- The Washington Times
Wednesday, October 8, 2014

As far back as 2012, a Department of Veterans Affairs advisory board was warning about excessive sway that reverse auction firm FedBid, a well-connected contractor employing former top White House officials, had on VA contracting officers.

One internal VA email obtained by The Washington Times shows that the VA advisory group warned in 2012 that contracting officers inside the Veterans Health Administration had been told that “the use of FedBid is mandatory, and that they can take no other path.”

That and other emails obtained by The Times provide further evidence that some VHA employees had cozy relationships with FedBid — the subject of a scathing inspector general’s report last week.

Investigators found that a top VHA contracting official, Susan Taylor, along with FedBid officials, plotted to discredit another VA official who questioned whether the company’s reverse auction business saved the government as much money as the contractor claimed.

Ms. Taylor, who has since been removed from her job, leaked nonpublic information, gave false statements and strong-armed staff into using FedBid, according to the report, which also revealed the company’s aggressive behind-the-scenes lobbying.

“Need to assassinate his character and discredit him,” former FedBid President Glenn Richardson wrote in an email to colleagues, referring to the VA procurement official, Jan Frye.

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Mr. Frye angered FedBid by enacting a moratorium in 2012 on the use of reverse auctions amid complaints from suppliers about costs.

In the wake of the report, Rep. Mike Coffman, Colorado Republican and chairman of the House Veterans’ Affairs investigative subcommittee, questioned whether FedBid should be allowed to continue doing business with the VA.

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,” the congressman said in a letter last week to new VA Secretary Robert McDonald.

In 2012, VA suppliers were growing increasingly concerned about FedBid, which handled VHA’s reverse auctions — a form of contracting in which sellers, not buyers, bid against one another. FedBid handles most of the government’s reverse auctions.

Former VA Chief of Staff Harold Gracey, a retired career federal executive, worked with a contractor who put together a group of VA contractors and suppliers to advise the agency on how to improve its procurement process.

In an interview, Mr. Gracey said the industry advisory group was concerned about FedBid and how VA was acquiring some medical supplies through reverse auctions.

“There were concerns they were paying more than they would have had to pay if they’d gone through the federal supply schedule,” Mr. Gracey said.

Mr. Gracey helped the advisory group put its concerns in writing. In an email to Mr. Frye in 2012, Mr. Gracey told the senior procurement official of concerns among VHA contract officers who were told they had to use FedBid for reverse auctions.

He also passed along a spreadsheet with a list of seemingly “inappropriate” reverse auction procurements, according to the email.

Mr. Gracey said the industry advisory group also gave a formal presentation to top VA acquisition officials, including Ms. Taylor.

“Susan was vehement in saying they were wrong on almost every point, that specifications were terrific, contracting officers were doing their jobs and VA was in fact not paying any fee to FedBid,” Mr. Gracey told The Times.

He said she became so adamant that the meeting took a nasty turn.

“I kind of interrupted and said, ‘Let’s all agree that it works for some things and not for others and not just argue,” Mr. Gracey said.

In response to questions Wednesday, a FedBid spokesman provided a statement by email saying the company cooperated with the inspector general’s investigation and believes it took “appropriate actions” to protect its business.

“Our company has always been transparent about its fee structure and the savings the FedBid marketplace can facilitate when buying commodity goods and simple services. It is important to point out, as our data demonstrates, that this report does not dispute that the FedBid marketplace stimulated competition that resulted in lower prices for VHA.”

The VA inspector general’s report also revealed undue pressure on contracting decisions. A similar case surfaced last year when the General Services Administration inspector general released an audit detailing how top managers were overruling contracting officers on behalf of influential contractors.

Brian Miller, a former GSA inspector general, said Wednesday that although the VA report raised troubling and serious questions, the news wasn’t all bad.

“The good news coming out of the IG report is that at least one person stood up and did the right thing. A courageous senior procurement executive did the right thing and suffered for it,” Mr. Miller said.

“Contracting officers at times need supervision, but when a supervisor is shilling for a particular contractor, it undermines the integrity of the whole process and sends the message to the public and the entire contracting community that influence can buy government contracts,” Mr. Miller said.

FedBid’s advisers, employees and directors include Joe Jordan and Steve Kelman, both formerly in charge of the White House’s office of federal procurement policy.

The company also relied on former Rep. Chet Edwards and retired Gen. George W. Casey Jr. to help lobby VA officials to overturn Mr. Frye’s reverse auction moratorium.

Mr. Jordan was not named in the inspector general’s report. He left the White House in December while Congress and the Government Accountability Office were scrutinizing reverse auctions.

Mr. Jordan oversaw federal procurement policy across the federal government. The Washington Times filed a Freedom of Information Act request with the Office of Management and Budget seeking information on post-employment ethics rulings related to Mr. Jordan’s move, but the White House has yet to respond.

• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.

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