VA Acquisition Management: Oversight of Service Contracts Needing Heightened Management Attention Could Be Improved
Fast Facts
VA increasingly relies on contractors for a wide range of services. But if contractors perform certain functions—e.g., providing legal advice or supporting budget prep—without additional oversight from government officials, they could pose risks to government decision-making and accountability.
The Office of Management and Budget issued guidance to help agencies determine which contracted services need this oversight. However, VA has yet to fully implement this guidance. For instance, VA hasn't directed its staff on how to plan and conduct oversight of these contracts.
We recommended that VA fully implement the OMB guidance, among other things.
Highlights
What GAO Found
The Department of Veterans Affairs (VA) has increasingly relied on contractors to perform tasks and services—such as medical, professional and management support, and hospital construction and maintenance services—to achieve its mission.
Department of Veterans Affairs (VA) Obligations on Service Contracts, Fiscal Years 2018 through 2022
GAO cannot report on VA's use of service contracts involving functions needing heightened management attention because VA's data are unreliable and incomplete. VA is required by law to analyze data about its service contracts annually to ensure, among other things, oversight of service contracts involving functions that need heightened management attention. However, VA's data analysis excluded contracts for medical and social services, which accounted for most of VA's obligations on contracts coded as needing heightened management attention. This is in part due to VA misinterpreting guidance from the Office of Management and Budget's Office of Federal Procurement Policy (OFPP) when selecting functions for the analysis.
OFPP issued guidance in 2011 to assist agencies in managing potential risks associated with contracts including functions that need heightened management attention, but VA has not fully implemented it. Specifically:
- VA guidance does not provide directions for how to plan and conduct oversight of these contracts.
- VA has yet to strategically plan its workforce to ensure sufficient personnel are available to provide heightened management attention.
- VA does not routinely offer related training to its employees.
VA officials for the 12 service contracts that GAO reviewed also reported uneven awareness and limited oversight of contracts including functions needing heightened management attention.
By taking steps to more fully implement OFPP guidance and improve the completeness of its service contract data, VA can position itself to better ensure it mitigates the potential risks associated with contractors performing functions that need heightened management attention.
Why GAO Did This Study
For certain service functions, OFPP guidance identifies agency responsibilities for addressing possible risks. These risks include the potential for contractors to inappropriately influence the government's authority, control, and accountability for decisions. Contracts with these risks need heightened management attention. GAO has previously reported how other federal agencies could better mitigate challenges to overseeing service contracts involving functions that need heightened management attention, such as by developing related guidance.
GAO was asked to review VA's use of service contracts involving functions needing this heightened attention. This report assesses, among other things, the extent to which VA uses and oversees these contracts.
GAO analyzed data that VA personnel entered in the Federal Procurement Data System from fiscal years 2018–2022; selected a sample of 12 contracts reflecting a range of contracting activities for in-depth review; interviewed VA officials and contracting personnel; and reviewed policies, guidance, and documentation.
Recommendations
GAO is making seven recommendations to VA, including that it improve the completeness of its service contract data, and that it more fully implement OFPP guidance by issuing additional VA guidance, analyzing its workforce needs, and improving training. VA agreed with GAO's recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to take steps to ensure that VA appropriately tracks special interest functions across product and service code changes to improve service contract inventory data completeness. (Recommendation 1) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement several steps to address the recommendation, including development of standard operating procedures for conducting the service contract inventory and tracking special interest functions across product and service code changes, respectively. In August 2025, VA provided documentation of these standard operating procedures that it had developed and implemented. VA also updated its internal procedures for its acquisition workforce to assist them in appropriately identifying special interest functions in service contracts.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to take steps to ensure that VA identifies additional VA-specific special interest functions to more comprehensively include those that are associated with contracts coded in government-wide databases as involving critical functions and functions closely associated with IGFs to improve the usefulness of its annual service contract inventory analysis. (Recommendation 2) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement several steps to address the recommendation, including development and implementation of service contract inventory standard operating procedures, and development of guidance on business, operational, and stakeholder requirement definitions to ensure the requirements are specific and detailed enough to avoid ambiguity and prevent inappropriate delegation of IGFs. In August 2025, VA provided documentation of the standard operating procedures and guidance it had developed and implemented. Specifically, VA updated its internal procedures for its acquisition workforce to include a definition of special interest functions and a list of VA-specific special interest functions. These VA-specific special interest functions expanded upon those the Office of Federal Procurement Policy identified as government-wide special interest functions and included service codes for social and medical services.