Bloomberg News

Veterans Agency Broke Law in Contract Awards, U.S. Watchdog Says

March 15, 2012

The U.S. Department of Veterans Affairs violated a 2006 law that directs the agency to favor small businesses led by veterans, a government watchdog agency ruled for the third time in six months.

Aldevra LLC, a Portage, Michigan-based kitchen supplies vendor owned by a disabled Gulf War veteran, had protested the VA’s attempt in December to buy an ice maker from a preselected group of government contractors.

Attorneys with the Government Accountability Office, Congress’s investigative arm, agreed with Aldevra owner Rodney Marshall that VA buyers should have first researched whether veteran-owned companies were able to provide the device at a reasonable price before turning to other vendors.

“In sum, we find unreasonable, and inconsistent with the statute, the agency’s failure” to determine whether a fairly priced product was available from businesses owned by disabled veterans, according to the GAO decision released today.

VA officials argued the agency is meeting its goals for contracting with veterans, and can prioritize spending with certain groups, including preselected vendors that often offer volume discounts, before turning to veteran-owned companies, according to the GAO decision.

If the agency changed its position, it might steer as much as $3 billion in federal contracts a year toward small companies owned by veterans, according to data compiled by Bloomberg Government.

Third Time

Jo Schuda, a VA spokeswoman, didn’t immediately respond to an e-mail and phone call seeking comment. She has previously said the agency has requested guidance from other agencies, including the White House Office of Management and Budget, on its veterans contracting policies.

Moira Mack, an Office of Management and Budget spokeswoman, didn’t immediately respond to an e-mail seeking comment.

This is the third time the GAO has sided with a veteran- owned business that complained the VA wasn’t following the 2006 contracting law. In October, the agency backed Marshall after he contested a VA plan to buy three griddles, a skillet and a food slicer from preselected vendors.

The GAO also sided with Waldorf, Maryland-based Kingdomware Technologies Inc. in December after the technology vendor said the VA had failed to research whether veteran businesses could provide an IT product and services at a San Francisco VA facility.

The latest GAO decision won’t help Aldevra and other veteran-owned companies unless the VA is forced to follow the 2006 law, Marshall said.

“We have multiple GAO decisions,” Marshall said in an e- mail yesterday. “Now we just need the White House and Secretary Shinseki to enforce and follow the Vets First law,” referring to agency chief Eric Shinseki.

Agencies have refused to follow GAO guidance no more than five times during the past decade, Ralph O. White, the GAO’s managing associate general counsel for procurement law said at a joint hearing of two U.S. House of Representatives Veterans’ Affairs subcommittees in November.

To contact the reporter on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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