Bosma Enterprises files lawsuit over VA contracting changes

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Indianapolis-based not-for-profit Bosma Enterprises and other advocacy groups for the blind on Wednesday sued the Department of Veterans Affairs in federal court, alleging the agency ignored a long-standing law when it changed contracting rules that have been used for decades to give jobs to the visually impaired.

In the lawsuit, Bosma said it would lose at least $36 million, or almost all, of its annual revenue because of the rule changes.

The VA's rule change came in the wake of a U.S. Supreme Court decision last year that found the agency was required to follow a 2006 law requiring that veteran-owned businesses be given priority. The new contracting rules also are consistent with President Donald Trump's campaign pledge to do more for veterans.

But the advocacy groups argue that the VA interpreted the court ruling too broadly when it quietly changed the rules in March. They say the VA focused on for-profit businesses owned by veterans while ignoring a separate 1938 law that grants priority status to more than 550 not-for-profit vendors that employ the disabled and blind to produce and sell goods to the government.

According to the lawsuit, the VA's interpretation could have a "disastrous" effect on not-for-profits across the United States that have contracts with the VA through the AbilityOne Program, which was created through the 1938 law. Together, they employ about 800 blind or visually impaired people, many at a handful of facilities in Indiana, Kansas, Missouri and North Carolina.

Bosma alone has more than 200 workers, 116 of them blind, who make surgical supplies. The organization says it brings in $36.4 million a year—97 percent of its revenue—through VA contracts and also provides services for blind people in the area.

"The VA’s action will jeopardize Bosma’s … ability to continue employing  those  individuals,  who  will  experience great  difficulty finding  replacement  jobs due to the nature of their severe impairment," the lawsuit says.

The advocacy groups say part of what keeps them afloat is their ability to charge a rate slightly above market on goods they sell to the VA.

The lawsuit was filed by the National Industries for the Blind, Bosma Enterprises and North Carolina-based Winston-Salem Industries for the Blind U.S. District Court in Washington, D.C.

Rhonda Chapman, 53, worked for an insurance company when she lost her sight in 2001. She struggled for five years to find work until she was hired at Bosma, which is named after the father of Indiana House Speaker Brian Bosma. She has since worked her way from the glove production line to running the organization's retail store.

"If Bosma (Enterprises) wasn't here, Indiana would suffer," Chapman said.

Attorney Thomas F. Bedsole of Frost Brown Todd LLC in Indianapolis is representing Bosma in the case.

Dan Kelly, chief operating officer of Winston-Salem Industries for the Blind, said the rule change came about unexpectedly and caught many by surprise.

"They made the decision without public input," said Kelly, whose organization employs 50 visually impaired workers who make eyeglasses for the VA. "I think that's part of the problem."

The advocacy groups say that both veterans and the blind—a demographic with a 70 percent unemployment rate—can both be given preferential status. They say the VA violated administrative procedures because they did not allow public comment before adopting the rule change.

"This isn't an issue, from our perspective, of being against veterans. But it is about the issue of the programs being able to co-exist," National Industries for the Blind CEO Kevin Lynch said.

Kelly said 22 percent of his organization's business comes through contracts with the VA, some of which are up for renewal next year. He said there are a number of veteran-owned businesses that would likely be chosen over him under the new rule.

"It's a major hit to our organization," he said. "I think any company would tell you that to take that substantive of a loss would be devastating."

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