GAO sends VA’s $6.8B disability contract back to square one

The Veterans Affairs Department must reopen the competition for a $6.8 billion contract for medical disability exams and processing services after the Government Accountability Office ruled in favor of several protesters.

The contract is actually a series of 12 awards that are broken up by seven districts. Some districts had more than one winner. The goal is to reduce wait times and make faster claims decisions.

In all, though, three companies shared awards across the districts. 

The three companies that won are all incumbents on early contracts. The winners are QTC Medical Services (a part of Lockheed Martin that will later become part of Leidos), VetFed Resources and Veterans Evaluation Services.

Veterans Evaluation Services also is a protester because it felt it should have won awards in other districts.

Logistics Health Inc. and Medical Support Los Angeles are the two other protesters.

The protests only involve awards made in five of the seven districts.

The protesters all claim that the agency misevaluated proposals, engaged in misleading discussions and made unreasonable source selection decisions.

For the most part, GAO rejected the claims about misevaluated proposals and a faulty source selection decision but it dinged VA on the misleading discussions, particularly involving the proposals submitted by Logistics Health Inc. and Medical Support Los Angeles.

The discussion question involves the final pricing the companies submitted. In earlier rounds, VA found that the pricing submitted by the two companies was reasonable, according to the method VA used. After the companies submitted their final proposal revisions, or FPRs, VA re-evaluated the pricing and this time determined that Logistics Health and Medical Support Los Angeles had pricing that was unreasonable.

VA said it was under no obligation to inform the companies of the change in the evaluation.

GAO said VA “essentially changed the evaluation criterion it used to measure price reasonableness.”

Logistics Health and Medical Support Los Angeles made relatively insignificant changes to their pricing because in earlier discussions they were told the pricing was reasonable. It was only with the final evaluation – when VA used a different criterion – that the prices were found to be unreasonable or too high.

But GAO ruled that the agency had an obligation to inform the companies about the change in their pricing evaluation.

GAO wants VA to reopen the acquisitions in the five districts and hold discussions with all the bidders. VA should then solicit and evaluate new proposals and then make new source selection decisions.

While Veterans Evaluation Services saw most of its protest denied by VA, it still gets the benefit of competing for the contracts again. QTC and VetFed also will compete again.

The goal of the contract is to centralize how VA manages and delivers disability benefits claims decisions. Each contract is for 12 months with four 12-month options.

While QTC, VetFed and Veterans Evaluation Services are all incumbents from previous contracts, this contract puts all of the work into a single program management structure with a central management group from both Veterans Benefits Administration and the Veterans Health Administration overseeing the process.