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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