VA abruptly issues second contract for Agent Orange claims system

The Veterans Affairs Department awarded IBM a contract in July to develop within three months a system to process claims for veterans suffering from diseases related to the Vietnam-era chemical Agent Orange. But last week officials inexplicably issued another contract searching for a second contractor to do the job in one-third the time, while the IBM contract remains in place.

VA needs the new system to process up to 240,000 claims for 15 illnesses determined to be the result of military personnel being exposed to Agent Orange, a defoliant sprayed on the jungles during the Vietnam War. VA presumes all personnel who served in Vietnam were exposed to Agent Orange, and the 15 illnesses they might have are a result of coming into contact with the chemical.

According to VA, its policy of presuming the diseases are a result of exposure to the chemical will simplify the process for veterans receiving compensation because the department will forgo the normal process of requiring veterans to prove their illnesses began, or worsened, during their military service in Vietnam. Paying Agent Orange claims will cost the United States $13.4 billion.

Department officials decided this year to process the claims separate from the other systems the Veterans Benefits Administration uses. In March, VA Secretary Eric Shinseki said he wanted to tap private sector skills to fast-track the development of the system. "This will be a new way of doing business and a major step forward in how we process the presumptive claims we expect to receive over the next two years," he said at the time.

VA initially planned to award the contract in April, but delays pushed that move up to July. IBM eventually won the $9.1 million pact. The procurement calls for delivery of a production-ready prototype by October and full production by December.

VA asked IBM to develop a fully automated system and a machine-readable claims form that veterans can electronically download and, at their option, electronically submit.

Officials want the forms to be shorter than the current document, well-suited to an automated processing method, and they expect IBM to use commercial systems to the fullest extent possible. They also want employees and veterans to be able to access the system via the Web, with a separate data repository linked to existing departmental systems.

But on Sept. 3, officials quietly posted on the Federal Business Opportunities website a second procurement for the same processing system. The document was not accompanied by any public announcement. The new procurement includes roughly the same requirements as the original contract, but a shortened delivery deadline.

VA wants the selected contractor to demonstrate the capability to electronically process claims within 15 days of the award and to provide a production-ready system 15 days later, a daunting task, according to one contractor who declined to be identified.

The system must be operational next month, and bidders must submit their proposals by Friday, only a week after the solicitation was issued, which are due Friday.

Harold Gracey, a consultant with Topside Consulting who served as chief of staff at VA from 1994 to 1998, said he assumed the department put out the second procurement as a backup plan in case IBM cannot deliver its system on time.

Gracey added VA could find a second contractor to meet its requirements, but bidders also have to recognize the negative publicity that would result if they fail to deliver. A source familiar with VA said he viewed the second source procurement as a poke at IBM to fulfill its requirements on time.

Veterans groups said whatever the reasons behind the second procurement they were worried the department might not be able to meet its deadlines. "VA's unusual announcement for a second contract, without any details released to the public, raises significant concerns among veterans about VA's transparency and VA's ability to process Agent Orange claims in a timely and accurate manner," said Paul Sullivan, executive director of Veterans for Common Sense. "We hope VA issues an explanation about this and puts to rest veterans' concerns."

VA officials did not reply to numerous requests from Nextgov to comment on the status of the IBM contract and did not respond to a query on why they issued a second procurement. IBM executives also did not reply to calls and e-mails about the status of the company's contract.