Federal VA Procurement Official Resigns Under Ethics Cloud

On October 14, 2014, the federal Veterans Health Administration’s deputy chief procurement officer, Susan M. Taylor, resigned under heavy pressure from Congress and other critics amid charges by the VA’s Inspector General that she “misused her position and VA resources for private gain” of a reverse auction company, FedBid.  The report was forwarded to the Justice Department, who declined to prosecute in favor of allowing VA to manage the abuses administratively.

Why she resigned:  Taylor resigned rather than face almost certain firing by the Department of Veterans Affairs.  Taylor came under an ethics cloud and was the subject of an Inspector General’s report for taking the following actions:

• Pressured staff to give FedBid a preference:  “Engaged in conduct prejudicial to the Government when she pressured contracting staff under her authority to give preference to and award a task order for reverse auction to FedBid.”

• Acted as agent of FedBid:  “Engaged in a conflict of interest when she improperly acted as an agent of FedBid in matters before the Government.”

• Disclosed non-public information:  “Improperly disclosed non-public VA information to unauthorized persons.”

• Use of position and resources:  “Misused her position and VA resources for private gain.”

• Retaliated against VA employee: “Engaged in a prohibited personnel practice when she recommended that a subordinate senior executive service (SES) employee be removed from SES during her probation period, as Ms. Taylor identified the subordinate as the person she suspected of making protected disclosures of Ms. Taylor’s ethics violations.”

• Interfered with investigation:  “Interfered with the VA Office of Inspector General’s (OIG) review of the FedBid contract and that she did not testify freely and honestly concerning her involvement in the solicitation and award of the task order to FedBid, as well as other matters.” 

The controversy surrounding Taylor’s actions on the FedBid contract were not the only ethical violations of Taylor over her 30 year career as a federal employee.  Other situations that relate to her personal relationship with another VA employee who was also implicated in the VA scandal, are detailed in the Inspector General’s 81 page report.

What is a reverse auction?  FedBid’s business model provides the framework for government agencies to obtain competitive prices through the use of a reverse auction in which a firm’s price is publicly disclosed and other firms may choose to lower their bid price to be the lowest bidder.  While some officials note that FedBid's reverse auction saves the government money, the savings are reduced by a fee charged by FedBid.

The following links give some of the timeline and background surrounding the VA-FedBid controversy.

• Department of Veterans Affairs Office of Inspector General, September 26, 2014 report: Administrative Investigation 

• VA contracting official misused her position to help company, inspector general finds, October 5, 2014 article from The Washington Post, by Christian Davenport

• VA contracting official Susan Taylor resigns amid agency’s attempt to fire her, October 14, 2014 article from The Washington Post, by Josh Hicks

• VA’s Use of Reverse-Auction Contracts Comes Under Attack, by Charles S. Clark, December 11, 2013 article from Government Executive

Lessons learned:  Unfortunately, there are too many stories like this one at all levels of government, and they serve as a reminder for public agencies to be diligent in managing the ethics environment and culture of an organization.

• Does your agency have an up-to-date ethics and conflict of interest policy?

• Do employees know what is in the policy?  Do you provide regular training and discussion on ethics?

• Does your agency have structures and systems in place to help prevent ethical lapses?

• Does your agency have appropriate checks and balances, internal controls, and supervision of staff to prevent ethical abuses?

• What is the culture and tone regarding ethics that is set by the leadership of your agency?

Mike Purdy's Public Contracting Blog
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