Recent news reports have raised a substantial question about who has authority to run the Department of Veterans Affairs (“VA”) in the wake of Dr. David Shulkin’s departure from the agency.  According to the White House, Dr. Shulkin resigned.  Meanwhile, Dr. Shulkin himself has publicly insisted that he did not resign and was instead fired.

This inconsistency sets up a potential dispute over whether, under the Federal Vacancies Reform Act of 1998 (“Vacancies Act”), President Trump had the authority to appoint Robert Wilkie, the Undersecretary of Defense for Personnel & Readiness, to serve as Acting Secretary of the VA.

As a result, contractors doing business with the VA have found themselves confronted with a series of knotty questions about the impact this uncertainty may have on the VA’s procurement priorities and actions.

The Federal Vacancies Reform Act

Enacted in 1998, the Vacancies Act sets out “the exclusive means for temporarily authorizing” an agency head to replace a Senate-confirmed officer of an Executive agency who leaves his or her post.  5 U.S.C. § 3347(a) (emphasis added).  As a general matter, if such an officer “dies, resigns, or is otherwise unable to perform the functions and duties of the office[,]” “the first assistant to the office of such officer” shall serve as the acting leader of the agency.  5 U.S.C. § 3345(a)(1).  However, the President generally may in these circumstances appoint another federal officer or employee to run the agency until the Senate confirms a new officer.  See 5 U.S.C. § 3345(a).  Interim appointees may only serve for a limited period of time and, if the interim appointee was a federal employee or inferior officer, then the interim appointee must be from the same Executive agency as the one in which the vacancy occurs and meet certain other requirements.  See 5 U.S.C. § 3345(a)(3)(A); 5 U.S.C. § 3346.

Notably, the express language of the Vacancies Act—focusing specifically on death, resignation, or incapacitation—does not permit the President to appoint an acting replacement to a vacancy created by a Presidential firing.  In this way, the rule is often understood to protect the Senate’s prerogative to confirm constitutional officers by constraining the President’s ability to simply fire agency heads and appoint acting replacements without Senate approval.  (Though informal DOJ guidance, citing Senate floor debates, leaves open the possibility that the Vacancies Act’s “unable to perform” clause includes an official being fired.)

But even if the President generally is not authorized to appoint a replacement for a fired official, the Vacancies Act does recognize an exception to that rule:  if another “statutory provision expressly” permits the President to select a temporary appointee, then the President can use that statute as a means of appointing an interim replacement.  5 U.S.C. § 3347(a)(1).

The Vacancies Act and the VA

Given the Vacancies Act’s provisions, it could matter whether Dr. Shulkin resigned or was fired.  If he resigned, then the President would likely have authority to appoint Undersecretary Wilkie as an interim successor under Section 3345.  However, if Dr. Shulkin was fired, then the validity of Undersecretary Wilkie’s appointment may be in doubt unless there is another statute providing for an appointment consistent with Section 3347.

To our knowledge, the White House has yet to assert that there is such a statute, and has instead stated that Dr. Shulkin resigned.  However, there is a statutory authority that may support the President’s ability to select an interim successor such as Undersecretary Wilkie:  38 U.S.C. § 304.  That statute creates the office of the Deputy Secretary of Veterans Affairs, and it further states that “[u]nless the President designates another officer of the Government, the Deputy Secretary shall be Acting Secretary of Veterans Affairs during the absence or disability of the Secretary or in the event of a vacancy in the office of Secretary.”  (Emphasis added).  Moreover, in recent litigation concerning the replacement of the former director of the Consumer Financial Protection Bureau, a federal court noted that Section 304 is the type of statute that might displace the Vacancies Act.  English v. Trump, 279 F. Supp. 3d 307, 322 (D.D.C. 2018).

But this does not necessarily resolve the issue.  Section 3347 requires another statute to “expressly” permit a presidential appointment, and a Court may find that Section 304 is not express because it does not state that the President shall have authority to appoint an interim successor.  Rather, Section 304 is written in the negative, providing for the Deputy Secretary to run the agency “unless” the President has otherwise lawfully appointed someone to that post.  Given that language, one might argue that Section 304 does not provide authority under Section 3347 for the President to appoint a temporary successor.

Implications for Contractors

For contractors, the upshot of the debate regarding President Trump’s appointment of Acting Secretary Wilkie is this:  if the appointment is invalid under the Vacancies Act, then Wilkie’s performance of certain functions or duties of the office may be void.  However, even this point has an additional nuance.  Legislative history and certain court precedent suggests that an invalid appointment of an official would void only that official’s performance of nondelegable functions or duties.  Stated differently, the Vacancies Act appears not to affect the validity of an official’s performance of delegable duties.  Under this view, many run-of-the-mill VA procurement functions presumably would be valid, even if Acting Secretary Wilkie’s appointment is deemed unlawful.

Nonetheless, contractors doing business with the VA would be wise to continue monitoring this issue closely, especially in light of the continuing debate about the essential nature and purpose of the VA.  The push in some circles to privatize the VA would have profound effects on the contracting community, and if such an overhaul were to occur during Acting Secretary Wilkie’s tenure, it likely would be challenged on the ground that Wilkie’s appointment is unlawful, rendering the policy change void.  Moreover, even if Acting Secretary Wilkie’s appointment ultimately is deemed lawful, the uncertainty it has created—and the looming prospect of litigation—could very well have second- and third-order effects that generally bog down the agency’s actions.

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Photo of Susan B. Cassidy Susan B. Cassidy

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government…

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government contractors and represents her clients before the Defense Contract Audit Agency (DCAA), Inspectors General (IG), and the Department of Justice with regard to those investigations.  From 2008 to 2012, Ms. Cassidy served as in-house counsel at Northrop Grumman Corporation, one of the world’s largest defense contractors, supporting both defense and intelligence programs. Previously, Ms. Cassidy held an in-house position with Motorola Inc., leading a team of lawyers supporting sales of commercial communications products and services to US government defense and civilian agencies. Prior to going in-house, Ms. Cassidy was a litigation and government contracts partner in an international law firm headquartered in Washington, DC.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
    the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.

Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.

Photo of Evan R. Sherwood Evan R. Sherwood

Evan Sherwood helps government contractors to resolve disputes with the federal government, prime and subcontractors, and contractor employees. He has helped clients to successfully navigate large federal contract claims, cost/pricing audits, contract terminations, and related litigation and investigations. He looks for constructive solutions…

Evan Sherwood helps government contractors to resolve disputes with the federal government, prime and subcontractors, and contractor employees. He has helped clients to successfully navigate large federal contract claims, cost/pricing audits, contract terminations, and related litigation and investigations. He looks for constructive solutions to disputes between contractors and their customers/business partners, so that companies can achieve their strategic goals.