[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
VA CONTRACTING: CHALLENGES IN
COMPETITION AND CONFLICTS OF INTEREST
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JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
AND THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, JULY 20, 2023
__________
Serial No. 118-27
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via http://govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-172 PDF WASHINGTON : 2024
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COMMITTEE ON VETERANS' AFFAIRS
MIKE BOST, Illinois, Chairman
AUMUA AMATA COLEMAN RADEWAGEN, MARK TAKANO, California, Ranking
American Samoa, Vice-Chairwoman Member
JACK BERGMAN, Michigan JULIA BROWNLEY, California
NANCY MACE, South Carolina MIKE LEVIN, California
MATTHEW M. ROSENDALE, SR., Montana CHRIS PAPPAS, New Hampshire
MARIANNETTE MILLER-MEEKS, Iowa FRANK J. MRVAN, Indiana
GREGORY F. MURPHY, North Carolina SHEILA CHERFILUS-MCCORMICK,
C. SCOTT FRANKLIN, Florida Florida
DERRICK VAN ORDEN, Wisconsin CHRISTOPHER R. DELUZIO,
MORGAN LUTTRELL, Texas Pennsylvania
JUAN CISCOMANI, Arizona MORGAN MCGARVEY, Kentucky
ELIJAH CRANE, Arizona DELIA C. RAMIREZ, Illinois
KEITH SELF, Texas GREG LANDSMAN, Ohio
JENNIFER A. KIGGANS, Virginia NIKKI BUDZINSKI, Illinois
Jon Clark, Staff Director
Matt Reel, Democratic Staff Director
------
SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
MATTHEW M. ROSENDALE, SR., Montana, Chairman
NANCY MACE, South Carolina SHEILA CHERFILUS-MCCORMICK,
KEITH SELF, Texas Florida, Ranking Member
GREG LANDSMAN, Ohio
------
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
JENNIFER A. KIGGANS, Virginia, Chairwoman
AUMUA AMATA COLEMAN RADEWAGEN, FRANK J. MRVAN, Indiana, Ranking
American Samoa Member
JACK BERGMAN, Michigan CHRIS PAPPAS, New Hampshire
MATTHEW M. ROSENDALE, SR., Montana SHEILA CHERFILUS-MCCORMICK,
Florida
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
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THURSDAY, JULY 20, 2023
Page
OPENING STATEMENTS
The Honorable Matthew M. Rosendale, Sr., Chairman, Subcommittee
on Technology Modernization.................................... 1
The Honorable Sheila Cherfilus-McCormick, Ranking Member,
Subcommittee on Technology Modernization....................... 2
The Honorable Jennifer A. Kiggans, Chairwoman, Subcommittee On
Oversight and Investigations................................... 3
The Honorable Frank J. Mrvan, Ranking Member, Subcommittee On
Oversight and Investigations................................... 4
WITNESSES
Mr. Michael Parrish, Chief Acquisition Officer and Principle
Executive Director, Office of Acquisition, Logistics and
Construction, U.S. Department of Veterans Affairs.............. 5
Accompanied by:
Mr. Phillip Christy, Deputy Executive Director, Office of
Acquisition, Logistics and Construction, U.S. Department
of Veterans Affairs
Ms. Angela Billups, Ph.D., Senior Procurement Executive and
Executive Director, Office of Acquisition and Logistics,
U.S. Department of Veterans Affairs
Mr. Joseph Maletta, Executive Director of Acquisition,
Procurement & Logistics Office, Veterans Health
Administration, U.S. Department of Veterans Affairs
Ms. Luwanda Jones, Deputy Chief Information Officer for
Strategic Sourcing, Office of Information & Technology,
U.S. Department of Veterans Affairs
APPENDIX
Prepared Statement Of Witness
Mr. Michael Parrish Prepared Statement........................... 27
Statement For The Record
Ms. Shelby S. Oakley............................................. 31
VA CONTRACTING: CHALLENGES IN COMPETITION AND CONFLICTS OF INTEREST
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THURSDAY, JULY 20, 2023
U.S. House of Representatives,
Subcommittee on Technology Modernization,
Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs,
Washington, DC.
The subcommittees met, pursuant to notice, at 9:25 a.m., in
room 360, Cannon House Office Building, Hon. Matt Rosendale
[chairman of the subcommittee on Technology Modernization]
presiding.
Present for the Subcommittee on Technology Modernization:
Representatives Rosendale, Self, Cherfilus-McCormick, and
Landsman.
Present for the Subcommittee on Oversight and
Investigations: Representatives Kiggans, Bergman, Rosendale,
Radewagen, Mrvan, Cherfilus-McCormick, and Pappas.
OPENING STATEMENT OF MATTHEW M. ROSENDALE, SR., CHAIRMAN,
SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
Mr. Rosendale. The subcommittee will come to order. Good
morning, everyone, now that the Veterans Administration (VA)
has opted to provide witnesses, we are here today to resume our
May 24th conversation about the competition and conflicts of
interest of the VA contracts. We will be broadening our focus
from IT contracts to consulting and professional services
contracts. VA spends over $3 billion a year on management
consulting contracts with companies ranging from the largest
multinational consulting firms to boutique shops that rely on
the VA for most of their business. Similar to the IT sector,
the top 10 consulting firms receive about 40 percent of the
VA's consulting dollars. These companies support nearly every
function of the Department including contracting with other
companies, and the VA is increasingly relying on them.
I have no doubt that many of them operate ethically. The
ranks of government contracting have never been known to be
filled with saints. Of all areas of contracting, consulting and
professional services contracts are the most fraught with
conflicts of interest. That is not my opinion. That is what the
regulators and regulations say. When contractors are virtually
indistinguishable from government employees and they are privy
to the most information that passes through the agency, there
is a lot of opportunity to exploit access to nonpublic
information.
Here are some examples. In March, the Wall Street Journal
reported that McKinsey consulted for VA on internal management
while advising its opioid manufacturer clients how to sell more
pain pills to the Department. That is problematic on so many
levels. Let us not forget that happened during the height of
the opioid epidemic that has shaken hundreds of thousands of
lives and upended countless others. We have been getting
complaints for years about how the VA's medical distributors
substitute their own usually more expensive products for those
of VA's contracted suppliers.
It also seems to be a standard practice for VA
organizations to hold their offsite leadership meetings and
planning retreats in contractors' facilities. Not only are key
strategic decisions made with contractors present, they are
made under the contractors' roofs. We have seen time and time
again how the same companies that staff the offices of VA
decision makers tend to get contracts to perform projects for
those other offices, not to mention when former VA executives
take jobs with companies whose contracts quickly multiply.
The revolving door on Capitol Hill rightfully gets a great
deal of scrutiny, but it is swinging out of control in Federal
agencies such as VA. We are not just talking about the actual
conflicts of interest, but statute also describes the
perception of. We have to eliminate both.
For all these reasons, Chairwoman Kiggans and I found it
unbelievable when Secretary McDonough stated in a May 31st
letter that no organizational conflicts of interest exist among
VA contractors. That is just absurd. I am going to let Ms.
Kiggans describe her letter but let me emphasize how
implausible the VA's answer is. VA's position seemed to be that
in more than $3 billion of consulting contracts annually, there
is nothing to worry about. Nothing to see here.
On the contrary, I intend to lay out the situations that
are happening as we speak in the VA, as reported by concerned
employees and other companies. I welcome our witnesses'
explanations. This issue is crucial to the integrity of the VA
as an organization and its ability to serve our veterans. A
culture of cutting ethical corners creates a breeding ground
for fraud. That is not hypothetical.
Every month, we see indictments and convictions involving
companies defrauding the VA, often paying kickbacks or bribes.
These schemes are keeping U.S. attorneys all over America busy.
I want to encourage every company that plays by the rules to
keep doing the right thing, and I urge everyone who sees
conduct that may be criminal to report it to the VA Office of
Inspector General Hotline. Thank you. With that, I will
recognize Ranking Member Cherfilus-McCormick for her opening
statement.
OPENING STATEMENT OF SHEILA CHERFILUS-MCCORMICK, RANKING
MEMBER, SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
Ms. Cherfilus-McCormick. Thank you, Mr. Chairman. Thank
you, Technology Modernization Subcommittee. The Technology
Modernization Subcommittee conducted extensive oversight of VA
modernization and IT contracting last year. A common thread
identified was a fundamental lack of planning, budgeting, and
adherence to contracting best practices by VA in its
contracting center. VA Acquisition Management has been on the
Government Accountability Office (GAO) high risk list since
2019. GAO has also catalogued issues with competition for IT
contracts. While VA's annual IT obligations have increased from
42 billion in 2017 to 6.5 billion in 2021, the number of
companies receiving those awards have decreased.
A particular concern of mine is the management and
oversight of the Transformation Twenty-One Total Technology
Next Generation (T4NG) enterprise Contract run by the
Technology Acquisition Center. The vehicle, which is currently
being recompeted, has historically been dominated by a few
large companies. The vehicle supports a number of IT programs
across the VA. I do not think I have to mention again the
record of success that VA has had with IT. It brings it into
question how well VA is vetting and managing not only who is on
the vehicle, but as how those companies are evaluated.
