VA, House lawmakers spar over veteran-owned contracting program

Thursday - 12/1/2011, 5:19am EST

Jason Miller, executive editor, Federal News Radio

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The Veterans Affairs Department is on the defensive on its decision on how it is applying a 2006 law.

VA is interpreting a provision in the 2006 Veterans Benefits, Health Care and IT Act to give service disabled veteran-owned firms and veteran-owned small businesses the highest priority only when it comes to contracting within set-aside programs. The department is not giving these firms priority in other types of contracting, such as full and open or through schedules. And it's that decision that is getting VA in hot water with Congress.

Both the Government Accountability Office and House lawmakers strongly disagree with VA's interpretation. In fact, GAO ruled against the agency in October on this issue.

In that case, a service-disabled veteran-owned business (SDVOB), Aldevra, challenged VA's award through the General Service Administration's Federal Supply Schedule for office furniture to a non-SDVOB. Aldevra contends the law requires VA to set aside the contract for service disabled or veteran-owned small businesses (VOSBs) because there were at least two companies capable of doing the work at a reasonable cost.

GAO sustained Aldevra's protest.

And at a hearing Wednesday, VA came under more scrutiny for its decision not to follow GAO's recommendations to rebid the contract as a set aside.

"The VA has made it clear in correspondence and meetings following the Aldevra decision that it has no intention of attempting to clear up its own questions about veterans first," said Rep. Bill Johnson (R-Ohio), chairman of the Veterans Affairs Subcommittee on Oversight and Investigations. "Despite acknowledging a problem, the VA is not trying to solve the problem, nor did it even ask Congress or this committee those questions that needed to be answered years ago. Even after the Aldevra decision and the VA's response, efforts by these two subcommittees to help explain parts of the law that the VA had trouble understanding — several years after its passage — were met with a lack of cooperation on the VA's part."

Decision time coming

VA has until Dec. 15 to tell GAO how it will move forward with the contract.

"The principal reason VA attorneys are not persuaded by GAO's Aldevra decision is because it doesn't contain analysis of all the words of that statue," said VA's deputy general counsel Jack Johnson during the hearing. "The set-aside law provides that for purposes of meeting the Secretary's annual goals for contracting with VOSBs and SDVOSBs, the department shall set aside contracts for them if certain conditions are met."

And Thompson quickly pointed to VA's success in contracting with service-disabled and veteran-owned small firms. In 2011, VA awarded 19 percent of its contracts to service-disabled veteran-owned small businesses and 22 percent of its contracts to small veteran owned businesses. Of that 22 percent, VA counts the 19 percent in that overall number. But that still is significantly more than most agencies, which are below five percent in this category.

The government missed the goal of 3 percent in 2010, awarding 2.5 percent of all contracts to SDVOSBs. The data for 2011 is not available government-wide.

Thompson said VA's accomplishments show it is meeting both the letter and spirit of the law.

Disagreement over the law

But Johnson and other committee members vehemently disagreed.

Johnson said there were at least three different times between 2008 and 2010 that VA officials testified or in official agency documents listed service disabled and veteran owned small businesses as the highest priority for all acquisitions.

"Where in the priority scheme do VSOBs and SDVOBs fall?" Johnson asked Leney. "You said there is a priority and a hierarchy. Putting them in open source, which is the eighth category down, is not putting is not first and second as previously identified in VA acknowledgement of Title 38 requirement. So, a straight forward answer, where do they fall?"

Leney said he is not the person to answer that question, which frustrated Johnson even more.

"We started asking these questions 30 days ago, and we were told the people appearing before this subcommittee today would be able to answer these specific questions," Johnson said.

Thompson said service disabled and small veteran owned businesses are the highest priority within VA set-asides.

But that didn't give Johnson the answer he was looking for either. He said the law doesn't specifically call out set asides, but the "contracting acquisition process."

Thompson disagreed with the committee's interpretation.

"VA has always been of the opinion that the correct interpretation of those veterans first provisions is that within all set-asides service disabled veteran owned businesses stay on top," he said.