Review of Excessive Procurement Costs at VHA’s Rural Outreach Clinic in Laughlin, Nevada

At the request of former United States Senator Harry Reid, the Office of Inspector General (OIG) reviewed allegations of excessive rent and remodeling costs, lack of radiology services, and inadequate handicap accessibility at the Master Chief Petty Officer Jesse Dean VA Clinic (clinic), which provides primary care to approximately 1,372 veterans in and around Laughlin, Nevada. The OIG found that VA paid excessive lease costs for the clinic when it awarded a 10-year contract at a rate higher than the established fair rental value (FRV). Additionally, VA paid for shell improvement costs for the clinic, which were the lessor’s responsibility. The contract file had no documents to explain or justify the lease’s higher rate, nor was there evidence of any reviews having occurred prior to awarding the lease. As a result, VA may pay as much as 41 percent above FRV over the 10-year lease. The OIG did not substantiate other allegations related to remodeling costs, radiology services, or clinic accessibility. The OIG recommended that VA ensure oversight reviews are conducted and documented prior to the award of leases, contracting officers adhere to acquisition requirements, and awarded lease rates are in the best interest of the government. The OIG also recommended that VA reevaluate the lease to determine the financial advantages and disadvantages of renegotiating the terms of the contract to obtain a FRV commensurate with the Laughlin area.