I realize that the VA is at a disadvantage when it comes to
holding these large companies accountable and attempting to
mitigate conflicts of interest. Regardless, we need to find
ways to hold poor performers that continue to win work at the
VA accountable. It is unacceptable that we continue to award
companies over and over again that have not led successful
programs at the VA. Hopefully, our hearing today will provide
insight into their needs and resources that Congress can
provide. Thank you again for holding this important hearing,
and I look forward to our discussion this morning. I yield
back.
Mr. Rosendale. Thank you Ranking Member Cherfilus-
McCormick. I now recognize Chairwoman Kiggans for her opening
remarks.
OPENING STATEMENT OF JENNIFER A. KIGGANS, CHAIRWOMAN,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
Ms. Kiggans. Thank you, Chairman Rosendale. I am glad you
and I were able to bring our subcommittees together to
collaborate on this important issue. Whether it is in corporate
boardrooms, public agencies, law firms, or institutions
throughout this country, conflicts of interest are ignored at
great peril. Conflicts of interest have given rise to countless
scandals and ended many careers. I know everyone in this room
takes this issue very seriously. From what I have seen in my 6
months on this committee, the Department of Veteran Affairs
seems to have become complacent with its contractors' potential
conflicts of interest.
In 2021, the VA doled out over $38 billion to contractors.
Every day, contractors are advising, analyzing, researching,
drafting, and contributing to decisions at all levels of the
Department. Sometimes it appears the contractors are even
making some of the Department's decisions themselves.
Today, a litany of consulting firms, healthcare suppliers,
and other companies have spun the VA into a web of competing
financial interests. VA's leaders appear surprisingly
unconcerned about the situation and unmotivated to untangle the
Department. This has very real consequences. Every dollar that
is wasted on a contracting boondoggle fails to reach the
doctors, nurses, and other professionals who directly serve our
veterans. It is no wonder why, even as the VA's budget
continues to grow, the quality of services that veterans
receive barely improves. Veterans and taxpayers deserve to know
that decisions in the VA are being made in the public interest
by VA employees, not outsourced to unaccountable contractors
who may harbor conflicts of interest.
In March, I sent a letter to Secretary McDonough asking him
how many times a VA contracting officer identified, mitigated,
or otherwise resolved a contractor's potential or actual
conflict of interest in the last two fiscal years. I wanted to
know what the VA is doing to make sure that companies are
operating on an even playing field. The Secretary's response on
May 31 was not believable. It was, as I quote, ``the VA has no
occasions where a contracting officer identified a potential or
actual organizational, personal, or other conflict of interest
in a solicitation or contract award for advisory and assistance
services.'' Given everything we know about the size of VA
spending and what functions have been outsourced, this was
implausible. This would be like a town taking all its police
off the beat and the citizens believing there is no more crime
because arrests stopped happening.
As Chairman Rosendale described, the Wall Street Journal
highlighted a very serious potential conflict of interest on
the part of McKinsey. For several years, they were carrying out
a wide range of consulting projects for the VA while
simultaneously advising pharmaceutical companies how to target
the VA to increase their opioid sales. Somehow no one said a
word about this until it was revealed years later. Secretary
McDonough's response made it clear that the VA had no concern
whatsoever about McKinsey's web of clients impacting its work
for the department. I am eager to hear the witnesses here today
explain this attitude toward contracting with a company that
paid a $600 million settlement for their role in the opioid
epidemic.
McKinsey is not the only one. I have heard numerous
complaints from employees and contractors about VA's apparent
disinterest in managing organizational conflicts of interest. I
find the magnitude of the spending on consultants questionable.
Worse than that, when conflicts of interest are allowed to
fester, that money is lining pockets rather than supporting
veterans. This is fundamentally unacceptable. I look forward to
hearing from our witnesses today about how we can clean this
up. Thank you, Chairman Rosendale. I yield back.
Mr. Rosendale. Thank you, Chairwoman Kiggans. I now
recognize Ranking Member Mrvan for opening statement that he
may have.
OPENING STATEMENT OF FRANK J. MRVAN, RANKING MEMBER,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
Mr. Mrvan. Thank you, Chairman. As the chairman last
Congress of Technology Modernization Subcommittee, and as
ranking member of the Oversight and Investigations Subcommittee
this Congress, I have seen how large an impact contracting has
on the VA. My staff has heard of competition and conflict of
interest issues with acquisitions across the Department. A
major concern of mine is with the lack of oversight and
controls of the medical surgical prime vendor contracts. MSPV
is a collection of contract vehicles that enable VA to
streamline supply chain management for an array of medical
supplies. We have heard that large companies awarded contracts
for distributing these supplies have historically been granted
conflict of interest waivers. These waivers would allow a
company to not only distribute supplies, but also sell their
own supplies at the expense and in place of service-disabled
Veteran Owned Small Businesses (VOSBs) that have contracts to
provide supplies for the VA. VA has assured our committee that
these waivers are no longer a part of the MSPV contracts but
that has not remedied all the issues that veteran owned small
businesses are experiencing.
We all know on this committee that the VA lacks a
sophisticated and well-equipped acquisition structure and
workforce. Committee members all know that VA does not have the
requisite employees to thoroughly oversee these huge vehicles.
That does not absolve the acquisition leadership from doing
better. The fox is in the hen house when it comes to providing
supplies across VA and veteran small businesses are suffering.
Today is an opportunity to voice to members of this
committee your needs to ensure that competition is a priority
of the Department and what exactly is needed to remedy the
issues of conflicts of interest. I look forward to hearing from
our witnesses this morning and I yield back.
Mr. Rosendale. Thank you, Ranking Member Mrvan. I will now
introduce the witnesses on our first and only panel. First, we
have Mr. Michael Parrish, VA Chief Acquisition Officer. He is
accompanied by Mr. Philip Christy, the Deputy Executive
Director of the Office of Acquisition, Logistics and
Construction, and Dr. Angela Billups, VA Senior Procurement
Executive. We also have Mr. Joseph Maletta, the Veterans Health
Administration Executive Director of Acquisitions. Finally, we
have Ms. Luwanda Jones, Deputy Chief Information Officer for
Strategic Sourcing. I ask the witnesses to please stand and
raise your right hands.
[Witnesses sworn.]
Thank you. Let the record reflect that all witnesses have
answered in the affirmative. Mr. Parrish, you are now
recognized for 5 minutes to deliver your opening statement on
behalf of the panel.
STATEMENT OF MICHAEL PARRISH
Mr. Parrish. Good morning, Chairman Rosendale, Chairwoman
Kiggans, Ranking Member Cherfilus-McCormick, Ranking Member
Mrvan, and members of the subcommittees. I am pleased to appear
before you today to discuss the competition trends in VA's
procurement, VA's enforcement of organizational conflict of
interest regulations, and the Department's use of professional
and management consulting services contracts. Joining me today,
as you stated, Mr. Chairman, are my colleagues, Mr. Phil
Christy, Deputy Executive Director of the Office of
Acquisition, Logistics and Construction, Dr. Angela Billups,
our Executive Director of the Office of Acquisition and
Logistics and also the VA Senior Procurement Executive, Ms.
Luwanda Jones, our Deputy Chief Information Officer for
Strategic Sourcing from the Office of Information Technology,
and Mr. Joseph Maletta, Executive Director for Acquisitions
from the Veterans Health Administration.
As the committee is aware, VA's procurements of goods and
services has grown from 20 billion in Fiscal Year 2012 to over
56 billion in 2022, which is 177 percent increase over the 10-
year period. This increase represents a significant rise in
procurement workload and the need to efficiently and smartly
execute all the contracting requirements that support VA's
mission needs. Even with this increase, VA has always placed
great importance on adhering to all laws and regulations and
maintaining the trust of veterans and taxpayers in the proper
execution of the procurement of all goods and services that
support our mission.
To deal with the major increase in procurement activities
over the last 10 years, VA has established a formal category
management program to support the smart and efficient execution
of how we buy goods and services. This program is consistent
with the Office of Management and Budget, OMB, Memoranda M-19-
13 Category Management: Making Smarter Use of Common Contract
Solutions and Practices.
It is important to note that category management has not
resulted in the loss of competition nor hindered VA's
enforcement of organizational conflict of interest regulations.
In fact, we have demonstrated exceptional results in the last 5
years, and our competition rates as of July 10 are currently
achieving a 97 percent competition rate for all procurements to
date. Also in Fiscal Year 2022, VA achieved a 90 percent spend
under management, exceeding the OMB goal of 87 percent.
