Veterans Affairs Contracting:

Improvements in Policies and Processes Could Yield Cost Savings and Efficiency

GAO-16-810: Published: Sep 16, 2016. Publicly Released: Sep 16, 2016.

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Contact:

Michele Mackin
(202) 512-4841
mackinm@gao.gov

 

Office of Public Affairs
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The VA spent nearly $20 billion in 2015 to buy goods and services to serve veterans. However, its purchasing process may be inefficient and unnecessarily complex. We identified several factors that are preventing the VA from effectively managing this process, including incomplete data, outdated and fragmented policies, and not taking advantage of discounts.

Recommendations: The VA should clarify its procurement policies so that its contracting officers know where to turn for guidance. It should also understand the barriers to effectively managing contracting workloads, and leverage its buying power through strategic sourcing.

 

Photo of VA headquarters.

Photo of VA headquarters.

Additional Materials:

Contact:

Michele Mackin
(202) 512-4841
mackinm@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

GAO found opportunities for the Department of Veterans Affairs (VA) to improve the efficiency and effectiveness of its multi-billion dollar annual procurement spending in several areas including data systems, procurement policies and oversight, acquisition workforce, and contract management.

Shortcomings in VA's recording of procurement data limit its visibility into the full extent of its spending. A recent policy directing that medical-surgical supply orders be captured in VA's procurement system is a step in the right direction, but proper implementation is at risk because procedures are not in place to ensure all obligations are recorded.

VA's procurement policy framework is outdated and fragmented. As a result, contracting officers are unclear where to turn for current guidance. VA has been revising its overarching procurement regulation since 2011 but completion is not expected until 2018. Meanwhile, contracting officers must consult two versions of this regulation, as well as other policy related documents. Clear policies are key to ensuring VA conducts procurements effectively on behalf of veterans. The figure below depicts the various sources of regulations, policy, and guidance.

Sources of Veterans Affairs (VA) Procurement Policy as of June 2016

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Managing workload is a challenge for VA's contracting officers and their representatives in customer offices. A 2014 directive created contract liaisons at medical centers in part to address this issue, but medical centers have not consistently implemented this initiative, and VA officials have not identified the reasons for uneven implementation.

VA can improve its procurement processes and achieve cost savings by complying with applicable policy and regulation to obtain available discounts when procuring medical supplies; leveraging its buying power through strategic sourcing; ensuring key documents are included in the contract file, as GAO found that more than a third of the 37 contract files lacked key documents; and ensuring that compliance reviews identify all contract file shortcomings.

Why GAO Did This Study

The VA spent about $20 billion in fiscal year 2015 for procurement of a wide range of goods and services that are essential to meeting its mission to serve veterans. A 2015 independent review commissioned by VA found that the procurement acquisition function was unduly complex and inefficient.

GAO was asked to look at how VA manages procurement. This report assesses 1) the extent to which VA data systems accurately reflect procurement spending, 2) VA procurement policies and lines of authority, 3) the extent to which VA's acquisition workforce is positioned to carry out its responsibilities, and 4) the extent to which opportunities exist to improve VA's key procurement functions and save money. GAO analyzed VA policies and procedures and reviewed a non-generalizable sample of 37 contract actions for fiscal years 2013 through 2015, selected based on their dollar value, extent of competition, and use of small business set-asides. GAO interviewed relevant officials and visited six contracting offices.

What GAO Recommends

GAO is making 10 recommendations, including that VA develop procedures to ensure all obligations are recorded in the procurement system, update and clarify its policy framework, assess and address inconsistent implementation of the contract liaison initiative, review strategic sourcing efforts, and improve contract reviews. VA stated that it agreed with all of GAO's recommendations; however, VA did not provide its written response in time for publication in this report.

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

Recommendations for Executive Action

  1. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation but has not yet taken actions necessary to implement it. However, in its letter to OMB and the Congress, VA stated that it plans to pursue a new financial and contracting systems that will be interoperable.

    Recommendation: In order to ensure universal usage and reduce duplicate work, the Secretary of Veterans Affairs should direct the Office of Acquisition and Logistics (OAL) to work with the National Acquisition Center to develop a plan for adding functionality to the Electronic Contract Management System (eCMS) that will alleviate the need for National Acquisition Center contracting officers to enter obligations for high-tech medical equipment into two different data systems.

    Agency Affected: Department of Veterans Affairs

  2. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation but has not yet taken actions necessary to implement it. In its letter to OMB and the Congress, VA noted an April 2016 policy that requires monthly reporting of orders to contracting officers, but additional guidance and processes are required to implement this policy.

    Recommendation: In order to ensure that VA's procurement data is complete and accurate, the Secretary of Veterans Affairs should direct the Office of Acquisitions and Logistics to develop policies and procedures to ensure that obligations made through prime vendor orders--such as medical-surgical orders--are consistently captured in eCMS.

    Agency Affected: Department of Veterans Affairs

  3. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation but has not yet taken any actions necessary to implement it. However, in its letter to OMB and the Congress, VA stated that it anticipated that the updated VAAR would be issued by December 2018.

