Breadcrumb

Review of VA’s Award of the PC3 Contracts

Report Information

Issue Date
Report Number
15-01396-525
VISN
State
District
VA Office
Veterans Health Administration (VHA)
Acquisitions, Logistics, and Construction (OALC)
Small & Disadvantaged Business Utilization (OSDBU)
Report Author
Office of Audits and Evaluations
Report Type
Audit
Recommendations
4
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
We reviewed Department of Veterans Affairs (VA) Patient-Centered Community Care (PC3) contracts to determine whether they were adequately developed and awarded. In September 2013, VA awarded the PC3 contracts to provide veterans with a comprehensive, nationwide network of high quality, specialty health care services. The contracts were awarded for an estimated $9.4 billion, with a potential cost to VA of $27 billion. We found significant weaknesses in the planning, evaluation, and award of the PC3 contracts. The PC3 contracts were not developed or awarded in accordance with acquisition regulations and VA policy intended to ensure services acquired are based on need and at fair and reasonable prices. The contracting officials solicited proposals from vendors without clearly articulating VA’s requirements. Thus, the vendors bidding on the solicitation did not have sufficient information on the type of specialty health care services they would need to provide, where to provide them, and the frequency. Therefore, VA increased the risk of not achieving the objectives of PC3 by inadequately identifying its health care service requirements. We found that documentation supporting vital contract award decisions was either not in VA’s Electronic Contract Management System or incomplete. Of the documents available, we noted that the awarded costs were actually negotiated at a higher rate than originally proposed by one of the vendors. The evidence for these decisions was not documented in the price negotiation memo. Accountability for ensuring the effective award of these contracts was not vested with a senior executive at VA. Although the contracting officer had the authority to execute these contracts, the level of oversight for this degree of contract risk did not provide reasonable assurance that VA’s interests were adequately protected. The Veterans Access, Choice, and Accountability Act of 2014 (Choice) was enacted on August 7, 2014. According to VA’s Under Secretary for Health in a memo dated July 7, 2016, since implementing the Hierarchy of Care memorandum in May 2015, the use of Choice has increased tremendously, while PC3 use has dwindled. We recommended the Principal Executive Director for Acquisition, Logistics, and Construction improve oversight and accountability, and ensure sufficient planning on all high dollar value and complex acquisitions. The Principal Executive Director concurred with our recommendations and provided technical comments. An acceptable corrective action plan was provided and we will follow up on its implementation.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
We recommended the Principal Executive Director for Acquisition, Logistics, and Construction (and Chief Acquisition Officer) ensure sufficient oversight on all high-dollar value and complex acquisitions to prevent violations of acquisition regulations and VA policies.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
We recommended the Principal Executive Director for Acquisition, Logistics, and Construction (and Chief Acquisition Officer) ensure critical planning actions—requirements development, market research, and independent government cost estimates are performed and provided to contracting officers, prior to developing requests for proposals.
No. 3
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
We recommended the Principal Executive Director for Acquisition, Logistics, and Construction (and Chief Acquisition Officer) obtain pricing analysis and technical assistance, to ensure quality products and services are procured at fair and reasonable contract prices.
No. 4
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
We recommended the Principal Executive Director for Acquisition, Logistics, and Construction (and Chief Acquisition Officer) enforce compliance with the VA policy to document all required acquisition decisions in the Electronic Contract Management System.
Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 16,800,000.00