VA pulls plug on UT health contract citing noncompliance

The Veterans Affairs Department is canceling the remainder of its five-year, $75 million contract with a University of Texas (UT) research center in Dallas because of persistent performance deficiencies and noncompliance, the department announced.

VA officials said they would not exercise the third year of the five-year contract with the UT Southwestern Medical Center to perform research into Gulf War veterans'  illnesses, according to a news release issued Aug. 26. The cancellation stemmed from problems uncovered in by VA’s Office of the Inspector General in a July 15 report, the department said.

“VA listed several reasons for not exercising the contract option, including [UT medical center's] persistent and continuing noncompliance with contract terms and conditions and detailed documentation by the contracting officer of performance deficiencies,” the news release stated. “VA also noted that its Office of Inspector General documented severe performance deficiencies in a July 15 report.”

In that report, the IG recommended the cancellation of the contract, noting a lack of compliance with contracting rules. The IG also said the UT medical center has been in default since October 2008 because it failed to comply with terms regarding ownership of data and information security.

However, the IG's office also faulted the VA for its handling of the contract. The department awarded the sole-source contract to the medical center in 2006, apparently to comply with a congressional earmark. However, although Congress earmarked $15 million in funding for Gulf War research in a 2005 law, there was no mandate to enter into a contract with the UT medical center, the IG said.

“The Memorandum of Understanding and contract were entered into without considering alternative means to comply with the earmark,” wrote Mark Myers, director of Division A contract reviews for the VA's Office of the Inspector General, in the July 15 report.

“The use of 8153 contacting authority was inappropriate and the use of an [Indefinite delivery/indefinite quantity] contract resulted in multiple problems with contract administration.”

As of Jan. 31, $32.2 million had been obligated to fund task orders against the contract and the total amount paid was approximately $8 million, the inspector general said.

The most significant performance issue was the medical center’s refusal to comply with terms and conditions relating to ownership of data, the report said.

“In October 2008, [the medical center] unilaterally changed the informed consent form that human subjects in the studies are required to sign. Contrary to the specific requirements in the contract, the revised form prohibits VA from access to certain information obtained by [the UT medical center] in conducting the research,” it added.

The medical center also did not notify the VA of the change and it was not discovered until January 2009. On June 8,  VA issued a Cure Notice to the medical center stating that failure to cure the deficiency would result in termination.

The decision not to continue the contract means VA’s research program will be able to redirect funds to support additional research into Gulf War illnesses.

The VA's  IG also issued two other recent critical reports. The reports allege that high-ranking VA officials in the information technology office abused their authority, improperly administered awards and engaged in nepotism, among other claims of ethical improprieties.