Review of Potential Misuse of Purchase Cards at Veterans Integrated Service Network 15

OIG reviewed purchase card practices within VISN 15 based on a September 2015 request from the former Chairman of the House Committee on Veterans’ Affairs. VISN 15 purchase cardholders did not use purchase cards improperly by exceeding the micro-purchase threshold or splitting purchases on a VISN 15 contract for restroom supplies. However, after the contract expired, purchase cardholders made 18 split purchases valued at approximately $73,000 when placing Federal Supply Schedule (FSS) orders to buy restroom supplies from the same vendor that had performed the expired restroom supply contract. These split purchases resulted in unauthorized commitments as well as improper payments. This occurred because purchase cardholders continued to act as if they were still operating under the contract for restroom supplies after it had expired—by placing orders with the same vendor using a GSA FSS contract. Although the GSA FSS orders were similar to the orders allowable under the terms of the expired requirements contract, they were now considered split purchases under the terms of the Federal Acquisition Regulation because they were no longer governed by the contract. The split purchases also occurred because the purchase cardholders did not have a clear understanding of what constituted a split purchase. VISN 15’s oversight of these purchase card transactions was ineffective and approving officials did not question what appeared to be the same routine purchases of restroom supplies, which had been occurring year after year subsequent to the expiration of the contract. As of July 2016, VISN 15 officials were not awarding separate contracts to purchase commodity items such as restroom supplies. We recommended the VISN 15 Director submit ratification requests for FY 2015 unauthorized commitments identified in the report, conduct additional focused training on split purchases, and establish more rigorous monitoring mechanisms over the VISN 15 purchase card program.