VA aggressively promotes the use of fair competition and
opportunities among all prospective vendors for VA awards. We
use a variety of contracting vehicles to meet the Department's
needs to ensure competition and deliver results that save
taxpayer dollars while providing world class healthcare and
benefits to our veterans. However, the use of these contracts
are not prioritized at the expense of our agency's Veterans
First Contracting program, nor our small business goals. VA's
procurement processes include risk management controls to
ensure compliance with applicable laws, regulations, and VA
policy. We are further strengthening our acquisition maturity
and oversight by rolling out our new acquisition lifecycle
framework, commonly known as ALF, which complements our
improved governance structure.
Because of VA's large annual spend on contracts, it is not
uncommon for a vendor to be selected for several different
requirements, but the Department follows Federal Acquisition
Regulations, or FAR, and the appropriate law. It should be
noted that contractors are selected based upon their competency
and ability to successfully respond to the solicitation
requirements. Many companies have multiple areas of expertise
and compete on requirements for different services throughout
the enterprise. VA takes the concern of organizational conflict
of interest very seriously, as do I personally, and we ensure
its contract awards comply with the FAR, the VA Acquisition
Regulation, as well as the VA Acquisition Manual.
In the last 12 months, VA has received three major Oracle
Cloud Infrastructure (OCI) complaints by industry, which were
independently investigated by the Government Accountability
Office, GAO, who also determined that those OCIs did not exist
and that VA did indeed follow the proper procedures in the
determination process. VA does not have--or does have one
current high visibility OCI allegation which is still under
investigation and will follow the established procedures to
make a final determination once that investigation is complete.
Regarding the use of professional management and consulting
services, VA is carefully monitoring this category of spend for
work conducted by contractors while also looking for
duplication of efforts as part of our category management
program. VA is committed to addressing organizational conflicts
of interest and finding ways of limiting the amount of taxpayer
dollars being spent in government on professional services
contracting to ensure they are only doing what the Department
truly needs.
While we at VA are following the FAR and continue to remain
in compliance with the law, there is more that we can do and as
Chief Administrative Officer (CAO), I have placed this among
one of my top priorities and am adding additional policies and
reviews where appropriate to ensure we are doing everything we
can to ensure full and fair competition for all potential
vendors to have an equal opportunity for government contracts.
For example, we are incorporating a truly independent
validation and verification contract to strengthen our
oversight. We just rolled out a draft RFP, request for
proposal, on Tuesday to get industry's input to make sure that
we are planning on initiating the IVV for our major acquisition
programs by the end of the year, which is in line with the
draft legislation that you are proposing. This will enable
true, independent, and agnostic oversight to validate and
provide confidence that we have asked the contractor to do
what--asked them to do was properly delivered on time and on
budget.
Chairman Rosendale, Chairwoman Kiggans, Ranking Member
Cherfilus-McCormick, Ranking Member Mrvan, and members of the
subcommittees, thank you for the opportunity to speak here
today. My colleagues and I are pleased to answer any questions
you may have.
[The Prepared Statement Of Michael Parrish Appears In The
Appendix]
Mr. Rosendale. Thank you, Mr. Parrish. We will now proceed
to questioning, and I would like to recognize Chairwoman
Kiggans for 5 minutes of questioning.
Ms. Kiggans. Thank you, Mr. Chair. Mr. Parrish, do you
stand by the Secretary's May 31 response to my letter stating
that no potential or actual organizational conflicts of
interest existed in any advisory and assistance contracts in
2021 or 2022, or would you like to amend that response?
Mr. Parrish. I stand by that statement to the best of my
knowledge, ma'am.
Ms. Kiggans. My understanding is the VA contracting
officers who ultimately report to you are relying on the
contractor certifications that they do not have any conflicts
of interest. Is that correct?
Mr. Parrish. That is one of the steps in the process of a
contract solicitation, correct.
Ms. Kiggans. Mr. Parrish, have you instructed the
contracting officers to do anything further like identify the
other work a contractor is performing, or the business
relationships a company has, or consider whether the
representation seems to be true?
Mr. Parrish. Let me pass that off to Dr. Billups, who can
answer some of the processes that we have inside the VA. Dr.
Billups.
Ms. Billups. Thank you and good morning, everyone. What we
actually do at the VA, we actually follow the requirements in
the Federal Acquisition Regulation. In the Federal Acquisition
Regulation, it actually lists a requirement for those
contractors to certify any potential conflicts of interest. In
addition to them identifying that, those contracting officers
take that information that is in the proposal and they look at
that to determine whether or not the information that was
provided by that potential offeror, if there is additional
information that needs to be considered, or if there is
something there that would trigger them to make a different
decision, the contracting officer. They follow the procedures
that are there.
Last year, well, let me step back, 2021, we actually looked
at the personal conflicts of interest and we updated that area
for standardized guidance throughout the VA, working with the
Office of General Counsel, actually updated some training and
ethics for the politicals that were coming into VA. One of the
other things that we did in 2022, is updated the area in the VA
supplement to the FAR as it relates to OCIs, as well as our
internal procedures, guidance, and instructions, called the VA
Acquisition Manual.
All of these things--excuse me--are what the contracting
officers and the Heads of Contracting Activities (HCAs) are
using before they award these contracts. All of these things
should be at least that first step toward looking at whether or
not there is an issue that needs to be considered around this
area of conflicts of interest.
Ms. Kiggans. As a follow up to that, Dr. Billups, so we are
pretty much taking the contractors' word for it that they are
operating above board and under the letter and spirit of the
conflict-of-interest regulations. You know, is that good
enough? Do you believe that is adequate?
Ms. Billups. That is what is required by the regulation
from the standpoint of the certification and of course in the
Federal Acquisition Regulation, there are also remedies. If we
find later on that a contractor has certified that there are no
organizational conflicts of interest, if we find something out
later on, we have remedies that are already in the FAR. We can
use the suspension and debarment, as well as other remedies. In
addition, to that if it is something that we find out we also
can create mitigation plans for those OCIs when they do come to
our attention.
From the letter that you sent to the Secretary in March,
working with those heads of those contracting activities who
all of the contracting officers report to, the information that
came back was that there were none that aligned with the
request that you had in your letter.
Ms. Kiggans. Also as a follow up, how many times do you
have to do the mitigation response where a conflict is
identified and you actually have to take some action like
mitigation response?
Ms. Billups. I have been at VA now for almost 4 years and
none of those have come to my attention. I am not sure if there
has been any for MSPV or other areas if someone else has some
input to that.
Mr. Christy. Good morning. I just want to add two things.
Obviously, everything that Dr. Billups has said is correct.
With the letter and meeting with your staff, after we met one
of the things that we went back to is that as part of category
management we are required to submit formalized plans to OMB.
Part of that plan is identifying duplication, i.e., contracts
with the same contractors. We are going to start using that
information to share with the contracting offices saying, hey,
this company A has 200 contracts with the VA. We need to look
at that and see if there is possible overlap.
Everything that Dr. Billups talked about certification, is
absolutely true. We are going to start taking more steps and
then using the information from our category management plans
to help the contracting field. The contracting officers that
may not have that total visibility--give them those lists and
say, hey, these contractors have multiple contracts throughout
the VA, is there overlap?
I will share with you a lot of times especially, you know,
we have about 3,000 contracting officers in the VA. About
2,300, 2,400 of them are out in the field and they do not
always see everything what everyone's buying on your left and
right. We are going to try to strengthen that, to capture that.
That is why we are not seeing in the system, and by the way the
system, at the moment, does not have a way for us to say, hey,
was there an OCI here to kind of trigger through the system. A
lot of this is through a manual data call that requires us, no
kidding, to flip through pages to see was there an OCI, is
there a mitigation there? We are not able to run an electronic
report or have visibility at that level. These are things,
obviously, since the letter that we have talked about and are
going to start looking at that capability to attack this
problem.
Ms. Kiggans. Do you know what the timeline will be then for
when you will start, because you are not currently doing all
that.
Mr. Christy. The category management plans, obviously, the
information from there, those are pretty much wrapped up for
2024. The information in them will be distributed probably
within the next week or two to highlight folks like, hey, we
have these many contracts with company XYZ and make sure that
we start to get that out there. Part of the category management
team is also going to be looking at going, hey, these 200, and
I am just using fictional numbers here, these contracts with
this particular company, let us see how similar they are and
are they in similar mission sets? You know, so you could have
one in Veterans Health Administration (VHA), you could have one
of Veterans Benefits Administration (VBA), but if we have some
that look like there is overlaps there, we are going to start
to trigger that and say, okay, hey, let us reach out to the
contracting officer. Are you aware that we have one here and
here that look similar? We need to take a peek at it to make
sure that the contracting officer has that knowledge to make a
determination about the OCI.
Ms. Kiggans. I would love to hear a report of what that
looks like once you implement it and how many conflicts you
find, and any you are working out, or if you are ending the
contract, or just kind of what the outcome of that action will
be. Thank you for taking that outcome or that approach.
Mr. Parrish, if I could ask one other oh, I am sorry. I am
very over. Okay. I will save it for later.
Mr. Rosendale. Thank you, Chairwoman Kiggans.
Ms. Kiggans. Thank you very much.
Mr. Rosendale. I appreciate that.
