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UPDATE: PRINCIPI'S VA DEAL DRAWS HOUSE INQUIRY -- PRINCIPI'S TIES

TO A FIRM AWARDED CONTRACTS BY THE VA SPARK SCRUTINY

There are five background pieces...

#1 here... http://www.vawatchdog.org/old%20newsflashes%20APR%2006/newsflash04-23-2006-6.htm

#2 here... http://www.vawatchdog.org/old%20newsflashes%20APR%2006/newsflash04-26-2006-5.htm

#3 here... http://www.vawatchdog.org/old%20newsflashes%20APR%2006/newsflash04-26-2006-9.htm

#4 here... http://www.vawatchdog.org/old%20newsflashes%20APR%2006/newsflash04-27-2006-10.htm

#5 here... http://www.vawatchdog.org/old%20newsflashes%20APR%2006/newsflash04-29-2006-4.htm

Today's story here... http://www.latimes.com/news/nationworld/nation/la-na-vets29apr29,1,5293834.story?coll=la-headlines-nation&ctrack=1&cset=true

Today's story below:

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VA Deal Draws a House Inquiry

Anthony J. Principi's ties to a firm awarded contracts by the veterans agency spark scrutiny.

By Walter F. Roche Jr., Times Staff Writer
April 29, 2006

WASHINGTON — A subcommittee of the House Veterans Affairs Committee has opened a preliminary inquiry into a veterans administration contract with QTC Management Inc., a firm headed by former Veterans Secretary Anthony J. Principi.

Brooke Adams, a spokeswoman for the committee, said Friday that members agreed to the bipartisan inquiry after a report in The Times on QTC's multimillion-dollar contract to conduct medical examinations of veterans applying for disability assistance.

Adams said both Democratic and Republican staff would be involved in the effort. Once the preliminary inquiry is complete, she said, the committee will decide whether to conduct a broader probe that could include public hearings.

Adams said Principi met privately Thursday with members of the House committee but she did not know what was discussed.

The agreement for a preliminary review came after a request by seven Democrats on the panel for an oversight hearing to examine whether the Department of Veterans Affairs was paying too much for the exams and whether there was a conflict of interest involved in awarding the contract.

In their letter, the seven Democrats acknowledged Principi's long-standing efforts for veterans but said, "Our committee should review the facts and circumstances involving Mr. Principi and the QTC contracts to determine if there was any wrongdoing."

Principi has stated that he recused himself from all matters relating to QTC during his four-year tenure as VA secretary ending in early 2005. QTC and department officials have also stated that the contracts were awarded in full accordance with federal bidding requirements.

Principi was the president of QTC in late 2000 when he was nominated by President Bush for the top veterans post. He returned to the firm, based in Diamond Bar, as chairman of the board in December 2005.

The Times reported Sunday that payments to QTC during Principi's tenure totaled $246 million. The Congressional Budget Office projected fees to QTC of $1.2 billion if its contract with Veterans Affairs was fully funded through 2008.

The original contract was awarded to the firm in 1998 and it won a second contract in 2003. Though the agency advertised for bids in 2002, no other firm submitted a proposal.

The contracts were awarded under a pilot program at 10 locations across the country. Under a series of amendments to those contracts, some approved during Principi's VA tenure, QTC also was authorized to conduct physicals on members of the military prior to their discharge.

The physicals to meet both Department of Defense and VA requirements were billed as cost-saving moves and recommended earlier by a congressional commission headed by Principi, before he joined QTC.

A Vietnam veteran, Principi first served as a deputy secretary in the veterans agency under President George H.W. Bush. He also served as a top aide to congressional panels overseeing the military and veterans affairs.

Rep. Henry A. Waxman (D- Los Angeles), ranking minority member of the House Government Reform Committee, also has requested details on the QTC contract along with records of any contacts between QTC and members of Principi's staff.

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Larry Scott

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