VA Health Care:

Improvements Needed for Management and Oversight of Sole- Source Affiliate Contract Development

GAO-16-426: Published: May 6, 2016. Publicly Released: Jun 6, 2016.

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What GAO Found

GAO found it took nearly 3 years on average to develop and award 11 selected high- value, long-term sole-source affiliate contracts (SSAC) from three of the five Department of Veterans Affairs (VA) medical centers (VAMC) GAO visited. The two remaining VAMCs GAO visited did not use high-value, long-term SSACs. High-value, long-term SSACs generally require the most oversight of all SSACs by the Veterans Health Administration (VHA), have total initial values of $500,000 or more, and provide affiliate services for more than 1 year. Officials from all five VAMCs GAO visited said that the lengthy development time frames of these contracts can impact VAMCs in several ways—including creating potential gaps in patient care and the need to repeatedly establish short-term solutions. GAO found that 10 of these 11 selected high-value, long-term SSACs exceeded the informal estimates created by VHA as planning guides for the expected development time frames that high-value, long-term SSACs should take. According to VA officials, these informal estimates are not used to measure the performance of this process and VHA has not established standards for the timely development of high-value, long-term SSACs. Federal internal control standards recommend establishing and reviewing performance standards at all levels of an agency. Absent such standards, VHA cannot ensure that its high-value, long-term SSACs are being developed in a timely manner.

VHA uses short-term SSACs to overcome lengthy high-value, long-term SSAC development time frames, but lacks effective oversight for the development and use of short-term SSACs. Short-term SSACs have total initial values of less than $500,000, provide affiliate services for up to 1 year, and are not reviewed by VHA Central Office. Instead they are developed and awarded independently by contracting officers within VHA's network contracting offices. Of the 12 short-term SSACs that GAO reviewed, 7 did not adhere to VA and VHA policy for the development of short-term SSACs—including 5 where (1) a solicitation was not issued to the affiliate (a required document detailing VA's performance requirements to enable a prospective contractor to prepare its proposal); (2) the affiliate did not provide VHA a formal proposal outlining the services to be provided and instead submitted a price quote; and (3) negotiations were not conducted between the contracting officer and affiliate to address potential pricing issues before awarding the final contract. The contracting officer responsible for these five contracts cited the lack of adequate time to develop and award the contracts and a lack of contract negotiating skills as the primary factors that impacted his ability to ensure that these short-term SSACs adhered to VA and VHA policy requirements. By not developing standards for short-term SSACs, VA has limited assurance that contracting officers have enough time to develop and award these contracts and also adhere to VA and VHA policy requirements.

GAO found a high level of inexperience among contracting officers responsible for developing SSACs in all 21 of VHA's network contracting offices. Specifically, about one-third of medical sharing contracting officers had 1 year or less experience developing medical sharing contracts, including SSACs, and more than half of medical sharing contracting officers had 2 years or less medical sharing contract experience. The high level of inexperience can be attributed in part to high turnover in recent years. About one-quarter of medical sharing contracting officers working within network contracting offices either left VA or were reassigned to other contracting teams. Inconsistent with federal internal control standards, VA does not have a plan to address the retention of its contracting workforce, nor has it taken adequate steps to expand training opportunities to enhance the level of competence.

Why GAO Did This Study

VA partners with university-affiliated hospitals, medical schools, and practice groups (affiliates) to provide educational opportunities in VAMCs. Under special contracting authority, VA can use SSACs to obtain physician services from affiliates that are not available in VAMCs.

GAO was asked to review VA's use of SSACs. This report, among other issues, examines (1) VHA's time frames for developing and awarding high-value, long-term SSACs; (2) VHA's use of short-term SSACs and how it oversees their development and use; and (3) how much experience the VA workforce that develops SSACs has and what, if any, specialized training VA provides. GAO reviewed VA and VHA policies and guidance. GAO visited five VAMCs and five network contracting offices based on geographic dispersion and use of SSACs. GAO also reviewed a nongeneralizable sample of 25 SSACs. GAO contacted supervisors from each of VHA's 21 network contracting offices to gather information on SSAC development and contracting officer experience.

What GAO Recommends

GAO is making eight recommendations, including that VA develop performance standards for the timely development of high-value, long- term SSACs, develop standards for the minimum amount of time necessary to develop and award short-term SSACs, and take steps to increase the retention and competence of the contracting workforce. VA concurred with GAO's recommendations and provided an action plan to address them.

For more information, contact Randall B. Williamson at (202) 512-7114 or williamsonr@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In March 2017, VHA reported that its Sole-Source Affiliates Contract Oversight Group is now charged with oversight of the sole-source affiliates contract (SSAC) process. VHA's Medical Sharing Office (MSO) set a 1 year performance standard for new requirements for SSAC to ensure timely development of high value long-term SSACs.

    Recommendation: To ensure the timely development of high-value, long-term SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to establish performance standards for appropriate development time frames for high-value, long-term SSACs and use these performance standards to routinely monitor VAMC, network contracting office, and Medical Sharing Office efforts to develop these contracts.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Implemented

    Comments: In March 2017, VHA reported that its Service Area Office central program analysts created a sole source affiliate dashboard to collect performance data on the time spent in each phase of the development of high-value long-term sole source affiliate contracts. This dashboard features a current list of open sole source affiliate acquisition plans with the usage of the new sole source affiliate milestone. In addition, there is a listing of affiliate active contracts with reporting criteria on the dashboard with capability to pull data expiring in 6, 12, or 18 months. The Medical Service Office developed a Key Performance Indicator report to display the milestone and progress of the action to be awarded. This information includes the affiliate milestone plan and provides a report that can track from beginning to end. All active contracts expiring within 18 months will be monitored and tracked to ensure that new requirement packages are being submitted for review.