Ms. Kiggans. I yield.
Mr. Rosendale. I now recognize Ranking Member Cherfilus-
McCormick.
Ms. Cherfilus-McCormick. Thank you, Mr. Chairman. As is
common now in Federal contracting, smaller companies are
acquired by larger government contractors, which leads to
decreased competition and conflict of interest. There has
certainly been the case from our observation of the T4NG
contracting vehicle, which is used by the VA and administered
by the Technology Acquisition Center. GAO's testimony from our
last hearing in recent reports highlighted that as dollar
amounts have increased for IT contracting at VA, that the
number of recipients of the awards have decreased. Ms. Jones,
from your observation, has the Technology Acquisition Center
done a sufficient job to manage the number of companies that
were on the T4NG vehicle?
Ms. Jones. Thank you for that question, ma'am. We have
definitely oversight of the T4NG vehicle. I just want to
highlight from an IT perspective, every acquisition that is
awarded goes through the Federal IT Acquisition Reform Act
known as FITARA. We are looking at those particular--the Chief
Information Officer (CIO) is responsible for all acquisition
strategies and acquisition plans. Additionally, before anything
is awarded on T4, or a General Services Administration (GSA)
vehicle, or Solutions for Enterprise-Wide Procurement (SEWP)
vehicle, we conduct extensive market research. We feel that we
are managing and are overseeing that contract appropriately.
Ms. Cherfilus-McCormick. Realizing that the new version of
T4NG is currently being protested, we do not know which
contractors will be eligible. What has VA proactively done to
ensure that you are not limiting the pool of competition?
Ms. Jones. First of all, we continue to conduct market
research. I want to highlight the T4, and especially from a
service disabled, veteran owned small businesses and VOSBs,
that T4 contract is, to our knowledge, the only contract in the
Federal Government that part of the acquisition evaluation is
veterans' employment. From the time T4 was initiated in 2016,
those vendors hired 16,000 veterans. Today, there are 58,000
veterans hired by those vendors on the T4 contract.
Ms. Cherfilus-McCormick. You have not done anything
proactively, is that what you are saying?
Ms. Jones. I think we have done a lot proactively to make
sure that every acquisition that we do is competed
competitively.
Ms. Cherfilus-McCormick. In these circumstances, could you
list what you have done? What proactive steps have you done to
make sure that you are not limiting the pool, just need those
steps.
Ms. Jones. I will turn that over to Mr. Christy.
Mr. Christy. Yes, let me jump in here real quick. Before
the solicitation went out, there were three industry days where
we had an opportunity for all of industry, so this went out
through SAM.gov, a worldwide announcement, hey, this is in our
requirement that is coming out. We want people to be
interested. Here is what it means. We had multiple industry
days, both virtually and in place to talk about what that was
and to explain what the requirement was and just try to
generate interest into this.
If you will, it was not just the same folks from the
current T4NG but trying to attract new folks to that. The new
T4NG, obviously, at the moment, we are targeting 15 will be
veteran-owned companies that will be on that contract that is
the target for that. The rest will play out depending on who
has the best there. The key there is to generate the interest
and the newness of the folks applying for that.
Also, some different things that we have promoted on there
is the joint ventures and other teaming arrangements. Not only
just kind of just a standalone company, but folks might be able
to come together and propose on this and act as a joint venture
to have opportunity for this.
Ms. Cherfilus-McCormick. How are you measuring the success
of what you are imposing now?
Mr. Christy. At the end of the day, it will be a successful
award of the contract vehicle, and we are targeting 30 awards
for the new T4NG.
Ms. Cherfilus-McCormick. Will the success of recruitment
and making sure everybody is aware of the opportunities, the
proactive steps that you just described, how are you measuring?
What are the variables to say this is a success, or we should
amplify it, or move forward?
Mr. Christy. Yes. This is where we get in a little clarity
management where we do want new people on the contract. The
reality is we put out the rules for how you will be decided if
you win the contract. For whoever wins, wins. It is based on
meritocracy, right? If you had the best solution, you bring the
best value, you could win. That could mean a lot of the
existing contractors. That is why we were trying to, again,
with those industry days and creating the communications before
the solicitation went out, is to try to reach folks that maybe
not be aware of it and/or, hey, there might be other ways that
you could team together to look at this to get on the contract.
Ms. Cherfilus-McCormick. Thank you. Mr. Chairman, I yield
back.
Mr. Rosendale. Thank you, Ranking Member Cherfilus-
McCormick. I now recognize General Bergman for 5 minutes
questioning.
Mr. Bergman. Thank you, Mr. Chairman. Sometimes we learn
from historical examples, sometimes we do not. Does the name
Fat Leonard ring any bells with any of you? Yes, probably the
biggest bribery scandal in at least modern Navy history. I will
say that was an example of how not to.
Mr. Parrish, many of the crimes committed by contractors
against the VA and other healthcare agencies involve bribery,
kickbacks. I want to read to you just a couple of examples from
the Inspector General. A Boston area spinal device company was
charged for paying surgeons between 32,978 in bribes. A Florida
lab owner was charged for perpetrating a $53 million fraud and
kickback scheme related to genetic cancer screening. A doctor
licensed in Texas and Oklahoma allegedly accepted kickbacks in
return for writing prescriptions for certain compounded drugs.
Mr. Parrish, do you have any procedures in place to detect
suspicious ordering patterns, unusual changes to contracts, or
other activities that may indicate criminality?
Mr. Parrish. Let me pass that off to, I think, either Dr.
Billups or Mr. Christy, or we will take that for action and get
an answer back.
Ms. Billups. Thank you, sir, for the question. Some of the
things that--is there something in place today? The answer is
no. One of the things that we are planning on doing is
looking----
Mr. Bergman. Can I ask you a question?
Ms. Billups. Mm-hmm.
Mr. Bergman. If this is not new, why? If you are planning
on doing something, how long do we have to wait before there
are, if you will, triggers in place that would detect activity?
What are we waiting for?
Ms. Billups. We are really not waiting on anything. It is
something that we have been talking about internally. What----
Mr. Bergman. Do we have a timeline? Do we have a plan of
action and milestones where we can say, 6 months from now, a
year from now? What are we thinking here?
Mr. Parrish. Congressman Bergman, I think to get to the
gist of your question is we are implementing independent
verification validation procedures, which will help and go
toward assisting checking on contracts and focusing on the
large contracts initially. We hope to have that in place by the
end of the fiscal year. We have started that by, as I
mentioned, having a draft RFP.
Mr. Bergman. Well, the bottom line, this committee, we
appreciate all you do, but we are required as Members of
Congress to hold to timelines. I just I am curious, I mean, if
I am the Fat Leonard of the guy working inside the VA system to
do what I am doing nefariously and illegally, then I know that
I can just keep on doing it because there are not anything in
place yet. I am a little concerned with that, but I would like
to go down a different way here.
Ms. Jones, as VA CIO, Mr. DelBene committed to recuse
himself from being directly involved in any VA procurement
decisions of importance to his former employer Microsoft. Yet,
since his appointment, the VA awarded Microsoft 1.6 billion
licensing agreement contract on April 1 of 2022. Was Mr.
DelBene involved in the decision?
Ms. Jones. Thank you for that question, sir. The answer is
absolutely, positively no.
Mr. Bergman. Okay. Do you feel any pressure----
Ms. Jones. I feel absolutely no pressure.
Mr. Bergman [continuing]. to give Microsoft extra business?
Ms. Jones. I would say we are not giving Microsoft extra
business.
Mr. Bergman. That is not what I asked you. I said, do you
feel any pressure?
Ms. Jones. I feel no pressure.
Mr. Bergman. Okay. Ms. Jones, what is your policy to ensure
that a broad range of companies can compete for business in
their areas of unique expertise, for example, video
conferencing and cybersecurity, moving forward, given
Microsoft's ability to bundle, because having been in the
private sector, working for small companies, working for large
companies, I know a little bit from personal experience how
things can work. Should we be concerned as the committee that
there is a threat to good competition because of the reason for
making the decision is, well, it is easier to bundle. We can do
with one vendor as opposed to several.
Ms. Jones. The government does not determine, sir, when
industry bundle their products. The Microsoft contract that we
currently have in place was awarded prior to the CIO's
appointment. Second, for every acquisition that we have, again,
we look at the market research to determine----
Mr. Bergman. Okay.
Ms. Jones [continuing]. but we also look----
Mr. Bergman. I appreciate it. My time is up. I yield back.
Ms. Jones. Thank you.
Mr. Rosendale. Thank you, General Bergman. We are going to
recess now for votes. I am sure you all have been tracking, as
I have, and we expect to resume at approximately 10:50, but it
will be 15 minutes after the last vote.
[Recess]
Mr. Rosendale. Okay. We are beginning again. Thank you for
your patience. The country appreciates it. I would now like to
recognize Mr. Mrvan for 5 minutes of questioning.
