FedBid, the politically connected contractor ousted by the VA, has benefited from a cadre of congressional allies who stepped in to defend the company and pressure the department to keep using its services, even as a top procurement officer was warning against it.
Then-Rep. Robert E. Andrews was among those members of Congress who pressed Veterans Affairs officials to overrule the senior procurement officer, Jan Frye, and overturn a moratorium Mr. Frye had placed on using FedBid, which the VA relied on to hold reverse auctions amid complaints from suppliers about unauthorized, potentially counterfeit supplies entering the VA's supply chain.
Within days of the moratorium, Mr. Andrews, whose campaigns' have accepted more than $11,000 from the company and its employees, contacted the agency, asking officials to rescind the ban pending a review, according to emails obtained through the Freedom of Information Act.
Weeks later the moratorium was lifted. And when Mr. Andrews resigned from Congress earlier this year he became a lobbyist — signing FedBid as one of his first clients.
"I chaired the procurement review panel of the House Armed Services Committee in 2009 and 2010 so I really followed defense procurement issues very closely," Mr. Andrews said in a phone interview.
"It was in that capacity I was asked to — and I don't know if I initiated the letter or signed it; I don't frankly remember — but to encourage the VA to not have a blanket prohibition against reverse auctions but look at where they work and use them. And if there are problems, don't use them," he said.
Craig Holman, legislative representative for the watchdog group Public Citizen, said the situation provides a troubling example of a lawmaker overstepping his bounds.
"Congress once in a while will intervene in contracting decisions if they suspect there's some partisan basis behind the decisions," Mr. Holman said. "But any time they want to intervene on some decision of executive contracting authority, they had better be very careful and do their homework to make sure there's justification," he said.
"If what they do is intervene on behalf of a company because that company makes campaign contributions or has lobbied them for intervention, then that poses some dire risks, and it clearly looks like they're acting on their own self interests."
Mr. Andrews' intervention wasn't unique.
The Washington Times previously reported that outgoing Rep. James P. Moran, Virginia Democrat, also asked the VA to lift the moratorium. And newly obtained records show two others joined in: Rep. K. Michael Conaway, Texas Republican, and then-Rep. Edolphus Towns, a New York Democrat who once had served as the House's top investigator.
Mr. Andrews registered to lobby for FedBid in April, months after he left Congress. He said as a lobbyist he doesn't get involved in VA matters but does help the company on defense procurement. Lobbying disclosure papers show no contact by Mr. Andrews with the VA as a FedBid lobbyist.
"I can tell you emphatically there was no relationship between any political support and my involvement with the VA request," Mr. Andrews said.
"My request with the VA request was based on my judgment that reverse auctions work and that a blanket prohibition didn't make any sense."
Character assassination
A fierce debate was underway at the VA in spring 2012 between the Office of Acquisition and Logistics, which had raised concerns about FedBid, and the Veterans Health Administration, where a top executive had mandated that contracting officers use the company when holding reverse auctions.
Reverse auctions are a form of procurement where vendors compete against each to offer the lowest price, and FedBid has said it has helped save the federal government lots of money.
Mr. Frye, though, said contractors were lodging complaints about the company, and he questioned whether it was saving money.
Even more serious were complaints that using FedBid had allowed unauthorized, potentially counterfeit medical devices to enter the VA supply chain, according to internal emails obtained by The Times. FedBid said the company had established procedures to protect against unauthorized sellers.
Mr. Frye imposed the moratorium on using FedBid, but the company moved fast to fight him, discussing plans to "assassinate" his character, according to correspondence uncovered by the VA Office of Inspector General.
The company also relied on nonpublic information leaked from a former VA official, according to the IG, which recently recommended that the VA "debar" the company, making it ineligible to do business with the department.
FedBid, in a previous statement to The Times, said the company cooperated fully with the IG investigation and believes it took "appropriate actions to protect its ability" to continue providing services to the Veterans Health Administration.
The Justice Department declined to prosecute.
"Additionally, our company has always been transparent about its fee structure and the savings the FedBid marketplace can facilitate when buying commodity goods and simple services," spokesman Andres Mancini said. "It is important to point out, as our data demonstrates, that this report does not dispute that the FedBid marketplace stimulated competition that resulted in lower prices for VHA."
Even though debarment proceedings are still ongoing, the VA earlier this month disclosed that it had cut ties with the company anyway and turned to a reverse auction platform run by the General Services Administration.
"Unleash the hounds"
Mr. Frye said members of Congress had moved to pressure the VA to lift the moratorium: "I got zero support from the political leadership in VA and Congress for putting a moratorium in place on its use, so that we could develop rules and processes for its use," he later told a colleague in an email.
Emails show FedBid was coordinating at least some of the response. One company email, dated soon after the moratorium, stated: "Launch Hill related actions Unleash the hounds."
Months later, Mr. Frye confided to a Senate aide, "The pain from Congress was staggering from my foxhole. This ordeal made me fully aware that special interest groups run the government."
In a separate email to a VA colleague, Mr. Frye wrote that the moratorium was "receiving a lot of political pressure," which he thought was tied to the company's high-profile financiers — Washington Wizards and Capitals owner Ted Leonsis and AOL co-founder Steve Case.
"In fact, I believe the two Congressional representatives are pushing the envelope WRT interfering Federal procurement policies. I intend to contact our OIG in this matter," Mr. Frye wrote in a note that did not identify the lawmakers.
There's no indication in the inspector general's report, in any of the thousands of pages of internal VA correspondence obtained by The Times, that Mr. Leonsis was involved in trying to lobby the VA to overturn the moratorium.
He's made no secret of his support for the company in the past, writing posts on his blog touting FedBid's track record and business. So far, he has not written on the IG's recommendation for debarment.
But Mr. Case was involved in the company's efforts to lift the moratorium, according to the IG. Among other things, he sent an email to then-VA Secretary Eric K. Shinseki, while retired Army Chief of Staff Gen. George Casey Jr. also contacted the VA.
As VA officials fielded complaints from FedBid and its cadre of advisers, the agency also was coming under scrutiny from members of Congress who asked the moratorium be lifted. Reply letters from Mr. Shinseki indicate that both Mr. Andrews and Mr. Conaway made that request.
Mr. Shinseki's reply seemed to clear FedBid, despite the IG's findings that resulted this year in the recommendation the company be debarred.
In his letter, Mr. Shinseki told the lawmakers, "It was made very clear to FedBid that VA's issues [were] not with the company nor with its service performance, but rather an internal VA issue of complying with contracting policy and procedures."
Like Mr. Andrews, Mr. Conaway received donations from FedBid's political action committee, though only $2,000, according to the Center for Responsive Politics, along with another $500 from one of its lobbyists.
Mr. Conaway's office did not return requests for comment.
The Times also obtained correspondence reflecting other inquiries form lawmakers, who were asking for information about the moratorium. But they stopped short of requesting that the VA overturn it.
Mr. Holman said that's an appropriate form of congressional oversight. But he said requesting a change in procurement policy that has such a big impact on one contractor is troubling.
Ben Krause, an attorney who runs the website disabledveterans.org, agreed, saying the intervention raised questions about whether lawmakers were "putting the interests of politics, contributions and special interests ahead of veterans."
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