VA Spends Billions without a Contract

June 22, 2015
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The Department of Veterans Affairs (VA) spends $60 billion a year providing health care benefits to service veterans. Its mismanagement is well-known and widespread. A recent letter provided to the Washington Post and Congress suggests that as much as 10 percent of the VA’s annual spending is in violation of federal contracting rules, representing billions of taxpayer dollars.

Employees of a New York VA facility used their government purchase cards to buy prosthetics for patients in a manner that violates standard operating procedures. Per the VA’s rules, purchasing cards are available to buy supplies costing less than $3,000. Items costing more require a contract and invoice.  The facility purchased at least 2,000 prosthetics for $24,999, well above the $3,000 limit and only $1 less than the card limit of $25,000. All told, $54 million was spent by this facility in violation of policy.

When congressional investigators heard about the questionable purchases at the Bronx facility, investigators asked for the accompanying contracts to prove the purchases were legitimate. VA employees tried to cover their missteps and blame the missing documents on Superstorm Sandy, according to the Washington Post.

VA officials had received an inquiry from Congress in September 2012 about the Bronx payments, but a letter signed by former secretary Eric Shinseki did not go out until July 2013. The agency had prepared to say that the records had been transferred to VA’s medical center in Manhattan, where they were destroyed in Hurricane Sandy, documents obtained by The Post show.

But in reviewing the claim that the records had been destroyed, a senior adviser in Shinseki’s office was skeptical. “Gemma — this isn’t going to work,” the adviser wrote in an e-mail obtained by The Post.

“The [congressman’s] letter was dated 26 Sept and the storm was 28 October. Yet we talk about visits in December 2012 and again in January. Not clear why we didn’t figure out in December that we lost the records and had to go back in January,” he wrote in April 2013.

“This is not cleared.”

Rice said in a statement Monday, “The damage caused by Superstorm Sandy was devastating and far-reaching, but the claim that all of these documents were destroyed strikes me as all too convenient and must be substantiated. We need to know exactly what happened to the documents, how and why this money was spent without written contracts, and who is accountable.”

This is just one instance of malfeasance. Jan R. Frye, VA’s deputy assistant secretary for acquisition and logistics, and now a VA whistleblower, found the actions at the NY facility were not an isolated event. Frye found a total of $1.2 billion in prosthetics purchases without a contract over an 18 month period in 2013 and 2014. Frye sent a 35 page memo to the VA Secretary, Robert McDonald arguing that laziness is the motivating factor behind the VA’s mismanagement. Purchasing cards are much easier than using the contract process.

Frye is not the first to criticize purchasing card usage by the VA. The Washington Post says:

Some of his [Frye’s] concerns were previously flagged by VA’s inspector general, who has reported for years that weak contracting systems put the agency at risk of waste and abuse. Thousands of pharmaceutical purchases were made without competition or contracts in fiscal years 2012 and 2013, often by unqualified employees, investigators found. And according to documents that have not been made public, the inspector general’s office has warned VA repeatedly that its use of purchase cards needs better oversight.

As much as $6 billion of VA’s annual spending violates federal contracting rules. Internal stakeholders have raised the issue in the past, now it is time for the VA to finally tackle the issue.

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