VA Probes $42 Million in Awards Questioned by Congress

U.S. lawmakers await the results of a Department of Veterans Affairs probe into why an agency employee processed more than 1,500 awards just under a monetary threshold that would require public disclosure of the contracts.

The inquiry focuses on a staff member who oversees orders for some VA health facilities in New York and New Jersey and who processed transactions worth more than $42 million over a roughly 18-month period. A letter from a House Veterans Affairs subcommittee said that the purchases ranged in amounts between $24,500 and $24,980.

Transactions of $25,000 and more are generally required to be published on a federal government procurement website to encourage as many bids as possible.

“What is the basis or reasoning for placing multiple transactions with the same vendor on the same day and keeping transactions below $25,000?” asked the Sept. 26, 2012, letter signed by Representative Bill Johnson, the Ohio Republican who at the time served as the chairman of the subcommittee on oversight.

Jo Schuda, a VA spokeswoman, said on March 28 that the department has finished its investigation into the case and is preparing a response that should be delivered this week.

“We are not commenting regarding any actions taken until the response is issued,” Schuda said in an e-mail. She declined to say whether the individual responsible for the transactions faced disciplinary action.

‘Fragmented’ Orders

The committee’s letter questioned why so many orders to the same vendor were “fragmented,” leaving them under the $25,000 threshold. The transactions occurred between Oct. 1, 2010, and March 18, 2012.

The House panel, when sending its letter, requested a response from the VA within 20 calendar days. Representative Jeff Miller, the Florida Republican who chairs the House veterans committee, expressed disappointment that the agency hasn’t answered the letter’s questions, more than six months after it was sent.

“VA owes it to America’s veterans and America’s taxpayers to engage in an honest conversation about how it spends taxpayer dollars,” Miller said in an e-mailed statement. “The longer it takes the department to explain these transactions, the more suspicious the transactions appear.”

It isn’t clear whether the VA employee whose actions spurred the investigation made the orders himself or prepared them on behalf of someone else, according to Johnson’s September letter. The transactions were linked to the employee’s name in a contracting database.

Lawmakers’ Concerns

Lawmakers said they were concerned that many of the transactions were done on the same day with a single vendor, and potentially violated a federal law requiring agencies to seek competitive bids for government work, the letter said.

“If true, such actions on the part of VA would appear to violate the Competition in Contract Act,” Johnson’s letter said. “This information creates the appearance purchases at VA are being fragmented, whether intentionally or unintentionally.”

The letter cited 25 purchase orders issued for Bismark Construction Corp. at $24,900 each, on December 30, 2010, for a total of $622,500.

It also said the employee in question created 25 transactions for $24,900 each for orders to Kinetic Concepts Inc., which designs and markets products such as tissue regeneration technology, on Nov. 9, 2011.

No Contact

James Seeram, president of Newark, New Jersey-based Bismark didn’t respond to a phone message and e-mail seeking comment about whether the company was aware of the probe. Mike Barger, a spokesman for San Antonio, Texas-based Kinetic Concepts, said in March 29 e-mail that the company hadn’t been contacted by lawmakers or the VA about the investigation and wasn’t aware of any “contractual irregularities.”

Dan Gordon, who served as President Barack Obama’s top procurement official until December 2011, said that “multiple purchases of similar goods or services by the same buyers over a short period of time, all just below a key threshold amount, should be viewed as a red flag.”

Gordon is now a procurement law dean at George Washington University law school in Washington.

To contact the reporter on this story: Kathleen Miller in Washington at Kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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