    Recommendation: To ensure the timely development of high-value, long-term SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to collect performance data on the time spent in each phase of the development of high-value, long-term SSACs and periodically analyze these data to assess performance.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Implemented

    Comments: In March 2017, VHA reported a sole source affiliate contracts (SSAC) Oversight Group has been put in place to ensure appropriate VHA Central Office oversight of the SSAC process. VHA developed a charter for the group and began meeting in March 2017. In addition, the Medical Sharing Office (MSO) created an enterprise-wide tracking system to identify SSACs 18 months before expiration so follow-on contracts are awarded prior to expiration. MSO will monitor milestone progress on behalf of the Deputy Chief Procurement Office including conducting monthly meeting with Service Area Office and Contracting Officer Directors. This tracking system will reduce reliance on bridge contracts.

    Recommendation: To ensure the effective development and use of short-term SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to develop requirements for VAMCs and network contracting offices to effectively engage in early acquisition planning for the replacement of expiring high-value, long-term SSACs in order to reduce the reliance on short-term SSACs as bridge contracts.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: In March 2017, VHA reported that the Service Area Office-Central program analysts created a sole source affiliate dashboard that resides on the Medical Sharing Office (MSO) SharePoint home page. This dashboard features a current list of open sole source affiliate acquisition plans with the usage of the new sole source affiliate milestone. Also there is a listing of affiliate active contracts with reporting criteria on the dashboard with the capability to pull the data expiring in 6 months, 12 months, or 18 months. MSO also developed a key performance indicator report to display the milestone and progress of the action to be awarded. This information includes the affiliate milestone plan and provides a report that can track from beginning to end. All active contracts expiring within 18 months will be monitored and tracked to ensure that new requirement packages are being submitted for review.

    Recommendation: To ensure the effective development and use of short-term SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to prioritize the review of SSAC contract data to identify patterns of overreliance on short-term SSACs that avoid appropriate Medical Sharing Office oversight.

    Agency Affected: Department of Veterans Affairs

  5. Status: Closed - Implemented

    Comments: In March 2017, VHA reported the Sole Source Affiliates Contract (SSAC) Oversight Group will ensure appropriate VHA Central Office oversight of the SSAC process. A charter was developed and workgroup began meeting in March 2017. Working in tandem with other SSAC-related recommendations, SSACs will only be used for legitimate new short-term requirements. If short term requirements are needed quickly, the Service Area Office Directors and Contracting Directors may use the flexibilities available in VAAR 873, Simplified Acquisition Procedures for Health-care resources, to expeditiously award short-term requirements.

    Recommendation: To ensure the effective development and use of short-term SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to develop standards for the minimum amount of time necessary to develop and award short-term SSACs to minimize cases of nonadherence to VA policy for these contracts.

    Agency Affected: Department of Veterans Affairs

  6. Status: Open

    Comments: In March 2017, VHA reported that it is working on creating a plan for increasing the retention of contracting officers that work in medical sharing teams. The Medical Sharing Office (MSO) has taken several steps including conducting research on possible ways to minimize or eliminate steps within its existing plan and expanding the number of topical training provided virtually network contracting offices to develop competency in VHA Health Care 1102 staff. In addition, VHA reported they are developing a training schedule to ensure newly deployed interns have received the training and resource to successfully conduct health care contracts if they are assigned to health care resources team and continuing to collaborate with the field to ensure awareness of MSO support and assistance.

    Recommendation: To develop and maintain medical sharing expertise within the network contracting offices, the Secretary of Veterans Affairs should direct the Under Secretary for Health to create a plan for increasing the retention of contracting officers that work in medical sharing teams.

    Agency Affected: Department of Veterans Affairs

  7. Status: Closed - Implemented

    Comments: In March 2017, VHA reported that the Medical Sharing Office (MSO) developed a robust training program to aid contracting officers in understanding the processes for developing sole source affiliates contracts. These courses are available in multiple formats including in-person, virtual, and via the Web. From October 2016 to January 2017, a total of 590 contracting staff and Contracting Officers Representatives participated in health care resources contract training. In the first quarter of FY 2017, MSO conducted three in-person training sessions and 9 virtual training sessions to a total of 257 VHA staff. The MSO also monitors and tracks its training offerings for efficacy and turnover. Finally, MSO determines the percentage of completion offered course and those yet to be trained.

    Recommendation: To develop and maintain medical sharing expertise within the network contracting offices, the Secretary of Veterans Affairs should direct the Under Secretary for Health to develop mechanisms to either provide existing training courses or create training courses that do not require travel for contracting officers working within network contracting offices.

    Agency Affected: Department of Veterans Affairs

  8. Status: Open

    Comments: In March 2017, the VHA reported that it plans to have an Academic Affiliate Contracting Forum on August 15-16, 2017 in Nashville, TN or Dallas, TX for VHA staff responsible for health care contracts and University affiliates. The purpose of the Forum is to strengthen and advance the collaborative partnership for providing service to Veterans; share perspectives; and enhance awareness about processes, procedures and tools that will help make contracting processes faster and easier for all parties.

    Recommendation: To ensure VHA effectively communicates with its affiliates regarding SSACs, the Secretary of Veterans Affairs should direct the Under Secretary for Health to reach out to all of its affiliates, identify any concerns, and determine the most effective method of communicating with affiliates regarding SSAC development.

    Agency Affected: Department of Veterans Affairs

 

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