Report Summary

Title: Audit of Purchase Card Use To Procure Prosthetics
Report Number: 15-04929-351 Download
Report
Issue Date: 9/29/2017
City/State: Oklahoma City, OK
Gainesville, FL
San Antonio, TX
Reno, NV
Cincinnati, OH
Indianapolis, IN
Cheyenne, WY
Omaha, NE
Washington, DC
VA Office: Veterans Health Administration (VHA)
Office of Acquisitions, Logistics, and Construction (OALC)
Report Author: Office of Audits and Evaluations
Report Type: Audit Report
Release Type: Unrestricted
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.