VA Spends Billions Annually Without Proper Oversight

Audit: Agency’s multi-billion-dollar procurement program operates on ‘outdated’ policies

Veterans Affairs Secretary Robert McDonald / AP
• September 19, 2016 5:00 am


The Department of Veterans Affairs spends billions of dollars annually on contracts for goods and services without proper oversight and management, according to a government watchdog.

The VA spent roughly $20 billion during fiscal 2015—over a quarter of the agency’s discretionary budget—to procure goods and services for veterans’ health care, and at least $46 billion over a three-year period, according to a new audit by the Government Accountability Office that faults the agency for managing contracts using "outdated and fragmented" policies.

The audit is the latest evidence of mismanagement at the federal agency, which has been widely scrutinized since the secret wait list controversy at government-run hospitals more than two years ago.

The VA spends billions each year on contracts for a wide range of goods and services that include construction, information technology, medical services, and medical supplies.

Auditors discovered shortcomings in the VA’s data systems, policies, oversight, acquisition workforce, and contract management related to the agency’s multi-billion-dollar procurement program.

The agency’s contract management has been repeatedly flagged for shortfalls. An independent assessment mandated by legislation enacted in 2014 following the wait list scandal found the acquisition program to be unduly complex and faulted the agency for not always procuring goods and services at the lowest available price.

A senior official at the agency penned an internal memo, later obtained by the Washington Post, to VA Secretary Robert McDonald in 2015 that said the agency was spending at least $6 billion annually on medical care and supplies in violation of federal contracting regulations.

"This GAO report shows VA’s contracting operations are as dysfunctional as ever.  This is the same sort of bureaucratic bungling that led to the massive VA procurement scandal that was exposed in 2015," Rep. Jeff Miller (R., Fla.), chair of the House Veterans Affairs Committee, told the Washington Free Beacon. "The fact that VA can’t seem to stop mismanaging resources underscores the agency’s lack of respect for taxpayer dollars."

"Given VA’s abysmal accountability track record, it’s unlikely the department will hold any employees accountable for this mismanagement, leaving veterans and taxpayers to foot the bill," Miller said.

The GAO found that the VA has two versions of acquisition regulation guidance, both of which are outdated, in addition to 14 memoranda, 170 information letters, and 12 day-to-day "acquisition flashes" that contract officers can follow, creating confusion among employees about what to use as guidance. These forms of information conflict with federal acquisition regulations in more than a dozen ways.

This confusion sometimes resulted in large sums of money being doled out for contracts without proper adherence to procedures. For instance, auditors determined that a contracting officer awarded a $335,000 contract to a veteran-owned small business without a justification or approval, in violation of an updated policy of which the employee was unaware.

"Clear policies are key to ensuring VA conducts procurements effectively on behalf of veterans," auditors wrote.

The review, initiated last July and completed this month, found that the VA isn’t taking full advantage of a vending program that allows medical supplies to be purchased at significant discounts. The agency has also not developed guidance to consolidate contracts made by regional facilities.

VA’s procurement program is spread across six different contracting organizations that span the agency’s administrative branches. This decentralized organization has led to mistakes, including equipment being procured from the wrong contracting office and duplicate contracts being awarded, according to the audit.

The VA also does not adequately track the total sums it spends on contracts.

GAO auditors found that the VA recorded roughly $46 billion in procurement expenses between fiscal years 2013 and 2015, but because the VA’s electronic data on contract expenses was incomplete, the estimates reflected "much lower total obligations" than those recorded in other federal databases documenting contract spending. The VA database underestimated contract obligations over the three-year period by about $10 billion, according to separate federal data.

"This situation results in missed opportunities for VA to understand the full picture of where its obligations are going, information that is needed to effectively monitor and provide oversight of procurement actions," auditors found.

The VA did not respond to a request for comment.

A representative of Concerned Veterans for America, a veterans group pushing for VA reform, told the Free Beacon that the VA’s poor management of its procurement process is unsurprising given the department’s past failings.

"The VA continues to be buried in red tape and bureaucracy, and cost efficiency is not a top priority for the self-serving bureaucrats who work there. Until real VA accountability is enacted, American veterans will continue receiving poor service and American taxpayers will continue getting short-changed," said Shaun Rieley, an analyst at Concerned Veterans for America.

The House Veterans Affairs Subcommittee on Oversight and Investigations plans to hold a hearing on reforming VA procurement this week.