Effect of Prior Decision on VA Contracts

The Veterans Administration (VA) has expressed concern about the effect of a GAO decision on its mutual-use and exchange-of-use medical services contracts. VA is authorized to secure mutual-use and exchange-of-use specialized medical resources when the Administrator determines it to be in the best interest of the prevailing standards of a VA medical care program. VA is further authorized to enter into contracts with medical schools and other groups capable of furnishing such medical specialist services. In a decision, GAO held that the award of a sole-source contract was not justified since the record indicated only a close relationship between VA and the awardee rather than showing that only the awardee could meet the minimum needs of VA. VA asserted that the governing regulation authorizes sharing rather than procurements and that Congress did not intend to have the regulation governed by Federal Procurement Regulations. Accordingly, VA contended that the regulation should not be administered as a normal procurement authority but as part of a statutory scheme designed to work in tandem with the VA affiliation program. VA also noted that it has historically awarded contracts for mutual-use and exchange-of-use under this regulation on a sole-source basis. GAO did not dispute the VA assertion that it has the authority to award sole-source contracts to medical schools and related institutions. However, VA procurement regulations subject mutual-use and exchange-of-use contracts to the requirements of Federal Procurement Regulations. The competition requirements allow for sole-source contracting only in limited circumstances, and these circumstances did not exist in connection with the protested award. The protester in the applicable decision requested a conference to discuss additional considerations. In view of the GAO conclusion, the conference appeared to be unnecessary, and the request for one was denied.