Review of VA's Reimbursements to the Treasury Judgment Fund

In House Report (H. Rept. 114-497) to accompany the House of Representatives, Military Construction, Veterans Affairs, and Related Agencies Appropriations Bill, 2017 (H.R. 4974), the Committee on Appropriations requested the OIG review VA’s reimbursement of the Department of the Treasury’s Judgment Fund relating to the payment of contractors for major medical construction projects to settle claims arising from contract disputes. We found VA did not reimburse the Treasury Judgment Fund in accordance with Title 31 Code of Federal Regulations (CFR) §256.40. From October 1, 2011 through September 30, 2016, Treasury paid 23 claims related to 10 major medical facility construction projects totaling $247,748,686. Of this amount, $226,328,422 remained unpaid as of January 31, 2017 with an average delinquency of 221 days. VA has been delinquent in reimbursing the Judgment Fund because VA has not been requesting sufficient funding for the reimbursement of Contract Disputes Act of 1978 (CDA) claims. VA’s FY 2017 congressional submission requested funding of only $9 million to reimburse the Judgment Fund for the payment of claims. By not reimbursing the Judgment Fund timely, VA has continued to maintain significant liabilities not covered by budgetary resources. VA will require significant future funding to satisfy the outstanding claims. We recommended the Acting Assistant Secretary for Management and Acting Chief Financial Officer establish procedures to ensure VA reimburses the Treasury Judgment Fund within 45 business days of receipt of demands for reimbursement, or establish appropriate payment plans for CDA claims. The Acting Assistant Secretary for Management concurred with the intent of the recommendation and reported. VA will update policy to reflect the requirements in Treasury Policy, and 31 CFR §256.40 and §256.41.