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Today, Rep. Matt Rosendale, (R-Mont.), the Chairman of the House Committee on Veterans’ Affairs Subcommittee on Technology Modernization, delivered the following opening remarks, as prepared, at the start of the Subcommittee’s Joint Oversight Hearing with the Subcommittee on Oversight and Investigations to examine challenges in competition and conflicts of interest in VA Contracting:

The subcommittees will come to order.

Good morning.

Now that the VA has opted to provide witnesses, we are here today to resume our May 24th conversation about competition and conflicts of interest in VA contracts.

We will be broadening our focus from IT contracts to consulting and professional services contracts.

VA spends over $3 billion a year on management consulting contracts with companies ranging from the largest multi-national consulting firms to boutique shops that rely on the VA for most of their business.

Similar to the IT sector, the top 10 consulting firms receive about 40 percent of VA’s consulting dollars.

These companies support nearly every function of the Department—including contracting with other companies—and the VA is increasingly reliant on them.

I have no doubt that many of them operate ethically.

But the ranks of government contracting have never been known to be filled with saints.

Of all areas of contracting, consulting and professional services contracts are the most fraught with conflicts of interest.

That is not my opinion—that’s what the regulations say.

When contractors are virtually indistinguishable from government employees and they are privy to most information that passes through the agency, there is a lot of opportunity to exploit access to non-public information.

Here are some examples.

In March, the Wall Street Journal reported that McKinsey consulted for VA on internal management while advising its opioid manufacturer clients how to sell more pain pills to the Department.

We have been getting complaints for years about how the VA’s medical distributors substitute their own, usually more expensive products for those of VA’s contracted suppliers.

It seems to be a standard practice for VA organizations to hold their off-site leadership meetings and planning retreats in contractors’ facilities.

Not only are key strategic decisions made with contractors present, they are made under the contractors’ roofs.

And we have seen time and time again how the same companies that staff the offices of VA decisionmakers tend to get contracts to perform projects for those offices.

Not to mention when former VA executives take jobs with companies whose contracts quickly multiply.

The Revolving Door on Capitol Hill rightfully gets a great deal of scrutiny. But it is swinging out of control in federal agencies such as VA.

For all these reasons, Chairwoman Kiggans and I found it unbelievable when Secretary McDonough stated in a May 31st letter that no organizational conflicts of interest exist among VA contractors.

I want to let Ms. Kiggans describe her letter. But let me emphasize how implausible VA’s answer is.

VA’s position seems to be that in more than $3 billion of consulting contracts annually, there is nothing to worry about. Nothing to see here.

On the contrary, I intend to lay out the situations that are happening as we speak in the VA, as reported by concerned employees and other companies.

I welcome our witnesses’ explanations.

This issue is crucial to the integrity of the VA as an organization and its ability to serve our veterans.

A culture of cutting ethical corners creates a breeding ground for fraud.

That is not hypothetical.

Every month we see indictments and verdicts involving companies defrauding the VA, often paying kickbacks or bribes. These schemes are keeping U.S. attorneys all over America busy.

I want to encourage every company that plays by the rules to keep doing the right thing. And I urge everyone who sees conduct that may be criminal to report it to the VA Office of Inspector General hotline.

Thank you.

With that, I recognize Ranking Member Cherfilus-McCormick for her opening statement.