Legal Meets Practical

by Sarah Schauerte

Last week, the acting Secretary of Veterans Affairs, Sloan Gibson, told the Senate Veterans Affairs Committee that the VA needs $17.6 billion to fix its healthcare system. According to Gibson, the money would help the VA decrease appointment times and allow it to hire new doctors.

That’s the gist of the request. No permanent reforms proposed. No house cleaning of administrators who profited from making fake reports of prompt patient services. No vows to improve transparency.

While some members of the Senate committee were on board with the request – given the obvious evidence that more money is needed for these purposes – others weren’t impressed. For example, Senator Mike Johanns of Nebraska, questioned whether VA care would improve if it received additional funding.

“This sounds so similar to what we’ve heard over the years,” Johanns said, adding that the committee had routinely met previous VA requests for additional funding. “If you can’t clean up your act, then guess what? You lose out,” he continued. “I don’t think you need more billions and billions of dollars.”

Gibson said the VA would use the $17.6 billion to hire 10,000 new clinical staff members, including 1,500 doctors. It would allocate $6 billion for infrastructure improvements, including building eight new medical facilities and leasing 77 more around the country.

The money would come on top of funds included in a separate bipartisan reform bill that both houses of Congress passed in June. That legislation is in a conference committee to work out differences.

Obviously, additional funds to provide for improved medical services will positively impact veterans in the VA’s healthcare system. But the scary question is, shouldn’t the VA already know how much it needs in order to provide adequate services to its veterans? And now it’s saying that it needs another $17.6 billion to do the job right?

Another point is where the priorities should be. The focus should be on the funds and measures needed for a systemic reform of the VA. Without substantive change, Congress cannot expect the VA healthcare system or its bureaucracy to act any differently than it has in the past. It needs reform to promote accountability and transparency.

We’ll see where this leads us. The VA healthcare system can’t be fixed in a few weeks, or months, or probably even in a few years. But one thing’s for certain – to do so, it needs a surgery, not a Band-Aid.

Did you find this article informative? If so, sign up for Sarah Schauerte’s blog on veterans issues at: https://legalmeetspractical.com. Sarah Schauerte is a veterans lawyer and advocate whose practice focuses on veteran small business issues.

While it is generally small businesses that have to worry about subcontracting out work, a new rule will make this an issue for every contractor.

Section 802 of the National Defense Authorization Act (“NDAA”) for Fiscal Year 2014 provides additional requirements relative to the review and justification of pass-through contracts. Where an offeror for a contract informs the agency pursuant to FAR 52.215–22 of their intention to award subcontracts for more than 70 percent of the total cost of work to be performed under the contract, the contracting officer must: (1) consider the availability of alternative contract vehicles and the feasibility of contracting directly with a subcontractor or subcontractors that will perform the bulk of the work; (2) make a written determination that the contracting approach selected is in the best interest of the Government; and (3) document the basis for the determination. The proposed rule, FAR 15.404-1(h), is being created in order to implement these statutory requirements.

This rule doesn’t apply to FAR Part 19 acquisitions, or acquisitions under the Small Business Program. The interesting aspect of this is that it effectively deters contractors from teaming together where the prime contractor passes through much of a work to a prime contractor. This is likely done to eliminate the middle man – i.e., the prime contractor – and to therefore also eliminate the markup.

This might benefit the government customer (and the taxpayer), but it also potentially reduces the incentive for contractors to team together. Subcontractors performing the bulk of the work might like this teaming arrangement because they don’t want to  deal with the government customer directly (which involves considerable paperwork and liability). Or perhaps they don’t have the past performance to bid, or they have a good relationship with the prime contractor so they want to collaborate.

What do you think? If you want to comment on the proposed rule, you need to do so by September 9, 2014. Access its publication in the Federal Register here.

Did you find this article informative? If so, sign up for Sarah Schauerte’s weekly blog on veteran and small business issues at: https://legalmeetspractical.com.

by Sarah Schauerte

When it comes to protests involving timeliness, these are usually losing battles for the protestors. Late is late, goes the old adage, and unless the situation is entirely beyond the offeror’s control, like weather issues or government closure, protestors should save their time and attorney’s fees.

One exception, however, came into play in a recent Government Accountability Office (“GAO”) protest. There, a protest was sustained when an offeror timely responded to a FedBid “Bid Valuation” request for fuel quotations, but did not timely respond to the contracting officer’s concurrent shorter-deadline, telephonic request for confirmation. AeroSage, LLC, B-409627 (July 2, 2014).