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to develop policies and procedures for identifying and documenting contracts involving functions needing heightened management attention and fully implement OFPP Policy Letter 11-01, including, but not limited to, establishing when use of the department-wide checklist is required and specifying the analysis needed to support completion of the checklist. (Recommendation 3) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement a number of steps to address the recommendation, including development and implementation of enterprise guidance for the VA acquisition community related to improving VA compliance with OFPP Policy Letter 11-01, and development of a risk-based strategy for defining service requirements leading to potential IGF-based contracts. In August 2025, VA reported that it provided its acquisition workforce with internal procedures and a template for identifying and documenting contracts involving functions needing heightened management attention. VA officials stated that this template must be completed and included in all service acquisition packages. However, VA reported that it has yet to finalize and issue a planned directive to formally institute these procedures and template, as well as provide policy and guidance on identifying and documenting contracts involving functions needing heightened management attention.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to develop policies and procedures for planning and conducting oversight of contracts that involve functions needing heightened management attention, including how to provide appropriate direction to contracting officer's representatives in their designation letters, to improve employees' awareness, understanding, and fulfillment of their responsibilities under OFPP Policy Letter 11-01. (Recommendation 4) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement a number of steps to address the recommendation, including development and implementation of enterprise guidance for the VA acquisition community related to improving VA compliance with OFPP Policy Letter 11-01, and development of a risk-based strategy for defining service requirements leading to potential IGF-based contracts. In August 2025, VA reported that it had provided its acquisition workforce with updated internal procedures and templates for planning and conducting oversight of contracts identified as involving functions needing heightened management attention. For such contracts, the procedures state that acquisition planners are to, among other things, develop a (1) heightened management oversight and internal controls plan, (2) risk assessment and management plan, and (3) quality assurance surveillance plan. The procedures also state that VA will require business continuity plans to be submitted by contractors if the solicited service involves critical functions. VA officials stated that these templates must be completed and included in all service acquisition packages. However, VA has yet to finalize and issue a planned policy directive to formally institute the use of this guidance and templates, as well as provide policy and guidance on planning and conducting oversight of contracts involving functions needing heightened management attention. Further, while VA revised its contracting officer's representative guide to include guidance on heightened management attention, VA officials said that it was too early to determine if designation letters for contracting officer's representatives consistently and sufficiently communicated their oversight responsibilities.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to update VA's methodology for conducting its annual service contract inventory analysis to prioritize contracts involving functions closely associated with IGFs and critical functions in the sample contracts selected for review, and to conduct more meaningful analysis, to support conclusions concerning VA's oversight and management of these contracts. (Recommendation 5) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement a number of steps to address the recommendation, including development and implementation of service contract inventory standard operating procedures, and development of guidance on business, operational, and stakeholder requirement definitions to ensure the requirements are specific and detailed enough to improve service contract inventory data. In August 2025, VA provided documentation of the standard operating procedures and guidance it developed. Specifically, VA's new service contract inventory procedures direct officials to include social and medical services and prioritize contracts involving functions closely associated with inherently governmental functions and critical functions in its service contract inventory planned analysis. In addition, the procedures state that VA will select a sample set of contracts involving special interest functions for review that reflects obligations on contracts involving critical functions and functions closely associated with inherently governmental functions. Further, to support its fiscal year 2024 service contract inventory, VA officials updated the questions included in a survey tool, which VA reported facilitated collecting more detailed perspectives on contract oversight from relevant officials. VA officials also reported that they conducted follow-up to clarify survey responses for one-fourth of the sampled contracts.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive, the heads of administration and staff office human capital functions, and the heads of contracting activities to ensure that human capital plans determine whether the acquisition workforce—including program managers and contracting officer's representatives—is of sufficient size and capability to conduct oversight of contracts involving functions that need heightened management attention, consistent with OFPP Policy Letter 11-01. (Recommendation 6) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement a number of steps to address the recommendation, including collaboration across the enterprise to ensure that human capital plans to determine the sufficient size and capability for the entire acquisition community support the capacity needs for providing oversight of service contracts. In February 2026, VA told us that in October 2025, the department had members of the acquisition workforce report their competencies and experiences, among other characteristics, which VA plans to use to inform upcoming human capital planning efforts. However, VA has yet to analyze its workforce to determine if it has sufficient capacity for providing needed oversight.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to develop training, and require that employees complete such training at least once every 2 years, to help employees understand and meet their responsibilities under OFPP Policy Letter 11-01, including identifying and documenting contracts involving functions needing heightened management attention and planning and conducting oversight of such contracts. (Recommendation 7) |
VA agreed with this recommendation. In July 2024, VA communicated its plans to implement a number of steps to address the recommendation, including development and implementation of training courses and methodologies to ensure the VA acquisition community is appropriately trained to meet specified roles and responsibilities. In February 2026, VA told us that they had taken steps to develop some training courses, but that they paused these efforts given ongoing changes to the Federal Acquisition Regulation.
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