WASHINGTON — The California company headed by former Veterans Affairs Secretary Anthony J. Principi overcharged the agency some $6 million under a long-term contract to conduct physical evaluations on veterans applying for disability benefits, an audit has found.
The report, released Thursday, also questioned a proposal by the Department of Veterans Affairs to amend the contract with the company -- QTC Management Inc., based in Diamond Bar -- to charge higher rates than currently authorized.
"The contract clearly limits the base rate" for these services, the 43-page report by the department's inspector general's office states.
The audit also said the proposed amendment amounts to a major or "cardinal change" under federal contracting laws, which can trigger a requirement for a new bidding process.
The report also found evidence that the VA may still be paying too much to the company for a variety of services on the multiyear contract.
The audit was triggered by a call to a government hotline. It followed an internal review of QTC's billing practices and a review of the contract by a private firm for the VA.
As a result, QTC already has agreed to repay about $3 million.
But a company executive said Friday that QTC "strongly disagrees" with the new audit's conclusion that it should repay roughly $3 million more.
"We just got the audit, and we're still reviewing it," said Senior Vice President Marjie Shahani. "Our initial review of the report shows that it has numerous errors and inaccuracies, and we strongly disagree with many of its conclusions."
QTC was paid a total of $267 million by the VA from May 1, 2003, through April 30, 2007, the period covered by the audit.
The company remains under contract with the agency. And, because of good performance reviews, it is to get an additional year tacked on to the current agreement, pushing the end date to April 2009.
The Times reported in 2006 that Principi's firm had benefited from a series of contract awards and revisions to those awards by the department he once headed. The article noted that a congressionally mandated review of QTC's performance had found that the costs of the contract were much higher than expected and did not produce anticipated savings.
The VA never performed a follow-up to that study, though one was recommended by the private firm doing the review.
