Report Summary

Title: Audit of Non-Purchase Card Micro-Purchases
Report Number: 12-01860-237
Issue Date: 8/9/2013
City/State: Orlando, FL
Detroit, MI
Hines, IL
St. Louis, MO
Phoenix, AZ
Cheyenne, WY
Portland, OR
San Francisco, CA
VA Office: Veterans Health Administration (VHA)
Report Author: Office of Audits and Evaluations
Report Type: Audits, Reviews & Evaluations
Release Type: Unrestricted
Summary: We conducted this audit to evaluate whether opportunities exist for VA medical facilities to increase purchasing efficiency and cost effectiveness by increasing purchase card use for micro purchases. During FY 2012, the Veterans Health Administration (VHA) spent about $3 billion on micro-purchases of $3,000 or less for supplies and services. VA’s Purchase Card Program allows VHA to streamline the procurement process and earn rebates from purchase card use.

Although VHA has increased purchase card use over the past 5 years, opportunities still exist for VHA to achieve significant procurement savings. We estimated VHA could decrease procurement-processing costs by about $20 million and receive additional rebates of about $4 million annually by maximizing purchase card use for micro purchases.

VHA did not identify micro purchases and establish yearly goals for using purchase cards. Additionally, VHA did not implement mechanisms to ensure purchase card use, and establish policies and procedures requiring the Veterans Integrated Service Networks (VISNs) to perform oversight of non-purchase card micro-purchases. As a result, VHA could miss opportunities to achieve procurement savings ranging from approximately $102 to $133 million over the next 5 years, with an estimate of $120 million.

We recommend the Under Secretary for Health work with the VA Office of Management to establish policies and procedures to regularly identify and evaluate micro-purchases, and establish annual and long-term strategic goals to increase the percentage of VA medical facility purchase card micro purchases.

Additionally, we recommend the Under Secretary collaborate with the VA Office of Management to implement procedures to ensure purchasers and approvers adequately consider purchase card use for micro purchases, including requiring VISNs to perform oversight of non-purchase card micro purchases.

The Under Secretary for Health concurred with our findings and recommendations, and has a plan for corrective action.