    Recommendation: In order to ensure that contracting officers have clear and effective policies as soon as possible, the Secretary of Veterans Affairs should direct the OAL to identify measures to expedite the revision of the Veterans Affairs Acquisition Regulation (VAAR), which has been ongoing for many years, and the issuance of the VA Acquisition Manual.

    Agency Affected: Department of Veterans Affairs

  4. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation but has not yet completed the actions necessary to implement it. In its letter to OMB and the Congress, VA stated that some Information Letters are still awaiting review and rescission or reissuance.

    Recommendation: To help contracting officers use current policy that is in effect in the period before the updated VAAR and VA Acquisition Manual are released, the Secretary of Veterans Affairs should direct OAL to take interim steps to clarify its policy framework, including establishing and adhering to set time frames for completing the process of reviewing all Information Letters, and either rescinding them or reissuing updated policy through Procurement Policy Memoranda.

    Agency Affected: Department of Veterans Affairs

  5. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation but has not yet taken any actions necessary to implement it. However, in its letter to OMB and the Congress, VA stated that it planned to issue updated guidance on roles for its national contracting organizations.

    Recommendation: To address remaining ambiguities in roles and customer relationships, the Secretary of Veterans Affairs should direct the Office of Acquisition, Logistics, and Construction to assess whether additional policy or guidance is needed to clarify the roles of VA's national contracting organizations, beyond that provided in its March 2013 memorandum outlining the current structure.

    Agency Affected: Department of Veterans Affairs

  6. Status: Closed - Implemented

    Comments: As part of a broader logistics transformation effort, VA found the contract liaison function valuable and incorporated the role into new standardized position descriptions that individual medical centers are being asked to adopt. Extent of implementation will vary by location based on available resources.

    Recommendation: To improve the efficiency of the procurement process, the Secretary of Veterans Affairs should direct the Veterans Health Administration (VHA) to assess why its April 2014 directive to implement contract liaisons at all medical centers has been inconsistently implemented and take appropriate steps to increase use of these liaison positions, if warranted.

    Agency Affected: Department of Veterans Affairs

  7. Status: Closed - Implemented

    Comments: In 2016, VA determined that because archiving functions are now handled by administrators of the government-wide Federal Acquisition Institute Training Application System (FAITAS), VA did not need to conduct additional archiving.

    Recommendation: To ensure that VA has the data required to fully monitor the certifications of its contracting workforce, the Secretary of Veterans Affairs should direct OAL to determine the appropriate frequency for archiving the data extracts on Federal Acquisition Certification-Contracting certifications to ensure that up-to-date data are readily accessible to management.

    Agency Affected: Department of Veterans Affairs

  8. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation. In July 2017, Veterans Health Administration officials stated that they would take further action to collect and disseminate best practices, which they estimate will be complete by late 2017.

    Recommendation: To facilitate consolidation of similar requirements and leverage buying power across medical centers within VISNs, the Secretary of Veterans Affairs should direct VHA Procurement and Logistics to conduct a review of VISN-level strategic sourcing efforts, identify best practices, and, if needed, issue guidance.

    Agency Affected: Department of Veterans Affairs

  9. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation. In its letter to OMB and the Congress, VA stated that it is beginning coordination between the Senior Procurement Executive (SPE) and its Heads of Contracting Activity (HCA) on using the findings of OMB A-123 reviews to focus its contract compliance reviews. The SPE and HCA developed a memorandum of understanding for this effort in late 2016, but VA has not yet provided information on any new guidance to focus compliance reviews.

    Recommendation: The Secretary of Veterans Affairs should direct the Senior Procurement Executive to issue guidance to the Heads of Contracting Activity to focus internal compliance reviews on ensuring that required contract documents are properly prepared and documented.

    Agency Affected: Department of Veterans Affairs

  10. Status: Open

    Comments: In providing comments on this report, VA concurred with this recommendation. VA has taken steps to monitor compliance with mandatory national contracts. However, VA has not yet established achievable timeframes for replacing Federal Supply Schedule items made available through non-competitive agreements its new Medical-Surgical Prime Vendor program, nor has it taken steps to distinguish these items from competitive national contracts in the ordering interface.

    Recommendation: To maximize compliance with mandatory national contracts during the transition to the new medical-surgical prime vendor (MSPV) process, the Secretary of Veterans Affairs should direct the Strategic Acquisition Center (SAC) and VHA Procurement and Logistics to take steps to ensure that: (1) SAC has mechanisms in place to collect and monitor transaction data to determine the extent to which Veterans Integrated Service Networks (VISNs) and their medical centers are complying with the requirement to use national contracts. (2) They establish achievable time frames for eliminating the ability for ordering officers to directly order Federal Supply Schedule items from the MSPV catalog once SAC awards national contracts for these items and monitor progress on an ongoing basis. (3) The ordering interfaces developed by the prime vendors clearly distinguish and prioritize standardized national contracts over items on Federal Supply Schedule contracts.

    Agency Affected: Department of Veterans Affairs

 

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