GAO Details VA Bidding Issues

By Walter F. Roche Jr.

The U.S. Government Accountability Office says the Veterans Administration used unreasonable standards in evaluating the price of medical exams submitted for a contract worth up to $6.8 billion over five years.
In a 23-page decision finally issued today, the audit agency also found that the VA gave one firm more credit than it should have in evaluating its anticipated performance in performing medical exams on veterans seeking disability benefits.
That company, VetFed Services, partnered with another winning bidder, QTC Medical, for most regions of the country, but was going it alone in the district in question.
"We conclude that its assignment of a good rating to VetFed for its past performance in District 2 (Kentucky, Tennessee, Alabama, Georgia, South Carolina and Florida)was unreasonable," the GAO decision states.
As the decision noted VetFed has partnered in the past with QTC by utilizing its staff and computer capabilities.
A shortened version of the decision had been issued earlier in the week, but the final document was delayed while the GAO redacted so-called proprietary information. VA officials have indicated that while they do not plan to rebid the pact, they will address the issues raised by the GAO.
The GAO had recommended in its decision that the VA reopen negotiations with the offerors and solicit and evaluate revised proposals and then make new source selection decisions.
Two bidders, including Veterans Evaluation Services, filed protests of the contract awards after they were announced in the Spring. The awards are for one year with options for four annual renewals.
As for the price evaluation, the GAO found that the VA shifted the way it compared bids without telling the bidders about the changes.
"We agree with the protesters that the agency's evaluation of total prices was unreasonable," GAO General Counsel Susan A. Poling wrote in the decision.
She found that bidders were not provided with the required information to shape their bids.
"The agency (VA) essentially changed the evaluation criteria they used to measure price reasonableness," the decision states.
While sustaining some of the protests, the GAO found several other claims without merit, including the impending sale of QTC to a third party.
QTC, based in Diamond Bar, Calif. was once headed by former VA Secretary Anthony Principi, who now is a registered lobbyist for QTC's parent company, Lockheed Martin. The GAO said that the possible sale of QTC was not relevant.
Principi has stated he was not involved in the bidding effort.
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VA Won't Rebid Disability Exams Contract

By Walter F. Roche Jr.

Veterans Administration officials say the do not plan to rebid medical examination contracts valued at up to $6.8 billion, but they do plan to address concerns about the massive procurement raised by the U.S. Government Accountability Office.
"The VA does not have plans to reissue this solicitation," said VA spokesman Henry Huntley, adding "we are working on reconciling issues raised by GAO in the protest."
The statement follows the disclosure of a GAO review of the contracting process in the award of contracts to conduct medical exams on thousands of veterans seeking disability assistance.
The GAO, acting on protests filed by two of the bidders on the contract, found that the VA made "prejudicial errors" in its review of the bids.
The GAO had recommended that the VA reopen negotiations with the offerors and solicit and evaluate revised proposals and then make new source selection decisions.
Scott Orr of VES Services, which filed one of the protests said, "We look forward to the VA addressing the issues raised and the recommendations made by the GAO in its decision."
Under the protested contracts awarded by the VA, the bulk of the work would go to QTC Medical, a subsidiary of Lockheed Martin.
The California firm was formerly headed by Anthony Principi, who served as VA Secretary. Principi is now registered as a lobbyist for Lockheed, but he said in response to questions that he was not involved in preparing a bid.
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Prejudicial Action Found in VA Contract Award

By Walter F. Roche Jr.

Concluding that the U.S. Department of Veterans Affairs made several prejudicial errors, the U.S. Government Accountability Office has sustained the protests of competing firms for contracts valued at up to $6.8 billion.
In a decision issued to interested parties last week, the GAO recommended that the VA reopen bidding for the contract to conduct thousands of medical exams per year on veterans applying for disability payments.
The protest centered on the award of the largest chunk of the $6.8 billion to QTC Medical Services,  a firm once headed by former VA Secretary Anthony Principi. The company was sold to Lockheed Martin, but Principi now serves as a lobbyist for the firm.
In a summary of its decision GAO said, "VA made several prejudicial errors in evaluating the proposals for these contracts."
In addition the  GAO found that "the VA misled two of the protesters during the conduct of discussions or negotiations. These errors led the VA to make source selection decisions that GAO found were unreasonable because they were based on erroneous conclusions in support of the contracts awarded."
 Among those protesting the awards were Veterans Evaluation Services of Houston, Tex., Logistics Health of La Crosse, Wisc. and Medical Support Los Angeles of Pasadena, Calif.
The decision was issued under a protective order because the  full decision contains confidential proprietary information, according to a GAO announcement.
The actual ruling will be issued later after the confidential information is redacted, according to the July 13 notice.
Principi, who left QTC to become VA Secretary only to return to the company later, said in response to questions that he was not involved in QTC's bid effort. He said he was not a founder of QTC but joined the company after its founding by Dr. Lay Kay. The sale to Lockheed Martin occurred in 2011

 "I never read any of the (bid) documents," he wrote in response to questions. 

 "I’m confident that the process will lead to a result that serves the best interests of veterans.  The integrity of the government’s procurement process should be above reproach and free of outside influences," he added, when asked to comment on the GAO action.

Congressional lobbying records show Principi's firm, The Principi Group, registered as the lobbyist for Lockheed Martin in 2014.
 "Determine the benefits and medical affairs requirements of the Department of Veterans Affairs," the lobbying firm listed as its assignment.

The GAO action comes as several members of Congress questioned the award. In addition the U.S. House Veterans Affairs Committee has initiated an investigation of the way QTC conducted exams of veterans claiming injuries from exposure to Agent Orange. 

The inquiry came in response to charges in a court suit by a former QTC employee that the exams of veterans claiming exposure were rushed and not properly completed. QTC performed the exams under a prior contract.

The whistleblower suit filed by David Vatan was dismissed on a technicality, but an appeal is pending.
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