill its statutory purpose—to
provide a means of satisfying the Department’s annual
contracting goals described in §8127(a). Id., at 934. Thus,
so long as those goals were satisfied, the Court of Appeals
concluded, the Department need not apply the Rule of Two
any further. Ibid. Judge Reyna dissented, arguing that
§8127 employs mandatory language that “could not be
clearer” in requiring the Department to apply the Rule of
Two in every instance of contracting. Id., at 935.
We granted certiorari to decide whether §8127(d) re­
quires the Department to apply the Rule of Two in all
contracting, or whether the statute gives the Department
some discretion in applying the rule. 576 U. S. ___ (2015).
II
Before we reach the merits, we must assess our jurisdic­
tion. Article III of the Constitution limits federal courts to
deciding “Cases” and “Controversies,” and “an actual
controversy must exist not only at the time the complaint
is filed, but through all stages of the litigation.” Already,
LLC v. Nike, Inc., 568 U. S. ___, ___ (2013) (slip op., at
3–4) (internal quotation marks omitted).
Here, no live controversy in the ordinary sense remains
because no court is now capable of granting the relief
petitioner seeks. When Kingdomware filed this suit four
years ago, it sought a permanent injunction and declara­
tory relief with respect to a particular procurement. The
services at issue in that procurement were completed in
May 2013. And the two earlier procurements, which
Kingdomware had also protested, were complete in Sep­
tember 2012. See Decl. of Corydon Ford Heard III ¶¶6–8.
As a result, no court can enjoin further performance of
those services or solicit new bids for the performance of
those services. And declaratory relief would have no effect
here with respect to the present procurements because the
Cite as: 579 U. S. ____ (2016) 7
Opinion of the Court
services have already been rendered.
Although a case would generally be moot in such cir­
cumstances, this Court’s precedents recognize an excep­
tion to the mootness doctrine for a controversy that is
“ ‘capable of repetition, yet evading review.’ ” Spencer v.
Kemna, 523 U. S. 1, 17 (1998). That exception applies
“only in exceptional situations,” where (1) “the challenged
action [is] in its duration too short to be fully litigated
prior to cessation or expiration,” and (2) “there [is] a rea­
sonable expectation that the same complaining party [will]
be subject to the same action again.” Ibid. (internal quota­
tion marks omitted; brackets in original).
That exception applies to these short-term contracts.
First, the procurements were fully performed in less than
two years after they were awarded. We have previously
held that a period of two years is too short to complete
judicial review of the lawfulness of the procurement. See
Southern Pacific Terminal Co. v. ICC, 219 U. S. 498, 514–
516 (1911). Second, it is reasonable to expect that the
Department will refuse to apply the Rule of Two in a
future procurement for the kind of services provided by
Kingdomware. If Kingdomware’s interpretation of
§8127(d) is correct, then the Department must use re­
stricted competition rather than procure on the open
market. And Kingdomware, which has been awarded
many previous contracts, has shown a reasonable likeli­
hood that it would be awarded a future contract if its
interpretation of §8127(d) prevails. See Decl. of Corydon
Ford Heard III ¶¶11–15 (explaining that the company
continues to bid on similar contracts). Thus, we have
jurisdiction because the same legal issue in this case is
likely to recur in future controversies between the same
parties in circumstances where the period of contract
performance is too short to allow full judicial review before
performance is complete. Our interpretation of §8127(d)’s
requirements in this case will govern the Department’s
8 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
future contracting.
III
On the merits, we hold that §8127 is mandatory, not
discretionary. Its text requires the Department to apply
the Rule of Two to all contracting determinations and to
award contracts to veteran-owned small businesses. The
Act does not allow the Department to evade the Rule of
Two on the ground that it has already met its contracting
goals or on the ground that the Department has placed an
order through the FSS.
A
In statutory construction, we begin “with the language
of the statute.” Barnhart v. Sigmon Coal Co., 534 U. S.
