A prominent Republican representative on the House Committee on Veterans’ Affairs has called on VA Secretary Robert McDonald to explain what, if any, punitive action he plans to take against a former deputy chief procurement officer at the Veterans Health Administration who was found to have engaged in violations of federal procurement law and has called on the agency to evaluate whether the reverse auction company at the heart of the scandal, FedBid Inc., remains a “responsible contractor” under federal procurement law.
In a letter sent Monday to McDonald, Rep. Mike Coffman, R-Colo., chairman of the Veterans’ Affairs Subcommittee on Oversight and Investigations, details the findings of a VA inspector general report that uncovered an orchestrated campaign by FedBid executives to “assassinate” the character of Deputy Assistant Secretary for Acquisition and Logistics Jan Frye after he suspended the use of reverse auctions throughout the agency in 2012 and that found that Susan Taylor, VA’s deputy chief procurement officer at the Veterans Health Administration, abused her position and “improperly acted as an agent of FedBid in matters before the government.”
“The sheer extent of the abuse of power undertaken by Ms. Taylor at VA alone should warrant her termination,” Coffman wrote. “It is apparent that Ms. Taylor is the personification of the morally bankrupt and ethically impaired culture that exists within the Department.” Coffman also wrote that the IG report substantiates that FedBid “was actively conspiring to defame an honorable public servant in an attempt to protect a friendly, corrupt bureaucrat and continue pushing a system of contracts that undercut fair competition. When coupling that with FedBid’s engagement in inherently governmental functions, I would call upon VA to examine whether FedBid remains a ‘responsible contractor.'”
Pressure from Coffman could spell trouble for both Taylor and FedBid. Although Taylor has reportedly been reassigned within VA, McDonald has pegged his tenure as the new VA secretary on a commitment to hold VA employees accountable and remain transparent about the steps the agency takes to ensure clear cases of wrongdoing are punished.
For FedBid, a company backed by powerful financiers and a laundry list of former high-level government officials, the fallout could be even worse. The company supports 17 other federal agencies and departments. Although determinations of nonresponsibility are award-specific, analysts say it could set the stage for a broader look at FedBid Inc.’s business dealings with VA and even other agencies, which could lead to discussion about suspension or debarment for either the company or specific executives.
According to the Congressional Research Service, decisions to exclude a vendor are made by agency heads or their designees “based upon evidence that contractors have committed certain integrity offenses, including any offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.”
A source at the VA Office of the Inspector General told FedScoop that FedBid’s previous statement that its reverse auction services “stimulated competition that resulted in lower prices for VHA” is not supported by the facts presented by another VA IG report issued on the same day as the report detailing the misdeeds of Taylor and other FedBid executives. According to the IG, that companion report, Review of the Veterans Health Administration’s Use of Reverse Auction Acquisitions “addressed the contract itself and found that the cost savings were overstated and may have limited competition.”
Lorraine Campos, a partner in the government contracts & grants team at the Washington, D.C.-based law firm Reed Smith, said federal agencies “ought to proceed with caution in touting savings from reverse auctions” in the wake of the VA IG reports. “While reverse auctions promise dramatic savings, such promises may only be smoke and mirrors,” Campos said. “Once transaction fees are factored in, the actual amount an agency saves may not be as dramatic as anticipated. Moreover, since reverse auctions only consider pricing, rather than value, agencies may not get the ‘bang for the buck’ through these mechanisms.”
