OIG Seal
Department of Veterans Affairs, Office of Inspector General
Michael J. Missal, Inspector General

Report Summary

Title: Review of VA's Management of Health Care Center Leases
Report Number: 12-04046-307 Download
Issue Date: 10/22/2013
City/State: Montgomery, AL
Loma Linda, CA
Fayetteville, NC
Winston-Salem, NC
Butler, PA
Monterey, CA
Charlotte, NC
VA Office: Veterans Health Administration (VHA)
Office of Acquisitions, Logistics, and Construction (OALC)
Report Author: Office of Audits and Evaluations
Report Type: Audits, Reviews & Evaluations
Release Type: Unrestricted

We conducted this review to determine if VA effectively managed timeliness and costs in the procurement process of seven Health Care Center (HCC) leases. We found that VA’s management of the HCC lease procurement process has not been effective. As of August 2013, only four of seven leases had been awarded and no HCCs had been built, despite VA’s target completion date of June 2012. This occurred because the HCCs were a new initiative and guidance was not available for planning leases of this magnitude. VA did not meet the milestones it established for HCC activation and occupancy in spite of providing Congress with an aggressive project schedule. Given the lack of progress to date and the inadequate planning documentation, it will take far more time than Congress anticipated for VA to award and activate the seven leases. Further, VA could not provide accurate information on HCC spending into April 2013; officials provided various estimates, from about $4.6 million to $5.1 million, on costs to prepare for HCC lease awards. According to VA officials, central cost tracking was not in place to ensure transparency and accurate reporting on all HCC expenditures. Until effective central cost tracking is instituted, expenditures to acquire the leases will not fully be accounted for. VA also will not have reasonable assurance of accuracy in reporting total HCC costs to Congress. We recommended the Principal Executive Director, Office of Acquisition, Logistics, and Construction, and the Under Secretary for Health: establish adequate guidance for management of the procurement process of large-scale build-to-lease facilities; provide realistic and justifiable timelines for HCC completion; ensure HCC project analyses and key decisions are supported and documented; and establish central cost tracking to ensure transparency and accurate reporting on HCC expenditures. The Principal Executive Director, Office of Acquisition, Logistics, and Construction, and the Under Secretary for Health concurred with our recommendations.