Can a contract between a medical practice and an employed physician cite Federal Employment as "competition" if the employed physician resigns.

The VA is a competitor within the meaning of the contract if the contract says the VA is a competitor.  That is what you agreed to.  If you agree not to eat meat for a week, and your contract defines meat as including tuna, you breach the contract by eating tuna.  However, I have substantial doubt about the enforceability of this provision, as non-compete provisions (which is what this is; the liquidated damages are only a remedy for the breach of the non-compete) are looked at very skeptically by the courts (although they are more likely to be enforced against employees with special skills, like physicians).  My gut is that keeping you from working for the VA is not protecting any legitimate interest of your employer, the 70 mile radius will be considered too wide an area, and there would certainly need to be a time limit on the non-compete for it to be enforceable.  Moreover, in the jurisdictions with whose law I'm familiar (which doesn't include Oregon, but I suspect it's the same) liquidated damages are only enforceable if (a) it would be difficult or impossible to calculate the actual damages caused by a breach; and (b) the liquidated damages amount reflects an honest attempt to approximate what the actual damages would be.  This clause seems to violate part 2.