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

Susan is co-chair of the firm’s Aerospace and Defense Industry Group and is a partner in the firm’s Government Contracts and Cybersecurity Practice Groups. She previously served as in-house counsel for two major defense contractors and advises a broad range of government contractors…

Susan is co-chair of the firm’s Aerospace and Defense Industry Group and is a partner in the firm’s Government Contracts and Cybersecurity Practice Groups. She previously served as in-house counsel for two major defense contractors and advises a broad range of government contractors on compliance with FAR and DFARS requirements, with a special expertise in supply chain, cybersecurity and FedRAMP requirements. She has an active investigations practice and advises contractors when faced with cyber incidents involving government information, as well as representing contractors facing allegations of cyber fraud under the False Claims Act. Susan relies on her expertise and experience with the Defense Department and the Intelligence Community to help her clients navigate the complex regulatory intersection of cybersecurity, national security, and government contracts. She is Chambers rated in both Government Contracts and Government Contracts Cybersecurity. In 2023, Chambers USA quoted sources stating that “Susan’s in-house experience coupled with her deep understanding of the regulatory requirements is the perfect balance to navigate legal and commercial matters.”

Her clients range from new entrants into the federal procurement market to well established defense contractors and she provides compliance advices across a broad spectrum of procurement issues. Susan consistently remains at the forefront of legislative and regulatory changes in the procurement area, and in 2018, the National Law Review selected her as a “Go-to Thought Leader” on the topic of Cybersecurity for Government Contractors.

In her work with global, national, and start-up contractors, Susan advises companies on all aspects of government supply chain issues including:

  • Government cybersecurity requirements, including the Cybersecurity Maturity Model Certification (CMMC), DFARS 7012, and NIST SP 800-171 requirements,
  • Evolving sourcing issues such as Section 889, counterfeit part requirements, Section 5949 and limitations on sourcing from China
  • Federal Acquisition Security Council (FASC) regulations and product exclusions,
  • Controlled unclassified information (CUI) obligations, and
  • M&A government cybersecurity due diligence.

Susan has an active internal investigations practice that assists clients when allegations of non-compliance arise with procurement requirements, such as in the following areas:

  • Procurement fraud and FAR mandatory disclosure requirements,
  • Cyber incidents and data spills involving sensitive government information,
  • Allegations of violations of national security requirements, and
  • Compliance with MIL-SPEC requirements, the Qualified Products List, and other sourcing obligations.

In addition to her counseling and investigatory practice, Susan has considerable litigation experience and has represented clients in bid protests, prime-subcontractor disputes, Administrative Procedure Act cases, and product liability litigation before federal courts, state courts, and administrative agencies.

Susan is a former Public Contract Law Procurement Division Co-Chair, former Co-Chair and current Vice-Chair of the ABA PCL Cybersecurity, Privacy and Emerging Technology Committee.

Prior to joining Covington, Susan served as in-house senior counsel at Northrop Grumman Corporation and Motorola Incorporated.

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 represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

Photo of Evan R. Sherwood Evan R. Sherwood

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience/default, and related audits, litigations, and investigations. He also advises on contract compliance and formation issues, including TINA/defective pricing…

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience/default, and related audits, litigations, and investigations. He also advises on contract compliance and formation issues, including TINA/defective pricing, data rights, mandatory disclosure rules, ethics, conflicts of interest, teaming arrangements, and other transaction agreements (OTAs). He has litigated matters before the Court of Federal Claims, the Armed Services Board of Contract Appeals, the Government Accountability Office, and the Federal District Courts.

In his work for defense and civilian agency contractors, Evan:

  • Prepares CDA claims and REAs;
  • Litigates matters involving CAS compliance, cost accounting practice changes, and cost allowability under the FAR and grant rules;
  • Defends contractors during audits and investigations involving the Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), and the Office of the Inspector General (OIG);
  • Advises on constructive changes, work delays, defective specifications, stop-work orders, government-furnished property, CPARS, warranty matters, data rights, and quality controls;
  • Counsels on disputes between primes and subcontractors, including teaming disputes; and
  • Conducts internal investigations and defends clients in federal investigations involving whistleblower allegations and retaliation claims.

Evan is a Vice Chair of the ABA Public Contract Law Section’s Contract Claims & Disputes Resolution Committee. He routinely writes and speaks about legal issues in federal contracting.