A small business is unable to compete fairly with a decades-long protected vendor.

Huntingdon Valley, PA: The Department of Veterans Affairs (VA) FY 2014–2020 Strategic Plan outlines what the VA wants to accomplish to further their mission. One of its three strategic goals claims:

“No single office, organization, or agency owns the expertise and resources to deliver all of the benefits, services, and resources necessary to meet the needs and expectations of every Veteran.”

The Veterans Health Administration (VHA) recognizes the need for diversity of services for its mission. But, for life support training, the VHA purchases for the entire country through one vendor. One employee in the VA tries to justify a $20M purchase by any means necessary and is breaching the integrity of the VA in the process.

Single Vendor for All Life Support Training

The VHA announced a $20M contract—that miraculously decreased to just over $9M when competition neared—to HealthStream, Inc., an American Heart Association (AHA) branded source, for life support training.

Not only does this award fall short of the VA’s goal, but it also is not congruent with the federal regulation that justifies a purchase without allowing open competition. Interestingly, to defend the procurement, the VA published a “Justification Review Document for Other than Full and Open Competition,” which neither provides justification nor review of competition. It only states that the procurement will last five years and that the Government will attempt to purchase from the same vendor, using a different intermediary after that.

Pacific Medical Training (PMT), an accredited provider of Basic Life Support (BLS), Advanced Cardiovascular Life Support (ACLS), and ECG Interpretation courses, learned that the VHA established Directive 1177 that makes it impossible for competitive bidders to win their business. This directive states that the REdI Program Manager shall standardize life support training. However, the person currently employed in this role also happens to work for the AHA. In working for the AHA, this person signed a conflict of interest statement, which requires “. . .the best interests of the AHA must be promoted over” Government interests.

Through a Freedom of Information Act request, PMT asked the VHA for a list of all companies which have been reviewed for life support training. The VHA replied that it had only considered AHA. The AHA has enjoyed a decades-long protected relationship with Veterans Affairs.

Veterans Affairs’ “Attempt” to Obtain Competition

Federal law requires the VA to consider competing certification products; however, Directive 1177 explicitly states that no other certifications are acceptable. Because PMT vigorously and successfully protested against the VA’s procurements of life support training from the AHA, PMT was able to submit one of its courses for “technical acceptability.”

After a seven-month review of PMT’s product, the VHA failed to find technical deficiencies; though, the VHA deems the course unacceptable based on—a conflict of interest—the personal opinion of the VHA’s REdI Program Manager who is also in a leadership role with the AHA. The VHA rejected this competitive product without justification from any published requirements or regulations.

Deficiencies in Veterans Affairs’ Purchase

Before the latest multimillion dollar contract, PMT discovered multiple ways in which the AHA’s courses do not meet the VA’s technical requirements or regulations. The following are examples of deficiencies PMT noted:

The AHA uses training features that make it unusable for persons with visual disabilities. According to the AHA’s course roster, all of the purchased courses do not have an “accessible version available for students with hearing, vision, and or motor impairments.”

The Learn:® Rapid STEMI ID and Learn:® Rhythm Adult courses—both purchased by the VA—are based on the 2010 AHA guidelines. The VHA Directive 1177 states that only 2015 guidelines are acceptable. If the VA uses Directive 1177 to restrict vendors, then AHA is not an eligible vendor.

The VHA was briefed on these deficiencies of its chosen vendor, yet the procurement is still active.

Bundling to Exclude Vendors

Veterans Affairs and their purchasing agent, the Army, are using a bundling tactic to exclude other capable vendors from their market research—they identify a need for:

”. . .licenses that enable access to AHA BLS Part 1, BLS Part 2/3, ACLS Part 1, ACLS 2/3, LEARN: Rhythm Adult ECG, and Acute Stroke Online. . .”

The bundling of this training into one purchase sounds good. But, for the 180,000 medical professionals practicing in over 1,000 VHA medical facilities worldwide, bundling can cause problems and can be illegal. The government regulation recognizes:

“. . .the potential impact [bundling has] on small business. . .,” and that “The procurement strategy [needs to provide] for maximum practicable participation by small business.”

The Department of Defense (DoD) just ordered F-35 fighter jets that only Lockheed Martin can provide. They also spend up to $130M per year on toilet paper. This week DoD announced a procurement for F-35s and five-years of toilet paper for the entire department in a bundled procurement. Because Lockheed Martin knows nobody else can meet all requirements for the procurement, they mark up the toilet paper to $12 per roll. . .because they can. The part about jets and toilet paper on the same procurement is just hypothetical—but, it illustrates why taxpayers are harmed by bundling. The bundling that the VHA uses is disallowed by federal procurement law and more specifically by defense procurement law.

Fair Growth for the Nation’s Economy

A 2016 National Federation of Independent Business survey shows that in the last three years, over 70% of small business owners made no sales to a government agency and 84% did not expect to bid on a contract during the next three years. Dejectedly, many small business owners do not believe they will succeed in obtaining a government contract.

Small businesses need help now more than ever, given the expanding role of economic globalization. Even just the ECG training (LEARN:® Rhythm Adult) portion of the bundled VHA procurement represents a significant opportunity for PMT and the students that PMT helps enter the workforce.

Well-crafted regulations are vital for protecting employees and the public. But, some rules are breached. Veterans Health Administration must strengthen its integrity; this is profoundly important for veterans, the health-care system, and taxpayers.

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