438, 450 (2002). If the statutory language is unambiguous
and “the statutory scheme is coherent and consistent”—as
is the case here—“[t]he inquiry ceases.” Ibid.We hold that §8127(d) unambiguously requires the
Department to use the Rule of Two before contracting
under the competitive procedures. Section 8127(d) re­
quires that “a contracting officer of the Department shall
award contracts” to veteran-owned small businesses using
restricted competition whenever the Rule of Two is satis­
fied, “[e]xcept as provided in subsections (b) and (c).”
(Emphasis added.) Subsections (b) and (c) provide, in
turn, that the Department “may” use noncompetitive
procedures and sole-source contracts for lower value ac­
quisitions. §§8127(b), (c). Except when the Department
uses the noncompetitive and sole-source contracting pro­
cedures in subsections (b) and (c), §8127(d) requires the
Department to use the Rule of Two before awarding a
contract to another supplier. The text also has no excep­
tions for orders from the FSS system.
Congress’ use of the word “shall” demonstrates that
§8127(d) mandates the use of the Rule of Two in all con­
Cite as: 579 U. S. ____ (2016) 9
Opinion of the Court
tracting before using competitive procedures. Unlike the
word “may,” which implies discretion, the word “shall”
usually connotes a requirement. Compare Lexecon Inc. v.
Milberg Weiss Bershad Hynes & Lerach, 523 U. S. 26, 35
(1998) (recognizing that “shall” is “mandatory” and “nor­
mally creates an obligation impervious to judicial discre­
tion”), with United States v. Rodgers, 461 U. S. 677, 706
(1983) (explaining that “[t]he word ‘may,’ when used in a
statute, usually implies some degree of discretion”). Ac­
cordingly, the Department shall (or must) prefer veteran-
owned small businesses when the Rule of Two is satisfied.
The surrounding subsections of §8127 confirm that
Congress used the word “shall” in §8127(d) as a command.
Like §8127(d), both §8127(b) and §8127(c) provide special
procedures “[f]or purposes of meeting the goals under
[§8127(a)].” §§8127(b), (c). But, in contrast to §8127(d),
those latter two provisions state that “a contracting officer
of the Department may use” (or, for §8127(c), “may
award”) such contracts. §§8127(b), (c) (emphasis added).
When a statute distinguishes between “may” and “shall,”
it is generally clear that “shall” imposes a mandatory
duty. See United States ex rel. Siegel v. Thoman, 156 U. S.
353, 359–360 (1895). We see no reason to depart from the
usual inference here.
We therefore hold that, before contracting with a non­
veteran owned business, the Department must first apply
the Rule of Two.4
B
The Federal Circuit and the Department offered several
——————
4 We need not decide today precisely what sort of search for veteran-
owned small businesses the Department must conduct to comply with
the Rule of Two. We do not decide, for example, whether the Depart­
ment may satisfy its obligations by searching for eligible veteran-owned
small businesses within the FSS, or whether it must conduct a broader
search for such businesses.
10 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
reasons for their alternative reading of §8127(d) as a
discretionary provision that the Department can disregard
for at least some contracting decisions. We disagree with
them.
To hold that §8127(d) is discretionary, the Federal
Circuit relied on §8127(d)’s prefatory clause. 754 F. 3d, at
933. That clause declares that the Rule of Two is designed
“for the purposes of ” meeting the annual contracting goals
that the Department is required to set under §8127(a).
The Department originally made a similar argument
before changing arguments in its briefing on the merits.
Compare Brief in Opposition 13–15 with Brief for United
States 24–25.
But the prefatory clause has no bearing on whether
§8127(d)’s requirement is mandatory or discretionary.
The clause announces an objective that Congress hoped
that the Department would achieve and charges the Sec­
retary with setting annual benchmarks, but it does not
change the plain meaning of the operative clause,
§8127(d). See Yazoo & Mississippi Valley R. Co. v. Thomas,
132 U. S. 174, 188 (1889) (explaining that prefatory
clauses or preambles cannot change the scope of the oper­
ative clause).
