Veterans Affairs Contracting:

Improved Oversight Needed for Certain Contractual Arrangements

GAO-15-581: Published: Jul 2, 2015. Publicly Released: Jul 16, 2015.

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What GAO Found

The Department of Veterans Affairs (VA) cannot document the extent to which it used interagency agreements in fiscal years 2012 through 2014 due to incomplete information. GAO reviewed data from VA's contract management system and found that VA obligated about $1.7 billion to other government agencies via such agreements. However, GAO's analysis of data from VA's accounting system found that the total amount transferred to other agencies over this period was between $2.3 billion and $2.6 billion, a difference of $600 million to $900 million for the same period. GAO found that VA's contract management system data are incomplete due to several shortcomings. For example, no direct link exists between this system and VA's accounting system. Thus, actions can be initiated directly in the accounting system without being recorded in the contract management system. In addition, VA recently revised its policy to exclude interagency transactions—also a form of interagency agreements in which VA funds are obligated for services provided by another agency—from being entered into the contract management system, further limiting its visibility into the full extent of its use of interagency agreements. Moreover, VA's management of the award and oversight of the interagency agreements GAO reviewed varied, and in some cases did not comply with its policy. Nearly half of the 21 interagency agreements GAO reviewed were missing items such as documentation of VA's reasons for using an interagency agreement instead of another procurement approach, for example. This places VA at increased risk of incurring additional costs such as service fees to other agencies that perform work for VA. Some contracting officials were not aware of policy requirements, in part due to an absence of training opportunities. VA has begun developing training, but it may not cover all who need it.

VA obligated over $244 million to Federally Funded Research and Development Centers (FFRDC) from fiscal years 2012 through 2014, and has opportunities to improve documentation and oversight. Almost all of these obligations were to FFRDCs operated by the MITRE Corporation (MITRE). Contracts with FFRDCs can be advantageous, but are noncompetitive, which can pose risks to the government in that it lacks the leverage to negotiate that it would otherwise have in a competitive environment. VA used MITRE for strategic and technical management support and other consulting services. GAO found that VA has processes to review individual FFRDC task order requirements, but not all awards are subject to these reviews, as VA does not centrally track contract actions to non-MITRE FFRDCs. As a result, VA is missing opportunities to provide more effective oversight for all of its FFRDC awards. In addition, all 10 MITRE task orders GAO reviewed complied with VA's basic requirements. However, these contract files contained limited documentation of some of the factors VA is to consider during pre-award reviews to determine the appropriateness of an FFRDC, and for some awards the contract files did not fully explain how VA determined that the contractor's proposed price was acceptable. Without this information, contracting officials who later revisit the file to make modifications will be limited in their abilities to make well-informed decisions.

Why GAO Did This Study

VA spent about $19 billion to buy goods and services in fiscal year 2014—partly through agreements where other agencies award contracts on VA's behalf. VA also uses FFRDCs—government-funded entities that have relationships with federal agencies to perform certain tasks. These arrangements can help VA meet its needs and take advantage of unique expertise.

In light of questions about VA's use of interagency agreements and FFRDCs, GAO was asked to look at how VA uses and manages these methods of procuring goods and services. This report assesses (1) the extent of use and effectiveness of VA's award and oversight of interagency agreements for fiscal years 2012 through 2014, and (2) the extent of use and effectiveness of VA's management of FFRDCs during this same period. GAO reviewed VA procurement policies, federal acquisition regulations, VA contract data, a sample of 21 interagency agreements and 10 FFRDC task orders, chosen, in part, based on obligation amounts; and interviewed officials from VA, other agencies, and MITRE, the primary FFRDC with which VA does business.

What GAO Recommends

GAO recommends, among other things, that VA revise its policies on interagency agreements so that it can better record and track them; provide training on their use; and ensure that all FFRDC actions are centrally reviewed and appropriately documented. VA agreed with GAO's recommendations.

For more information, contact Michele Mackin at (202) 512-4841 or mackinm@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: VA concurred with this recommendation, and developed training based on the revised policy on interagency agreements issued in October 2016. GAO requested information in June 2017 on how VA will ensure this training reaches the full range of program and contracting officials, but as of September 2017 we have not yet received these details.

    Recommendation: To ensure consistent implementation and documentation of actions relating to interagency agreements, the Secretary of Veterans Affairs should ensure that planned training on interagency agreements reaches the full range of program and contracting officials, particularly those who only occasionally award interagency agreements.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Implemented

    Comments: In August 2015, VA briefed its Heads of Contracting Activity on the updated FFRDC governance plan released in January 2015. Additionally, in September 2015, VA's Technology Acquisition Center (TAC) completed a review of the four actions identified by GAO as FFRDC awards made by other VA contracting offices and found that no corrective action was required.

    Recommendation: To ensure consistent implementation and documentation of actions relating to FFRDC task orders, the Secretary of Veterans Affairs should develop a strategy to ensure that all FFRDC contract actions, including those awarded to non-MITRE FFRDCs outside the Technology Acquisition Center, are reviewed according to the requirements of VA's FFRDC Governance Plan.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Implemented

    Comments: In 2015, VA's FFRDC contracting office, the Technology Acquisition Center, updated its processes to include a memorandum to the task order file recording the results of the Acquisition Integrated Product Team meeting. Additionally, the price negotiation memorandum for each task order will now include an analysis of the level of effort required and the results of any negotiations with the FFRDC.

    Recommendation: To ensure consistent implementation and documentation of actions relating to FFRDC task orders, the Secretary of Veterans Affairs should require contracting officers to document in the contract files (1) pre-award reviews to determine whether proposed task order requirements meet VA's criteria for award to an FFRDC, (2) how they determined the FFRDC's proposed pricing was acceptable, and (3) any price negotiation.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: In April 2016, VA's Technology Acquisition Center modified its contract with its FFRDC to exclude travel costs from calculation of fee on all future task orders, effective immediately.

    Recommendation: To ensure consistent implementation and documentation of actions relating to FFRDC task orders, the Secretary of Veterans Affairs should re-assess whether to continue paying a fixed fee on travel costs for FFRDC contracts and task orders.

    Agency Affected: Department of Veterans Affairs

  5. Status: Closed - Implemented

    Comments: In October 2016, VA issued a revised policy on interagency agreements. This policy clarified which types of agreements should be recorded in its Electronic Contract Management System (eCMS), and also required program offices using interagency agreements to establish procedures to ensure monthly updates are reflected in eCMS.

    Recommendation: To ensure consistent implementation and documentation of actions relating to interagency agreements, the Secretary of Veterans Affairs should (1) revise policies on interagency agreements to clarify which interagency transactions must be recorded in VA's Electronic Contract Management System (eCMS), and (2) improve the completeness of interagency agreements recorded in eCMS, which could include implementing procedures to routinely check eCMS data against transaction data in VA's accounting system.

    Agency Affected: Department of Veterans Affairs

 

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