Mr. Mrvan. Thank you, Chairman. I have introduced
legislation to create an acquisition review board at the VA
this Congress and testimony last week. VA was supportive of
this legislation. I am happy to continue working with the VA on
providing structure and solutions to ensure that the award and
the management of large contracts ensures that we are making
the best use of taxpayer funds and provide better healthcare
and benefits to veterans. Dr. Billups, I appreciate your
testimony and participation in our hearing last week and would
like to give you an opportunity to discuss how this legislation
will help VA with issues relating to conflicts of interest and
competition.
Ms. Billups. Thank you, sir, for the question. This
particular legislation would really help from the standpoint
that this gets back to the heart of just starting to look at a
program from the aspect of that executive that is in charge of
that particular mission area. As that executive in charge of
that particular mission area, they have to put together the
business case to support whether or not VA will actually be
approving the program to move forward.
As it relates to competition and OCI, this is also an area
that they can start looking at also because they are the ones
who know the different contracts that, across their portfolio,
may be using similar contracts, or the executives, their peers
in VBA, VHA, as well as National Cemetery Administration (NCA).
Some of the things that we can work on is helping them to
understand how important some of these areas are as it relates
to competition. What is that current landscape as it relates to
the contractors that are doing business with VA, how those
contractors, and there may be that potential of an
organizational conflict of interest. We are working all of
these things together from the beginning in the outset with
that executive that is in charge, and then moving that into the
acquisition lifecycle where the acquisition workforce can
provide that support, as well as the CIO, the Chief Human
Capital Officer (CHCO), the Human Capital Chief, as well as the
CAO, and Finance and all of that kind of working together. That
is the way that this acquisition review board can really help
us to make some improvements in all of these areas.
Mr. Mrvan. Okay. My follow-up is, Dr. Billups, once we are
able to move this legislation forward and codify this board,
what in the future should we be focusing on as it pertains to
providing you with tools and resources you need to effectively
manage acquisitions and guard against conflicts of interest?
Ms. Billups. We already, at the present time, have a plan
for improving acquisition management from an end-to-end
perspective at the VA. The GAO came out... and I think you
mentioned GAO, Acquisition Management was on the GAO high risk
list as of 2019. We, actually, have done--something that from
what was shared with us from the Comptroller General, is that
VA got its acquisition plan, I mean, its action plan to address
those areas of concern in the GAO high risk list in a matter of
3 years. It has never been done before, according to the
Comptroller General.
What we are doing now, we are moving from a plan to some
strategies and some action. I can tell you we do have some gaps
as it relates to resources to really, fully implement all the
things that we have planned to do. That is one of the reasons
why we put a ticket in for the Accident Review Board (ARB) for
$25 million in 2024. We will need additional resources as we
flush out the activities that are in the plan. In Fiscal Year
2023, we have started working through all those activities that
are in that plan, and we have already identified areas where we
need additional resources.
Mr. Mrvan. Thank you. Mr. Parrish, I wanted to give you an
opportunity to be able to talk about acquisition maturity and
the level that you are taking that to.
Mr. Parrish. Sure. Thank you for that question, Congressman
Mrvan. I guess what I want to highlight here is when I first
took over this role back in March 2021, there was a belief that
acquisition in VA was, you know, focused on individual
administrations and kind of a focus on contracts only. As Dr.
Billups said, we have grown exponentially over the last couple
of years to focus on lifecycle management. Acquisition, as we
say, big A acquisition, and it starts from cradle to grave, and
we have implemented a lot of different policies and processes.
One of the biggest impacts under the guidance and
leadership of Secretary McDonough is around the jointness and
transparency. It is really working collaboratively across the
enterprise, working with all the entities, VHA, VBA, NCA, and
focusing on understanding the business need from the very
beginning, getting the requirements established correctly, and
understanding what success looks like and have those metrics
established before we ever start any major program. It really
gets to the heart of really focusing on a systematic approach
to be able to do some of these deployments of long term, major
complex systems and trying to fix some of these efforts.
More work to do. I am very proud of being part of this
team. As I say, can I borrow from someone, we say acquisition
is a team sport in VA now, and I think everybody is moving
forward in the right direction. We are really working closely
with the CIO, the Chief Financial Officer (CFO), and other
teammates across the enterprise.
Mr. Mrvan. Thank you, Mr. Parrish. Mr. Chairman, with that,
and I had a private moment with you where I want to compliment
him. Besides his tough exterior, I hope you all noticed his Ken
dress-like for Ken and Barbie today. We should all make sure
that he made that effort in support of the movie that is coming
out.
Mr. Rosendale. Thank you.
Mr. Mrvan. Chairman Ken----
Mr. Rosendale. I understand Ken was getting----
Mr. Mrvan [continuing]. I mean, Chairman Rosendale----
Mr. Rosendale [continuing]. I understand Ken was getting a
bad rap, so I just thought I would I stand up.
Mr. Mrvan. I noticed it right away, sir.
Mr. Rosendale. Thank you.
Mr. Mrvan. Montanans will love that.
Mr. Rosendale. Absolutely. Thank you, Representative. I now
recognize Representative Radewagen for 5 minutes of
questioning.
Ms. Radewagen. Thank you, Mr. Chairman. My question is for
Mr. Parrish. Do you believe it may create an organizational
conflict of interest when a company staffs a senior executive
or political appointee's office and at the same time holds
contracts to perform projects for that office?
Mr. Parrish. I believe if you can reword the question,
ma'am?
Ms. Radewagen. There is no other way to. Do you believe it
can cause an organizational conflict of interest when a company
staffs a senior executive or political appointee's office and
at the same time holds contracts to perform projects for that
office?
Mr. Parrish. You are asking, if I understand the question,
you are asking if a vendor or a contractor has one of their
executives inside, like a VA organization or a government
organization is that the question?
Ms. Radewagen. I think that is what I am asking, yes.
Mr. Parrish. Yes, ma'am. I think it depends, and it is
based upon the FAR requirements. We do have a requirement that
if they are doing program management support, they are not
allowed to do, or they are not allowed to participate in the
solicitation for a program in that area. That is part of the
FAR and part of our VA acquisition regulations as well. It is
possible would be the right answer? It depends.
Ms. Radewagen. As a follow up, Ms. Jones, is it accurate
that some of the companies that support or have supported the
Office of Information Technology (OIT) front office also
provide software or develop systems for VA?
Ms. Jones. Thank you for that question, ma'am. I am not
aware of that, and I can take that for the record.
Ms. Radewagen. How do you monitor or restrict the
information, Ms. Jones, those contractors are privy to in the
course of facilitating meetings, managing calendars, preparing
briefing materials, or other support functions?
Ms. Jones. Can you repeat the question, please?
Ms. Radewagen. How do you monitor or restrict the
information those contractors are privy to in the course of
facilitating meetings, managing calendars, preparing briefing
materials, or other support functions?
Ms. Jones. First and foremost, and I want to speak
particularly about the acquisition meetings, we do not have
contractors in those meetings. I am personally responsible for
the Federal IT Acquisition Reform Act, of which the CIO is
responsible for reviewing all IT acquisitions and acquisition
plans. We do not have any contractors in those meetings, so
they are totally restricted from that.
Ms. Radewagen. Okay, so back to Mr. Parrish, what functions
do contractors perform in your organization, either onsite, in
VA offices, or remotely? As a follow up, how do you monitor and
restrict those contractors' activities or access to
information?
Mr. Parrish. I do know that we have, and I can let my
teammates here discuss what certain small business vendors do
for them, we do have some program management support offers
that work and help with some of the analysis of some of the
work we do. However, I will reiterate that for those that are
doing that area, they are not bidding on contracts that they
otherwise would be helping us to facilitate. I do not know if
Phil or Angela, you want to add on some of your contractors are
working on?
Mr. Christy. Yes, one thing that I think all of us maybe
did not get to get out is in those types of situations, you
mentioned access to calendars or maybe shared drives, things of
that nature, information that the VA uses to operate, those
type of support contractors do have to support nondisclosure
agreements.
Ms. Radewagen. Okay, so, Mr. Parrish, let us take today's
hearing, what involvement did contractors have in preparing for
today's hearing?
Mr. Parrish. With me, none.
Ms. Radewagen. Thank you. I yield back.
Mr. Rosendale. Thank you very much Representative
Radewagen. As we have discussed, the thing that we are trying
to address here is conflict, but not only the conflicts, the
actual conflicts, but the perception of conflicts. Mr. Parrish,
you laid out very clearly that increased transparency is the
best way for us to achieve that. Daylight is the best
disinfectant, as they say.
Ms. Jones, I understand you are responsible for engaging
with IT vendors about contracting opportunities and maintaining
relations with existing contractors. Can you explain exactly
what that entails?
Ms. Jones. Yes, sir, Mr. Chairman, thank you so much for
that question. My IT Vendor Management Office is responsible
for contractors who are either doing business with us or want
to do business. What we do is we bring them in and we talk
about their capabilities from a market research perspective.
One of the things that we say upfront and early in any
discussion is, one, we do not talk about ongoing solicitation.
