Audit of VHA's Support Service Contracts

In fiscal year (FY) 2012, the Office of Management and Budget stated Government spending for support service functions quadrupled over the past decade. Previous Office of Inspector General audits identified recurring systemic deficiencies in virtually all phases of the Veterans Health Administration’s (VHA) contracting processes. VHA’s support service contract costs increased 60 percent from approximately $503 million for about 5,100 contracts in FY 2012 to just over $805 million for about 4,700 support service contracts in FY 2013. We determined whether staff adequately developed, awarded, and monitored VHA support service contracts. We found VHA did not have effective internal controls or follow existing controls to ensure adequate development, award, monitoring, and documentation of support service contracts. Within our statistical sample of 95 support service contracts, we found 1 or more contract deficiencies in each. The contract deficiencies included insufficient documentation of key contract development and award decisions, assurance that paid invoice amounts were correct and funds were de-obligated following the contract completion, and a complete history of contract actions in VA’s mandatory Electronic Contract Management System. These deficiencies occurred because VHA management did not have an effective quality assurance program, Integrated Oversight Process reviews were not completed, and contracting officers did not delegate and meet with contracting officers’ representatives as required. If VHA does not take timely action to improve its support service contracting processes, we estimated it will inappropriately compete, award, and manage contract funds totaling $159 million annually or $795 million over the next 5 years through FY 2019. We recommended VHA improve their quality assurance and training programs, revise and complete Integrated Oversight Process reviews, objectively evaluate contracting officer’s performance, and ensure contracting officers’ representatives are delegated and met with quarterly. The Under Secretary for Health concurred with our recommendations and provided an acceptable action plan. We will follow up on the implementation of the corrective actions.