AeroSage had submitted a quotation which prompted a “Bid Validation” request, which directed AeroSage to confirm, by 5:00 p.m. that day, that it could deliver the fuel by March 13, at 9:00 a.m. At 4:36 p.m., AeroSage replied affirmatively to the Validation request via email.

During the time after the FedBid Validation request was sent, but before the response was due, the contracting officer (“CO”) determined that it was appropriate to contact AeroSage, make an offer, and request acceptance prior to delivery. The CO made two telephone calls to AeroSage’s office, at 12:44 p.m. and at approximately 1:45 p.m. In the second call, the CO directed AeroSage to call back by 2:30 p.m., i.e., within 45 minutes, to confirm delivery and accept the offer. When AeroSage did not return his call, the CO deemed this “a rejection of the Government’s offer” and decided to award to the next lowest-priced, technically acceptable vendor.

The GAO held that the agency’s actions were  analogous to a decision to accelerate the closing time for final revised proposals on the proposal due date. This additional requirement for telephonic confirmation was not only unstated in the RFQ, but was inconsistent with the instructions set forth in FedBid’s previously-issued Bid Validation request.

In short, the GAO found that the agency’s actions violated a fundamental premise of government procurements: that offerors must be advised of the bases upon which their proposals will be evaluated. Citing H.J. Group Ventures, Inc., B-246139, Feb. 19, 1992, 92-1 CPD ¶ 203 at 4. Specifically, it was unreasonable for the CO to provide AeroSage approximately 45 minutes to respond to a voicemail while providing no notice that this might be required. AeroSpace had not only timely replied to the Bid Validation request, but there was nothing in the record to suggest that it would not deliver as promised. The GAO concluded by saying that it found that the CO had improperly imposed an additional unstated requirement.

AeroSage was awarded its costs and fees in the appeal. However, the work it had bid on had already been fully performed by the awardee. This means that for all intents and purposes, all AeroSage got out of this protest was a free piece of paper validating its position. This raises the question – is making a point worth the trouble of a protest?

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by Sarah Schauerte

*Update – In late July, the Senate unanimously approved Mr. McDonald’s nomination as the next VA secretary. He will replace acting Secretary, Mr. Sloan Gibson, who has occupied the position since Mr. Eric Shinseki’s resignation in mid-May. 

On Monday, President Barack Obama announced his nomination of former Procter & Gamble executive Robert McDonald as the next Secretary of the United States Department of Veterans Affairs (“VA”). This, of course, comes on the heels of former Secretary Eric Shinseki’s resignation last month, which followed high-profile scandals surrounding several VA medical centers.

While Shinseki initially expressed his intention to remain as Secretary, this changed after a report by the VA’s Office of Inspector General confirmed the public’s worst fears about veteran treatment and “fudging the numbers” at the healthcare center in Phoenix.

In tapping McDonald for the post, Obama is signaling his desire to install a VA chief with broad management experience. McDonald also has a military background, graduating near the top of his class at the U.S. Military Academy at West Point and serving as a captain in the Army, primarily in the 82nd Airborne Division.

McDonald resigned abruptly from Procter & Gamble in May 2013 amid pressure from investors concerned that he was not doing enough to boost the company’s performance. This isn’t the best way to depart, but we don’t know what this actually means. When his nomination is approved by the Senate, which must happen to solidify the appointment, I’m sure more information about his past with Procter & Gamble will become public.

Personally, I believe that someone with a strong business background is a smart pick for the new Secretary. The VA is in desperate need of someone skilled in process improvement, practical solutions, and who possesses business savvy. We need someone who makes improvements and changes with actual teeth. We don’t need more memorandums and reports.

One thing important to remember, however, is that McDonald is inheriting a broken system. The VA isn’t going to significantly improve, quickly, regardless of who Obama places in charge. I think most people know we can’t expect a fast fix, but this is worth mentioning. We’re appointing a Secretary, not a Superman.

Another issue is red tape. Even if McDonald has the capacity to effect change, what type of process must he go through to do so? The bureaucratic nature of the system might impede him.

Good luck to Mr. McDonald. He’s going to need it.

Did you find this article informative? If so, sign up for my weekly legal blog on veterans issues at: https://legalmeetspractical.com.