By Gregg Hoffmann
Logistics Health Inc. has become a major player as a provider of health services for the military and other branches of government.
That has been great for La Crosse and the region, as the company has grown dramatically, adding employees and two new headquarters buildings during the last few years.
But, as a major player, LHI also becomes a target for toppling from the top of the heap. Its operations are now being scrutinized by competitors and those who monitor government spending.
This means LHI has to make sure it operates with the utmost ethics and integrity, and as much transparency as possible.
Some competitors recently charged that LHI had an unfair advantage in bidding on a $790 million contract, let in September. Besides routine exams for reservists and National Guard members, the LHI program will provide full medical assessments to reservists, Guard members and members of the active military returning from Iraq and Afghanistan.
Logistics Health will be paid an estimated $151 million for the first year of a contract that can be renewed annually and extended up to five years, at a total cost of about $790 million.
The competitors note that LHI hired William Winkenwerder Jr. as a director and consultant in June. Winkenwerder had supervised military health programs at the Pentagon as assistant secretary of defense for health affairs from 2001 until April.
Of course, Tommy Thompson, former Wisconsin governor and secretary of Health and Human Services in the Bush Administration, serves as president of LHI.
Winkenwerder, Thompson and LHI chairman and CEO Don Weber all have denied any wrongdoings. Thompson labeled the complaints “sour grapes” from companies that lost in the bidding process.
But, these companies claim that their bids ranged from $80 million to $100 million less than the LHI bid. “They stacked the deck,” said Fran Lessans, president of Passport Health, one of the losing bidders, in a Los Angeles Times story. Her Baltimore-based firm lost despite a bid projected over five years to cost nearly $100 million less than Logistics Health’s winning proposal.
“It was wired. There is no doubt in my mind,” Lessans said of the Defense procurement process.
Two other firms involved in the bidding have filed formal protests with the Government Accountability Office (GAO). A draft copy of one protest letter, reviewed by the Times, cited Winkenwerder’s role and complained the winning bidder may have “gained unequal access to information not available to other competitors” by hiring the former Pentagon official.
In other letters of protest filed with the GAO, officials of rival firms also charged LHI won the pact despite questions raised about its performance under a previous agreement with the Department of Health and Human Services, according to the Times story. That pact originally was awarded in 2001.
Kenneth Moskowitz, an attorney for the Pennsylvania-based United States Military Dental Corp., said in an Oct. 12 letter that Logistics’ prior performance and practices under the Health and Human Services contract “put reservists and National Guardsmen at possible undue risk” because nobody monitored the LHI program.
Within the current political environment because of the war in Iraq, the accusations were bound to gain more attention and take on some image of credibility. We’ve all read and heard about exorbitant contracts to Halliburton and other companies providing services in Iraq.
Ties to Vice-President Dick Cheney and cronies have been scrutinized. Wasteful spending, sub-standard construction projects in Iraq and accusations of war profiteering by private companies have made headlines.
When Thompson was first hired by LHI, you could hear under-currents that he was brought on board to get more government contracts. That was a high profile hire by Weber, who had supported Thompson when the latter was still in politics. Winkenwerder’s hiring more or less ran under the radar screen of the media.
Cynics might say LHI has just learned the rules of the game, and it’s about time, since Wisconsin businesses have lagged behind others in procuring government contracts in the past.
But, it’s very important for LHI, and Wisconsin business in general, for the company to now be transparent and ethical, as the accusations are scrutinized. While LHI is a private company, it deals with public money in its government contracts, thus needs to be open about the process of obtaining those contracts — at least as far as government security regulations allow.
The GAO has until early January to act on the protests. Government officials have refused to comment on the accusations, pending a possible review.
In the Times story, which also ran in the La Crosse Tribune with some local additions, Winkenwerder said the rules bar him from contacting his former Pentagon colleagues on Logistics’ behalf, “and I have followed those rules scrupulously. Further, I support such rules and place a high importance on strict ethical behavior in all of my conduct.”
Thompson said in the Tribune, “Logistics Health Inc. is so ethical, it’s beyond the pale.” Weber said as LHI becomes a larger company it has become a target. “We’re a very ethical and moral company,” he added. Weber said LHI has moved from the “minors leagues to the major leagues.”
With that move also comes the major league spotlight. LHI has been providing needed services on government contracts for quite some time and has received excellent reviews from government agencies in the past. Winkenwerder, Thompson and Weber might very well be right in their contentions that LHI has done nothing wrong.
But, the unpopular war in Iraq, and some of the practices by the Bush Administration, have created a climate of distrust and scrutiny. So, one of the consequences of becoming a major player is that LHI must prove its contentions.