Two, I can not and will not, I can not guarantee you any
contract because it has to go through the procurement process.
We actually use that information for market research.
Mr. Rosendale. Okay. Do other OIT employees also engage
with IT vendors?
Ms. Jones. The answer is yes. However, we highly recommend
that they use my IT Vendor Management Office to schedule those
meetings. Therefore, we keep some consistency going on and we
make sure that we do not talk about those things that I just
said.
Mr. Rosendale. How do you actually outline and enforce what
they are permitted to do and what they are not to do?
Ms. Jones. First of all, we give them training. Second, I
personally attend most of the vendor session meetings. If I do
not, one of my other executives do, or my vendor management
director attends those meetings. To the best of our ability, we
put controls in place.
Mr. Rosendale. Okay. Ms. Jones, how do the other OIT senior
leaders engage with IT vendors, either with you or independent
of you?
Ms. Jones. They definitely--thank you, sir--they definitely
engage with me because as vendors are coming in, one of the
first things that we ask for is what are your capabilities? I
want to make sure and we want to make sure that if you are
providing a capability, then we have the right OIT stakeholders
in the session to hear those capabilities.
Mr. Rosendale. Are there any times that an OIT employee
would engage with a vendor by themselves?
Ms. Jones. Well, first of all, to the best of my knowledge,
I am not there to police every OIT employee, so I can not
definitively say yes or no.
Mr. Rosendale. Let me ask, is all of the scheduling, 100
percent of that, do you have access to that?
Ms. Jones. I have access to the scheduling that my office
schedules because it is from my calendar.
Mr. Rosendale. Okay. Ms. Jones, how does Assistant
Secretary DelBene specifically engage with IT vendors?
Ms. Jones. First of all, I am the one that schedules the
sessions that he is going to have with any vendor when it comes
to meetings.
Mr. Rosendale. Okay. Specifically, are those appointments,
you are scheduling those, then what other staff participates?
Do we always have additional staff in there?
Ms. Jones. Absolutely. It depends upon the capability that
the vendor is coming in to talk about. Our goal is to make sure
that we have the right OIT stakeholder there.
Mr. Rosendale. Microsoft is a very significant VA
contractor. How many times in the last 2 years have you met
with Microsoft? Roughly how many times have other OIT officials
met with Microsoft?
Ms. Jones. Thank you. That question I would have to take
for the record because I am not counting or I do not have
account in my head how many times every OIT vendor has met with
Microsoft.
Mr. Rosendale. Okay, we would like to have that. I mean,
could you make an estimate? Five times, 10 times, 25 times?
Ms. Jones. No, sir, I will not make an estimate.
Mr. Rosendale. Okay.
Ms. Jones. I will take it back for the record and we will
look at the calendar. You know, Microsoft is a contractor that
was there prior to our CIO.
Mr. Rosendale. We should be able to, if you can just look
at the calendar, we should be able to get that sometime next
week then, provide that information?
Ms. Jones. I will do my best to get it to you, sir,
absolutely.
Mr. Rosendale. Thank you. Ms. Jones, to the best of your
knowledge, how many times in the last 18 months has Assistant
Secretary DelBene met with Microsoft?
Ms. Jones. Absolutely zero, to my knowledge. To my
knowledge, zero.
Mr. Rosendale. Okay. I would appreciate if you would also
check in with him as you are checking the calendar so we can
get an accurate description of that as he is not here for me to
ask.
Ms. Jones. Yes, sir. If I may, when it comes to the
Assistant Secretary and Microsoft, it is my responsibility to
make sure that he does not meet with them and I am pretty
adamant about that.
Mr. Rosendale. Okay. Ms. Jones, committee staff met with
Assistant Secretary DelBene on April the 27th. During that
meeting, we learned that there is no formal process to document
when Mr. DelBene recuses himself from Microsoft related
matters. No official process. The Office of General Counsel
attorney present agreed that it would be a very good idea to
start keeping a record of Mr. DelBene and other VA executives'
recusals when they actually recuse.
On May 10, Chairman Bost sent a letter asking for a summary
of VA's plan to document these recusals. VA never answered. The
Chairman followed up on June the 5th with another letter. There
still has been no answer. I would love to give you folks the
benefit of the doubt. Right now, you have no way of proving why
Mr. DelBene has ever recused himself. The fact that you have
not responded to the two letters that simply asked for a plan
to start documenting the recusals does not inspire confidence
in me or this committee. We need a response to that. When will
the VA respond?
Ms. Jones. Thank you, sir. I am a veteran myself and I do--
--
Mr. Rosendale. Thank you for your service.
Ms. Jones [continuing]. take my job extremely seriously. I
will personally go back and I will work with our office and
with the Office of Congressional and Legislative Affairs (OCLA)
to see when we can get you that response.
Mr. Rosendale. As we get the information next week, I am
assuming, for the calendar, if you could give us a response
next week on when this other information will be forthcoming,
it would be greatly appreciated.
Ms. Jones. Absolutely, sir.
Mr. Rosendale. Thank you so much. With that, we are going
to start the second round of questioning and go to Chairwoman
Kiggans for 5 minutes questioning. Thank you.
Ms. Kiggans. Thank you very much, Mr. Chair. Mr. Parrish,
the Secretary's May 31 letter was not concerned about any
conflicts of interest at McKinsey and its clients. When did
anyone at the VA first become aware that McKinsey also had
opioid manufacturer clients and was advising them on how to
sell more pain pills to the VA and other healthcare
organizations?
Mr. Parrish. Congresswoman Kiggans we will take that for
the record, and I will have to get you a better answer back. I
am not aware.
Ms. Kiggans. Okay. Along those same lines, do you know, did
McKinsey ever certify in its contract proposals that it had any
potential organizational conflicts of interest related to the
opioid manufacturer clients or any other situations?
Mr. Parrish. I will take that for action also----
Ms. Kiggans. Okay.
Mr. Parrish [continuing]. and get an answer back for you,
ma'am.
Ms. Kiggans. That was kind of the premise of my letter
also. Then, Mr. Parrish, when someone did become aware of this,
what was done to assess the situation, determine whether it
posed a problem?
Mr. Parrish. Without getting into details, I do know that
we are continuing to look at that, and I mentioned that there
are certain investigations ongoing. Once we have that resolved,
we will be able to give you a better answer on that.
Ms. Kiggans. Okay. Yes, please do. I would be curious. Now
I would like to list some inherently governmental functions
that contractors can support but are prohibited from
performing. These come directly from the Federal Acquisition
Regulations, and I assume the panel is familiar with them.
There are reorganizations and planning, developing policy,
developing regulations, developing requirement, and contracting
documents. The VA has multiple contractors working in each of
these areas today. How are these contractors monitored and is
there anything in place to make sure they do not cross the line
and start making decisions for the VA?
Mr. Parrish. I will defer that to some of our colleagues
who actually have those contractors working with them. Joe, if
you want to give an example. I do know that one of the rules
that we have, as I mentioned earlier, ma'am, is that if they
are doing internal work on our support, program management,
they are not allowed to be able to bid on any kind of efforts
that they might be helping or assisting with. I will pass it to
Joe.
Mr. Maletta. For awareness, my responsibilities for the
Veteran Health Administration procurement organization alone
for our administration in support of our acquisition community,
my office, we do not have any contractor support, with the
exception of some contracting staff that actually do non-
inherently governmental functions to support and help us
execute the administrative part of contract administration,
such as preparing documents for closeouts, et cetera. We do not
have any other contractor staff that help us with acquisition
plans, et cetera.
Ms. Kiggans. Does anyone else?
Ms. Billups. Also, just like you said, in the Federal
Acquisition Regulation, as it relates to inherently
governmental, each one of those contracting officers also has a
responsibility to work with their program offices to make sure
that that determination has been made for each of those
requirements. That is a requirement that is in the FAR. They
have to list that information. They have to have documentation
in the file that they have had those conversations and that is
a requirement, like I said, that is in the Federal Acquisition
Regulation.
Mr. Parrish. I will also pass to Ms. Jones.
Ms. Jones. Yes, ma'am. We do not have any, to the best of
my knowledge, contractors doing anything that is inherently
governmental functions. We do have technical management
services contractors and they are working on, for example, some
architectural designs of our programs. They are also doing
configuration management. They may be doing some testing. They
are working for our government program managers or our
portfolio managers.
Mr. Parrish. If I could just finalize that ma'am, is for
all of contracts, and it is still a work in progress, all of
our contracts, we expect any support contract services, or
otherwise, to have clear deliverables and expect them to
deliver what they promise on time and on budget.
Ms. Kiggans. Thank you and I look forward to following up
with you guys, hopefully next year and hearing how some of the
changes you are putting in place are going to improve the
system. Thank you very much, I yield back.
Mr. Rosendale. Thank you very much, Chairwoman Kiggans. I
will now recognize Ranking Member Mrvan for 5 minutes of
questioning.
Mr. Mrvan. Thank you. Ms. Jones, how long have you been the
CIO?
