House Committee on Veterans' Affairs

Washington, D.C. – On Thursday, September 23, 2010, the House Veterans’ Affairs Health Subcommittee, led by Chairman Michael Michaud (D-ME), held a hearing to provide oversight of the contracting and procurement practices by the Veterans Health Administration (VHA) at the Department of Veterans Affairs (VA).  The hearing specifically focused on existing deficiencies and explored potential remedies in order to improve practices so they are fair, fiscally responsible, and effective. 

“Recent reports on VA’s contracting activities identified the need for increased transparency and increased fiscal responsibility, while highlighting inadequate competition and lack of accountability and oversight,” said Chairman Michaud.  “Past hearings have brought to light the difficulties that many private companies face in contracting with the VA.  As a result of these deficiencies in VHA’s procurement practices, veterans may not have access to the latest innovations or the appropriate equipment when receiving health care.”    

The Committee received the testimonies of private companies that contract with the VA and those that are seeking to contract with the VA, which highlighted the perceived strengths and weaknesses of the Department’s acquisition and procurement processes. Witnesses expressed concerns over unfairly award contracts, overly complex contracts, and lack of competition during the bidding process.  Some businesses face more extreme challenges.  Mark T. Munroe, Senior Vice President of Sales and Marketing for Mobile Medical Corporation, testified that “the last thing our company ever expected would be the need to sue the U.S. Government for actions taken during a procurement process.”

Contractors suggested the VA strengthen communication lines with contractors by appointing a single contact person for each contractor and sharing important information in a consistent manner with a specific point person. Moreover, they pressed for a simplification of contracts that should to be awarded to one company per industry.

Belinda Finn of the VA’s Office of the Inspector General discussed findings from late 2009 that “identified systemic issues such as poor acquisition planning, problematic contract award processes, poorly written contracts, and inadequate contract monitoring that impacted VA’s efforts to effectively and economically deliver goods and services to VA facilities.”  She continued that procurement problems led to “inadequate competition for contracts, the misuse of funds, and a general lack of assurance that VA procurements achieved fair and reasonable prices or were in the best interest of the Government.  We attributed many of these systemic procurement problems to VA’s decentralized organizational structure for procurement activities, inadequate oversight and accountability, and inaccurate and incomplete procurement data. Our work since we testified in December continues to identify systemic weaknesses in procurement practices that negatively impact VA’s ability to obtain quality goods and services in a timely manner at fair and reasonable prices.” 

Bob Filner (D-CA), Chair of the House Committee on Veterans’ Affairs, said, “This Committee is committed to providing necessary resources to VA – but those resources are intended for veterans.  I am beyond frustrated with the continued lack of due diligence regarding firms that do business with the VA, lack of a clearinghouse for contracting data which results in hidden and invisible contracts, and lack of consequences for abusive firms.  For the most part, I support the policy guidelines currently in place, yet clear evidence remains that they are not uniformly applied in the field.  VA officials must work with local providers and facility directors to ensure adherence to policy and return accountability to those that fail to ensure patient safety and those that refuse to end waste, fraud, and abuse in the VA’s contracting process.” 

Witness List:

Panel 1
•    Mark T. Munroe, Senior Vice President, Sales and Marketing, Mobile Medical International Corporation
•    Derek Newell, MBA, MPH, President, Robert Bosch Healthcare
•    Lincoln Moss, Senior Vice President and Chief Operating Officer, Ramtech Building Systems, Inc., Mansfield, TX (on behalf of Modular Building Institute)
•    Jay Wise, Chief Executive Officer, Wise Knowledge Systems, Piper Creek, TX
•    James A. Clair, M.P.A., M.S., Chief Executive Officer, Goold Health Systems, Augusta, ME

Panel 2
•    Debra A. Draper, Director, Health Care, U.S. Government Accountability Office
•    Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office of Inspector General, U.S. Department of Veterans Affairs
Accompanied by:
o    Maureen Regan, Counselor, Office of Inspector General, U.S. Department of Veterans Affairs

 Panel 3
•    Frederick Downs, Jr., Chief Procurement and Logistics Officer, Veterans Health Administration, U.S. Department of Veterans Affairs
Accompanied by:
o    Andrea Buck, M.D., J.D., National Director of Medicine, Veterans Health Administration, U.S. Department of Veterans Affairs

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Prepared testimony and a link to the webcast are available on the internet at this link: http://veterans.house.gov/hearings/hearing.aspx?newsid=624.