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Wednesday, April 2, 2014

Crooks had no trouble getting construction contracts from Department of Veterans Affairs, report shows -- By Mark Flatten, The Washington Examiner


Crooked contractors, bribery and embezzlement are all subplots in a botched $153 million deal to build a Department of Veterans Affairs hospital near Pittsburgh, according to a report released Tuesday by the agency's inspector general. (Photo: Washington Examiner file)Crooked contractors, bribery and embezzlement are all subplots in a botched $153 million deal to build a Department of Veterans Affairs hospital near Pittsburgh, according to a report released Tuesday by the agency's inspector general.

Veterans Affairs contracting officers and lawyers improperly dismissed evidence that the firm selected to build the project, Westar Development Co., was controlled by a man who admitted to embezzling money from a previous employer. They also failed to spot connections between Westar and a money man in the deal who pleaded guilty to bribery and racketeering charges three months after the lease was awarded.

Westar officials even claimed falsely that their project team would include a former VA executive as a consultant, an assertion that earned extra points from agency evaluators. That executive, William Montague, later pleaded guilty to accepting bribes and kickbacks while he worked at the veterans' agency in return for inside information about lucrative agency contracts that apparently were unrelated to the Pennsylvania facility.

Veterans Affairs officials did not check their own records to verify claims that Westar should received special consideration as a veteran-owned small business. They did not even verify Westar's claim that it had worked on 11 other federal buildings, including veterans' hospitals. In fact, Westar had never built anything before it got favored treatment from VA contracting officials to build and lease the medical center in Butler, Pa., according to the report.

The 20-year lease agreement that would cost taxpayers $152.7 million was awarded to Westar in May 2012. It was terminated in August 2013 after the inspector general confirmed the allegations initially made in a protest filed by an unsuccessful bidder. The follow-up report released Tuesday came at the request of agency officials who asked the inspector general to determine why the contract was so badly mishandled.

“While it is undisputed that Westar made false and misleading representations to VA, our findings and conclusions supported that VA failed to perform appropriate, required verification steps and failed to follow up on key statements made in Westar’s proposal,” the inspector general said in its analysis of the deal.

The bizarre tale began in January 2010, when VA sought proposals from developers who would secure land, build the Butler VA medical center, and lease the property to the agency for 20 years.

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