Ms. Jones. I am sorry sir, I could not hear you.
Mr. Mrvan. How long have you been in your position?
Ms. Jones. I have been in the Department for 12 years. I
have been in this current position since 2018.
Mr. Mrvan. Okay. Since 2018, has Microsoft been awarded a
contract?
Ms. Jones. We have----
Mr. Mrvan. Let me rephrase the question. For how long has
the VA utilized Microsoft?
Ms. Jones. From a Federal Government perspective, as you
know, all of us use Teams, all of us use MS Word. Microsoft is,
that infrastructure has been in our department at least since I
have been there. I would say if you look from a Federal
Government perspective, if we are all using Word, we are using
Microsoft. If we are all using Teams, we are using Microsoft.
Mr. Mrvan. Okay. Do you have the information with you on
what the spend was for the VA through your oversight for 2018,
2019 and 2020?
Ms. Jones. I do not have it with me, but I can get it, sir.
I can take that for the record.
Mr. Mrvan. Okay. Thank you very much.
Ms. Jones. Yes, sir.
Mr. Mrvan. Mr. Parrish, we have heard from a large number
of service-disabled veteran owned small businesses that they
are concerned that these large companies are putting them out
of business. There are complaints of high fees being charged by
distributors and a lack of use of the blanket purchase
agreements that veterans' small businesses are awarded. What
are you doing to ensure that the next version of the MSPV
contracts that these large companies are not able to sell their
supplies in place of the veterans' small businesses?
Mr. Parrish. I will defer to Mr. Maletta first, and then I
will have another additional response on a macro scale. Joe?
Mr. Maletta. Thank you, sir, for that question. I think it
is most important to note that the upcoming Med Surg Prime
Vendor contract will have accountability for the prime vendors
to utilize the blanket purchasing agreements that have been
established by the folks in my office, of which greater than 50
percent of them are small business concerns. That
accountability will help us to determine whether or not there
is any gamesmanship or malfeasance going on if a prime vendor
is not utilizing the vendors we have assigned to them to
utilize. That has been in response to our similar concerns as
to what you just expressed.
Mr. Parrish. If I could just highlight, you know, we
acknowledge that the amount of small businesses getting
contracts government wide has been significantly reduced over
the last 10 years. I think there are some concerns around
consolidation of industry where small businesses are being
acquired by the largest, and that is one area. I think the
other area is we have created an unintentional bias against
small businesses to be able to bid on some of our contracts,
especially in the IT space. For example, as the cloud services
are exponentially growing in technology, the FedRAMP rules,
which are absolutely required to make sure that we have proper
cybersecurity oversight, it takes years to get FedRAMP
certified, and it takes hundreds of thousands, if not millions
of dollars to get FedRAMP certified. In fact, the FedRAMP,
Federal Risk and Authorization Management Program, has been
around since 2011, and only 300 cloud offerings have been
certified. That basically limits who can then bid on our new
contracts that we are putting out that are cloud-based and
cloud services. We have to find a way, government wide to
improve some of these regulatory requirements to help small
businesses.
Mr. Mrvan. Okay. With that, I yield back.
Mr. Rosendale. Thank you, Ranking Member Mrvan. Mr.
Parrish, the attitude of the VA toward documenting ethical
matters seems to be extremely hands off. There seems to be no
process whatsoever to track organizational conflicts of
interest or recusals. You and the other panelists have assured
us that everything is fine, but you have very little to show us
to demonstrate that is true.
You can not provide transparency if we do not have any
documentation or record to look into. I mean, I have got a very
old saying that has been helpful to me in my business, inspect
what you expect. If you do not have any documentation or
record, then you are not going to be able to provide that
transparency. You have no way to measure. You have no way to
check. Do you believe that you, personally, and the Department
of Veterans Affairs as an organization, need to do better? What
specifically can you do, are you willing to do to provide this
transparency, this documentation?
Mr. Parrish. Thank you for that question, Chairman
Rosendale, and you have my commitment that we will do better
and make sure that we have proper documentation based upon your
earlier comments. I will follow back up with you and your
staff.
Mr. Rosendale. Again, we need to see some processes, okay,
that you are going to be following. Mr. Parrish, if a company
holds contracts in competing areas such as Veterans Health
Information Systems and Technology Architecture (VistA) and
Cerner or the VA's internal scheduling project and commercial
scheduling software, or maintaining the existing human
resources systems and replacing it, do you believe that may
give rise to a conflict of interest that requires further
scrutiny?
Mr. Parrish. To your earlier comment, Chairman, I believe
there is potential for perception of conflict. One of the
things I do want to reinforce of what we have been doing, I
will use the supply chain modernization effort as an example
that the panel has talked about, is we are really focused on
overcommunicating and having large transparency and jointness
with our vendors and our industry partners. We talk to them
quite a bit. Industry days, we have had lots of draft RFPs. One
of the requirements we do with these big programs is once we
think we are ready, instead of just throwing it over the fence
to industry, we make sure industry has input. By shining
sunlight on that, every vendor has the opportunity to see it.
There is not one vendor that gets an advantage.
We have communications with companies all the time and we
offer up, if one company wants to come give us a discussion, we
offer it up to everyone else to be able to have that same kind
of discussion. We always post any of the questions and answers
that are posted out there fully transparent on SAM.gov. You can
use the supply chain modernization effort that is ongoing right
now with the RFP on the street that you can see that we have
leveled the playing field from an e-library that has all of our
internal workings and all our technology that everybody can
see.
Mr. Rosendale. Okay. Mr. Parrish, do you consider it
permissible for the same company to support a project and
actually perform that project? For example, the electronic
health record modernization or the human resources
modernization?
Mr. Parrish. If you are mentioning, Chairman, the Program
Management Office Services----
Mr. Rosendale. Mm-hmm.
Mr. Parrish [continuing]. that is one of the rules that I
mentioned earlier, that if someone is providing internal
support to us, then they are not allowed to bid on that same
support contract. For supply chain, if they were doing supply
chain admin work, they were not allowed to bid on the supply
chain solicitation.
Mr. Rosendale. Okay. Mr. Parrish, how about if two
companies merge and the combined entity is supporting and
performing the project?
Mr. Parrish. That does trigger a review and that is where
we have to go back and look at it inside the team with the
contracting officer.
Mr. Rosendale. Okay. The VA is obviously not the Justice
Department and can not impact a merger. What would you do in
that situation?
Mr. Parrish. I am not going to speculate, but I will take
that for action, Chairman.
Mr. Rosendale. Okay. Again, this is something that we need
to have the process laid out so that we can see so we have some
kind of consistency of the application.
Mr. Parrish. Yes, sir.
Mr. Rosendale. Okay. We have lost our ranking member.
Representative Radewagen, do you have any additional questions?
Ms. Radewagen. Thank you, Mr. Chairman. I have no
additional questions at this time, but I am happy to yield my
time to you.
Mr. Rosendale. Okay. I have got my questions all filled up.
That was my last one. it looks like we are in good shape. Where
is my closing? Here we go. Okay.
Thank you again for all the witnesses this morning. As our
time has concluded, I will dispense the closing remarks. I want
to assure everyone the committee will be continuing to monitor
these issues which are so important to the integrity of the
Department of Veterans Affairs. With that, I ask unanimous
consent that all members have 5 legislative days to revise and
extend their remarks and include extraneous material. Without
objection, so ordered. This hearing is adjourned.
[Whereupon, at 11:27 a.m., the subcommittees were
adjourned.]
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A P P E N D I X
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Prepared Statement of Witness
----------
Prepared Statement of Michael Parrish
Good morning, Chairman Rosendale, Chairwoman Kiggans, Ranking
Member Cherfilus-McCormick, Ranking Member Mrvan, and Members of the
Subcommittees. I am pleased to appear before you today to discuss
competition trends in VA's procurement, VA's enforcement of
organizational and personal conflict of interest regulations, and the
Department's use of professional and management consulting service
contracts. Joining me today are my colleagues, Mr. Phillip Christy,
Deputy Executive Director, Office of Acquisition, Logistics, and
Construction; Dr. Angela Billups, Executive Director, Office of
Acquisition and Logistics and Senior Procurement Executive; Mrs.
Luwanda Jones, Deputy Chief Information Officer for Strategic Sourcing
from the Office of Information Technology (OIT); and Mr. Joseph
Maletta, Executive Director for Acquisitions from the Veterans Health
Administration (VHA).
As the committee is aware, VA's procurement of goods and services
has grown from $20.2 billion in fiscal year (FY) 2012 to $56.2 billion
in FY 2022, which is a 177.3 percent increase over a 10-year period.
This increase represents a significant rise in procurement workload and
the need to efficiently and smartly execute all the contracting
requirements that support VA's mission needs. Even with this increase,
VA has always placed great importance on adhering to all laws and
regulations and maintaining the trust of Veterans and taxpayers in the
proper execution of the procurement of all goods and services that
support VA's mission. To deal with the major increase in procurement
activities over the last 10 years, VA established a formal category
management program to support the smart and efficient execution of how
it buys goods and services. The Department has executed a robust and
efficient category management program to drive how VA spends its
financial resources on procurement. VA's program was devised in
accordance with the Office of Management and Budget (OMB) Memoranda M-
19-13, Category Management: Making Smarter Use of Common Contract
Solutions and Practices and the results thus far have been exceptional.
