An effort by Department of Veterans Affairs officials to boost small-business contracting numbers may have dramatically slowed down equipment orders and prosthetic repairs for wounded veterans, according to documents obtained by congressional investigators.
In some cases, orders for heart stents, artificial limbs and sensory aids, such as eyeglasses and hearing aids, that used to take a few days are now taking weeks to process. On Thursday, lawmakers raised concerns that VA officials may be gaming small-business contracting data at the expense of veterans care.
"It appears the VA's acquisition goals are negatively impacting veterans care and service," said Rep. Bill Johnson, R-Ohio. "I think our veterans deserve better."
In testimony before the House Veterans Affairs Committee, VA Deputy Secretary Scott Gould disputed that wounded veterans have been inconvenienced by the contracting changes, and said the department is working to make sure they're including small businesses in their $17 billion contracting stream.
The issue stems from a series of memos earlier this year regarding VA equipment purchases, and internal concerns raised about a sudden change in contracting rules.
Earlier this summer, Joseph Jordan, administrator for federal procurement policy in the Office of Management and Budget, issued a government-wide memo calling for "steps to increase utilization of small businesses," especially in cases where larger firms were receiving government contracts.
In response to that push, Gould issued a department-wide memo that called for "increasing opportunities for small businesses when making small dollar awards, increasing opportunities for small businesses under multiple award contracts, and strengthening accountability for small business goal achievement."
Gould told lawmakers on Thursday that VA officials had set a goal of 34 percent of all contracting dollars heading to small businesses, but as of August they were hovering slightly lower than that mark.
In a memo sent to contracting officials Aug. 1, Gould said that the department was "well short" of its small-business contracting goals despite those efforts.
As a result, those employees' authority was limited to awarding new contracts to small businesses.
"... no contracts to large businesses, other than our prime vendors, will be awarded unless approved by VA central office," the memo stated.
VA officials could not say how many of those waivers were granted.
Emails obtained by the committee from VA staffers responding to the contracting order expressed confusion over the need for the change and concern that veterans would receive slower, less effective response from the new vendors.
Several also expressed concern that the new small-business contracts would be duplicative at best and illegal at worst, possibly undercutting existing agreements with other companies.
The definition of which firms qualify as small businesses depends on their industry. In general, the companies have fewer than 1,000 employees, make less than $20 million a year, and "are not dominant in their field," according to the U.S. Small Business Association.
House investigators are looking into whether that order violated federal contracting laws, and what effect it has had on veterans care. They also said preliminary data provided from the VA shows a drop in timeliness for equipment orders starting at the same time as the VA's small business push.
In May, veterans groups voiced concerns with a series of proposed changes in prosthetics care by VA officials, noting that changes in vendors could disrupt veterans care.
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