Contract Management:

Further Action Needed to Improve Veterans Affairs Acquisition Function

GAO-06-144: Published: Oct 19, 2005. Publicly Released: Oct 19, 2005.

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The Department of Veterans Affairs (VA) is among the largest federal acquisition agencies, spending $7.3 billion on product and service acquisitions in 2004 alone. Recent reports by VA and other organizations identified weaknesses in the agency's acquisition function that could result in excess costs to the taxpayer. One report by the Naval Supply Systems Command (NAVSUP) made 24 recommendations to improve VA's acquisition function. VA has accepted these recommendations. GAO was asked to review the progress VA has made in implementing the key NAVSUP recommendations. GAO identified 7 of the 24 recommendations as key, based primarily on its professional judgment and prior experience.

Progress made by the Department of Veterans Affairs in implementing the key recommendations from the NAVSUP report has been limited. In fact, a year after the report was issued, VA has not completed actions on any of the seven key recommendations GAO identified. While VA agrees implementation of the key recommendations is necessary, the steps it has taken range from no action to partial action. No action has been taken on three key recommendations: to develop a long-term improvement plan, adequate management metrics, and a supplement to the agency's strategic plan. No more than partial action has been taken on four others: establishment of a contract review board for reviewing files at key milestones along with improvement of postaward contract management, customer relationships, and employee morale. A lack of permanent leadership in key positions has contributed to the lack of further progress in revising acquisition policies, procedures, and management and oversight practices, according to VA officials. For example, two key VA acquisitions management positions were unfilled--one for 15 months and the other for 25 months. In addition, VA has neither set time frames for completing actions on the NAVSUP recommendations nor established a method to measure progress. Until VA establishes a process for completing action on the NAVSUP recommendations, the benefits of the study may not be fully realized.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: VA contracted with Logistics Management Institute (LMI) to develop (1) a strategic plan for fiscal 2007-2010 and (2) a balanced score card. A draft of the strategic plan and balanced score card were provided to GAO on August 28, 2006. The Strategic Plan serves as the organization's long-term improvement plan and the balanced score card is used as an ongoing tool by management to measure progress in achieving set objectives. However, VA is midway through a process to implement several major organizational changes and in doing so, they are transforming the VA Office of Acquisition and Logistics into a 21st Century organization focuses on five strategic areas: personnel, training, technology, structure and processes. In the area of personnel, VA is increasing their acquisition and engineering workforce to meet the increased contracting and construction workload. VA has opened a new Technology Acquisition Center (TAC) located in Ft. Monmouth, NJ. The TAC is comprised of experienced information technology acquisition professionals. VA anticipates regionalizing Construction Facilities and Management execution to place the expertise where the workload is located. In the area of training, in August 2008, VA opened the first acquisition academy outside of the Department of Defense to train VA acquisition professionals in three areas. The training programs include a contracting intern program, Federal Acquisition Certification in contracting and program management and training contracting officer?s technical representatives. In the area of technology, VA recently implemented an electronic contract writing system that is fully operational. VA is also deploying business intelligence tools to support decision-making and acquisition initiatives such as strategic sourcing. VA is also developing an integrated financial, contracting, and logistics system. In the areas of structure and processes, VA has made changes to its organization and acquisition models. These changes include streamlining the contracting functions, implementation of contract review boards, integrated product teams, and OMB Circular A-123 business review. Through this transformation, VA expects the deficiencies in the procurement process will be resolved. The status of the key NAVSUP recommendations:(1) Develop a Long Term Improvement Plan - Accomplished; (2) Develop Adequate Management Metrics - Accomplished; (3) Supplement Strategic Plan - Accomplished; (4) Establish Contract Review Board - Accomplished; (5) Improve Post Award Contract Management - Ongoing; (6)Improve Customer Relationships - Ongoing; and (7)Improve Employee Morale - Ongoing.

    Recommendation: The Secretary of Veterans Affairs should direct the Deputy Assistant Secretary for Acquisition and Materiel Management to identify specific time frames and milestones for completing actions on the key NAVSUP recommendations.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Implemented

    Comments: VA has enhanced its contract management systems with state-of-the-art technology in two primary areas. The first area is the contract writing system, which systematically guides contracting officers (CO) through the development of all contractual documents. COs are mandated to use this system for all contract actions over $25,000. These changes alone will significantly improve the quality of contracts and ability to track performance. The second change is with reporting capability. By adding business intelligence capability to the system, VA now has the ability to measure process efficiency, assess compliance with acquisition laws and policies, and monitor performance and take corrective action when needed, in a timely manner.

    Recommendation: The Secretary of Veterans Affairs should direct the Deputy Assistant Secretary for Acquisition and Materiel Management to establish a method to measure progress in implementing the recommendations.

    Agency Affected: Department of Veterans Affairs


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