The Federal Circuit’s interpretation also would produce
an anomaly. If the Federal Circuit’s understanding of
§8127(d)’s prefatory clause were correct, then §§8127(b)
and (c), which also contain “[f]or purposes of meeting the
goals” clauses, would cease to apply once the Department
meets the Secretary’s goal, and the Department would be
required to return to competitive bidding. If we interpreted
the “purposes” clause of §8127(d) to mean that its
mandate no longer applies if the goals are met, then the
identical “purposes” clauses of §§8127(b) and (c) would
also render those clauses’ permissive mandates inapplic-
able. This would require the Department, once the goals
are met, to award bids using the default contracting pro­
Cite as: 579 U. S. ____ (2016) 11
Opinion of the Court
cedures rather than to use the noncompetitive and single-
source provisions in §§8127(b) and (c).
Second, the Department argues that the mandatory
provision does not apply to “orders” under “pre-existing
FSS contracts.” Brief for United States 25. The Depart­
ment failed to raise this argument in the courts below, and
we normally decline to entertain such forfeited arguments.
See OBB Personenverkehr AG v. Sachs, 577 U. S. ___, ___
(2015) (slip op., at 10). But the Department’s forfeited
argument fails in any event. Section 8127(d) applies when
the Department “award[s] contracts.” When the Depart­
ment places an FSS order, that order creates contractual
obligations for each party and is a “contract” within the
ordinary meaning of that term. See, e.g., Black’s Law
Dictionary 389 (10th ed. 2014) (“[a]n agreement between
two or more parties creating obligations that are enforce-
able or otherwise recognizable at law”). It also creates a
“contract” as defined by federal regulations, namely, a
“mutually binding legal relationship obligating the seller
to furnish the supplies or services . . . and the buyer to pay
for them,” including “all types of commitments that obli­
gate the Government to an expenditure of appropriated
funds and” (as a general matter) “are in writing.” 48 CFR
§2.101 (2015). An FSS order creates mutually binding
obligations: for the contractor, to supply certain goods or
services, and for the Government, to pay. The placement
of the order creates a new contract; the underlying FSS
contract gives the Government the option to buy, but it
does not require the Government to make a purchase or
expend funds. Further confirming that FSS orders are
contracts, the Government is not completely bound by the
FSS contract’s terms; to the contrary, when placing orders,
agencies may sometimes seek different terms than are
listed in the FSS. See §8.405–4 (permitting agencies to
negotiate some new terms, such as requesting “a price
reduction,” when ordering from the FSS).
12 KINGDOMWARE TECHNOLOGIES, INC. v. UNITED STATES
Opinion of the Court
Third, the Department contends that our interpretation
fails to appreciate the distinction between FSS orders and
contracts. The Department maintains that FSS orders are
only for simplified acquisitions, and that using the Rule of
Two for these purchases will hamper mundane purchases
like “griddles or food slicers.” Brief for United States 21.
But this argument understates current practices under
the FSS. The Department has expanded use of the FSS
well beyond simple procurement. See Brief for Iraq and
Afghanistan Veterans of America as Amicus Curiae 14–16.
This case proves the point: the contract at issue here
concerned complex information technology services over a
multiyear period. Moreover, the Department may con-
tinue to purchase items that cost less than the simplified
acquisition threshold (currently $150,000) through the
FSS, if the Department procures them from a veteran-
owned small business. See 38 U. S. C. §8127(b).
Finally and relatedly, the Department asks us to defer
to its interpretation that FSS “orders” are not “contracts.”
See Chevron U. S. A. Inc. v. Natural Resources Defense
Council, Inc., 467 U. S. 837, 843–844 (1984) (establishing
deference to an agency’s interpretation of an ambiguous
statute). Even assuming, arguendo, that the preamble to
the agency’s rulemaking could be owed Chevron deference,
we do not defer to the agency when the statute is unam­
biguous. See id., at 842–843. For the reasons already
given, the text of §8127(d) clearly imposes a mandatory
duty. Thus, we decline the Department’s invitation to
defer to its interpretation.
* * *
We hold that the Rule of Two contracting procedures in
§8127(d) are not limited to those contracts necessary to
fulfill the Secretary’s goals under §8127(a). We also hold
that §8127(d) applies to orders placed under the FSS. The
judgment of the Court of Appeals for the Federal Circuit is
Cite as: 579 U. S. ____ (2016) 13
Opinion of the Court
reversed, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.