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Audit of Purchase Card Use To Procure Prosthetics

Report Information

Issue Date
Report Number
15-04929-351
VA Office
Veterans Health Administration (VHA)
Acquisitions, Logistics, and Construction (OALC)
Report Author
Office of Audits and Evaluations
Report Type
Audit
Recommendations
5
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The OIG reviewed allegations the Veterans Health Administration (VHA) inappropriately used Government purchase cards to procure commonly used prosthetics, instead of establishing contracts to leverage VHA’s purchasing power, and failed to ensure fair and reasonable prices. Furthermore, VHA allegedly did not report purchases in the Federal Procurement Data System (FPDS). We substantiated the allegation that for some prosthetic purchases above the micro-purchase limit, VHA did not leverage its purchasing power by establishing contracts and did not ensure fair and reasonable prices. This occurred because VHA controls did not ensure the Prosthetic and Sensory Aids Service (PSAS) sufficiently analyzed prosthetic purchases to identify commonly used prosthetics and the Procurement and Logistics Office (P&LO) did not adequately monitor Network Contracting Office procurement practices to ensure contracts were established. We estimated VHA may have paid higher prices for an estimated $256.7 million in prosthetics purchases during FY 2015 by not establishing contracts. We did not substantiate the allegation that VHA failed to report prosthetic procurements in FPDS. However, we determined VA medical facility staff improperly procured prosthetics above the micro-purchase limit without authority. We estimated VHA made improper payments and unauthorized commitments totaling about $520.7 million in FY 2015. If VHA staff does not ensure P&LO and PSAS implement our recommendations and newly established controls, they increase risks for improper payments and unauthorized commitments totaling about $2.6 billion over a five-year period. We recommended the Acting Under Secretary for Health take additional actions to identify all commonly used prosthetics offering opportunities for leveraging VHA’s purchasing power and pursue appropriate contracts. We also recommended the Acting Under Secretary review FYs 2015 and 2016 prosthetics transactions to identify unauthorized commitments for ratification, conduct annual reviews, and consider holding cardholders and their approving officials accountable for unauthorized commitments, as appropriate.

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 Veterans Health Administration (VHA)
We recommended the Acting Under Secretary for Health require Prosthetic and Sensory Aids Service conduct periodic analyses of Veterans Health Administration prosthetic purchases to identify commonly used prosthetics that offer opportunities for VA’s Strategic Acquisition Center to leverage Veterans Health Administration’s purchasing power by pursuing Veterans Health Administration-wide or multi-Veterans Integrated Service Network contracts.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
We recommended the Acting Under Secretary for Health require the Procurement and Logistics Office and Prosthetics and Sensory Aids Service to periodically monitor prosthetic procurements to ensure Veterans Integrated Service Networks and Network Contracting Offices identify and report prosthetics usage and cost data for use in developing Veterans Integrated Service Network contracts when Veterans Health Administration wide or multi-Veterans Integrated Service Network contracts are not possible.
No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
We recommended the Acting Under Secretary for Health require the Procurement and Logistics Office to review fiscal years 2015 and 2016 prosthetic purchase card transactions above the micro-purchase limit and submit identified unauthorized commitments to Heads of Contracting Activities for ratification actions.
No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
We recommended the Acting Under Secretary for Health direct Heads of Contracting Activities to perform ratification actions for unauthorized commitments identified by the Procurement & Logistics Office review of fiscal years 2015 and 2016 prosthetic purchase card transactions above the micro-purchase limit and consider holding cardholders and their approving officials accountable for unauthorized commitments, as appropriate.
No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
We recommended the Acting Under Secretary for Health require the Procurement and Logistics Office to develop a process for conducting periodic reviews to evaluate compliance with the requirements of VHA Directive 1081, VA Procurement Policy Memorandum 2016-02, and the Veterans Health Administration’s Memorandum, Implementation of the Implant Pre-authorization Process.
Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 3,120,699,904.00