Report Summary

Title: Review of Alleged Unauthorized Commitments for Prosthetic Purchases at VA Network Contracting Office 3
Report Number: 15-03678-210 Download
Issue Date: 6/12/2017
City/State: Bronx, NY
VA Office: Veterans Health Administration (VHA)
Report Author: Office of Audits and Evaluations
Report Type: Audits, Reviews & Evaluations
Audit Report
Release Type: Unrestricted

In May 2015, members of Congress, Kathleen Rice and Mike Coffman, requested the OIG review allegations that a supervisor at a VA facility in Bronx, NY, made unauthorized commitments by splitting prosthetic purchases in increments below $25,000, in fiscal years 2011 and 2012. Congresswoman Rice, also asked the OIG to assess VA’s claim that related procurement records were destroyed during Hurricane Sandy in October 2012. We did not substantiate that the Purchase Card Program Manager (PCPM) unauthorized commitments by splitting prosthetic purchases. We did determined that the Network Contracting Office (NCO) 3 the PCPM erroneously reported approximately $54.4 million of prosthetic purchases in Federal Procurement Data System during FYs 2011 and 2012. This erroneous reporting included the alleged split purchases under review. The PCPM erroneously reported contract purchases because NCO 3 was not meeting a performance metric that measured acquisitions on contracts. This occurred because the NCO 3 Contract Manager did not provide oversight or ensure implementation of the required segregation of duties for FPDS reporting. This erroneous reporting of prosthetic purchases was eventually removed from FPDS, in 2013. We did identify 11 unauthorized commitments totaling about $457,000 for prosthetic purchases that exceeded the warrants of the purchasers. The facility was unable to provide documentation of compliance with VA policy showing that these payments had been made by purchase cardholders in accordance with their warrant authority. The unauthorized commitments must now be ratified. We did not substantiate VA’s claim that procurement records for prosthetic purchases at NCO 3 were destroyed during Hurricane Sandy. All the prosthetic procurement files had been stored on the 14th floor of the medical center and were not in an area affected by the hurricane. We recommended that the Executive Director, Service Area Office East, submit a ratification request for unauthorized commitments and consult with Regional Counsel to determine if the Executive Director should take actions related to erroneous reporting. We also recommended that the Executive Director conduct a review of Network Contracting Office operations to ensure internal controls, such as segregation of duties, are monitored and enforced. We received sufficient evidence to close recommendations 2 and 3 and will follow up on recommendation 1.