In FY 2022, VA achieved an OMB standard of 90.1 percent for spend
under management, exceeding the OMB goal of 87 percent. VA aggressively
promotes the use of fair competition and opportunities among all
prospective vendors for VA awards; uses a variety of contracting
vehicles to smartly meet the Department's needs, ensures competition,
and delivers results that save taxpayer dollars while providing world
class health care and benefits to Veterans; VA's procurement processes
include risk management controls to ensure compliance with applicable
laws, regulations, and VA policy. VA also uses an acquisition lifecycle
framework to enable the development of effective requirements,
appropriate acquisition approaches; identification and mitigation of
potential organizational conflicts of interest, and targets the
prevention of duplication, waste, and unethical or unfair behavior.
The Competitive Procurement Process
VA's Procurement program is consistent with OMB Memoranda M-19-13,
Category Management: Making Smarter Use of Common Contract Solutions
and Practices and has not resulted in the loss of competition nor
hindered VA's enforcement of organizational and personal conflict of
interest regulations. In fact, VA has demonstrated exceptional results
the last 5 years with competition rates and, as of July 10, 2023,
continues to maintain this tradition and is achieving a 97 percent
competition rate for all procurements.
To complete our contracting needs while ensuring robust
competition, we use a host of Federal contractual vehicles, including
Government-Wide Acquisition Contracts (GWACs), General Services
Administration (GSA) Federal Supply Schedules program, and VA strategic
and individual contract vehicles. We regularly review requirements to
improve the efficiency and effectiveness of acquisition activities to
further VA mission outcomes, service delivery, and effective
stewardship. Category management principles seek to identify
unnecessary contract duplication using OMB recognized spend under
management contract vehicles. However, the use of spend under
management contracts are not prioritized at the expense of the agency's
Veterans First contracting program nor small business goals.
As part of our VA category management program, we actively work to
create strategic intelligence activities to include reviewing
government and industry best practices, prices paid data, trend
analysis, and other information to facilitate informed buying
decisions. Our category management analyses often conclude that
combining similar or duplicative procurement spend into larger
enterprise actions will increase our ability to leverage our agency
buying power. When consolidation of multiple requirements is determined
to be in the Government's best interest, VA complies with the
requirements in the Federal Acquisition Regulation (FAR) developing and
approving a determination verifying the need and justification for
consolidation. The written determination ensures that market research
was conducted, alternative contracting approaches that involve a lesser
degree of consolidation were considered, any negative impact of the
acquisition strategy on contracting with small business concerns were
addressed, and steps were taken to include small business concerns in
the acquisition strategy. The determination must also be coordinated
with VA's Office of Small and Disadvantaged Business Utilization
(OSDBU) and with VA's Office of General Counsel (OGC).
Once an acquisition strategy is decided upon by contracting
officers (CO), a source selection evaluation plan is created to
evaluate proposals received in response to a solicitation to select a
proposal that represents the best value to the Government in accordance
with the FAR, VA Acquisition Regulation (VAAR) and VA Acquisition
manual (VAAM). Evaluation factors are tailored to each acquisition but
generally consist of technical, price, past performance, small business
participation, Veterans' involvement, and Veteran employment with a
weighting of all the factors. The CO's contract award decision is based
upon a comparative assessment of proposals against all source selection
criteria in the solicitation. While the CO may use reports and analyses
prepared by others, the source selection decision represents the CO's
independent judgment. The source selection decision is documented, and
the documentation includes the rationale for any business judgments and
tradeoffs made or relied on by the CO, including benefits associated
with additional costs.
Competition, Competency and Organizational Conflicts of Interest
Because of VA's large annual spend on contracts, it is not uncommon
for a vendor to be selected for several different requirements, but the
Department follows the competitive acquisition process outlined above.
It should be noted that contractors are selected based on their
competency and ability to successfully respond to the solicitation
requirements. Many companies have multiple areas of expertise and
compete on requirements for different services throughout the
enterprise. Prior to an award, a determination is made to ensure the
awarded contractor is competent in the areas that they are providing
services. Where there is the potential for related services to be
provided by the same company, the solicitation includes Organizational
Conflict of Interest (OCI) clauses requiring vendors to disclose if
they believe there is a conflict as well as put them on notice that if
they were to win the contract, they could be conflicted out of
potential future work.
If any potential OCIs are identified, these are brought to the
attention of the CO who investigates the potential OCI in conjunction
with the requiring program activity. The results of the investigation
are shared with Office of General Counsel (OGC) for their review and
advisement. If the CO determines an actual or potential OCI exists, the
Government must act to avoid, neutralize, or mitigate the actual or
potential OCI. In the last 12-months VA has received three major OCI
complaints by industry and VA conducted thorough analysis and
determined OCIs did not exist. These three instances were challenged by
industry and were independently investigated by the Government
Accountability Office (GAO) and the GAO also determined OCIs did not
exist, and VA followed proper procedures in the determination process.
VA does have one current high visibility OCI allegation which is still
under investigation. VA will follow its established procedures and make
a final determination once the investigation is completed.
VA takes the concern of OCI seriously and ensures its contract
awards comply with the FAR, VAAR and VAAM. Furthermore, VA requires the
inclusion of OCI as a topic as part of all Senior Executives and
Acquisition Workforce annual mandatory ethics. Safeguarding sensitive
information and compliance with ethical behavior is a high priority for
VA. As such, we embrace the principles of least privilege in all our
daily activities; this extends into our management of contracts and our
oversight of contractor personnel.
Industry-wide vendor consolidations have been ongoing for years in
the marketplace. Due to size and scale, many of VA's contracts consist
of a prime contractor working with one or more subcontractors, either
directly managed or through a joint venture. As subcontractors may only
provide specific targeted outcomes for the prime on a part-time basis,
the subcontractors employees may participate in multiple VA contract
actions at the same time. This necessitates our use of confidentiality
and Non-Disclosure Agreements (NDAs). These artifacts specifically
discuss requirements for contractor personnel to safeguard information
and not disclose information to unauthorized individuals. In addition,
VA's contract language requires contractors to limit access to the
minimum number of personnel necessary for contract performance for all
information considered sensitive or proprietary. To be clear, an NDA
alone is not sufficient to avoid or mitigate an OCI for the prime and
subcontractor. When a prime or subcontractor is identified as
potentially participating in related contracts, the government OCI
investigation would take into consideration whether the prime and
subcontractor performance under one contract would impact or create
impaired objectivity, unequal access to information, or biased ground
rules on the additional or new contract.
Information Security
Safeguarding Veteran data is VA's top priority. All contractor and
subcontractor employees requiring access to VA information or VA
information systems must pass a security background check and complete
the VA Privacy and Information Security Awareness training and
acknowledge their understanding of any responsibilities for compliance
by signing VA Information Security Rules of Behavior.
When it comes to VA's development of future acquisition needs, we
closely safeguard the sensitive information from our industry partners
by ensuring this information is not included in written or oral
communication that would give any incumbent vendor a competitive
advantage. When our market research and contract development activities
necessitate industry interaction, we make use of broad industry
announcements to ensure all potential bidders receive equal access to
information provided and equal access to provide feedback on VA's
approach to acquiring future products and services.
In reference to vendors performing work across VA's enterprise,
situational awareness is ascertained and made available by using data
captured in various systems including, but not limited to, Contractor
Performance Assessment Reporting System (CPARS) and the Federal
Procurement Data System--Next Generation. Reports are routinely run by
COs and program offices leveraging these systems to obtain oversight of
a contractor's portfolio within VA's enterprise. Additionally, the
program office and contracting officer representatives and COs
continuously monitor performance and enter performance information into
these systems to allow for the documentation of this information.
Regarding the use of professional management and consulting
services, VA is carefully monitoring this category of spend for work
conducted by contractors while also looking for duplication of efforts
as part of our category management program. It is noted that the
Mission Act, the COVID-19 pandemic, and the PACT Act drove an increase
in spending on professional management and consulting services
contracts over the past few years. Currently, VA is projected to spend
less and execute fewer contracts in FY 2023 for the purchase of
professional management and consulting contracts. VA is committed to
ensuring the use of professional management and consulting services is
necessary and prudent.
Conclusion
Chairman Rosendale, Chairwoman Kiggans, Ranking Member Cherfilus-
McCormick, Ranking Member Mrvan, and members of the subcommittees,
thank you for the opportunity to speak on competition trends in VA's
procurement, VA's enforcement of organizational and personal conflict
of interest regulations, and the Department's use of professional and
management consulting service contracts. My colleagues and I are
pleased to answer any questions that you may have.
Statement for the Record
----------
Prepared Statement of Shelby Oakley
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