Audit of Interior Design and Furnishing Contract Mismanagement by Network Contracting Office 21

An audit as a result of a September 2015 allegation regarding the Network Contracting Office (NCO) 21’s award of a $3.3 million contract to the Contract Office Group, Inc. (COG) to provide interior design services and furnishings to renovate a Sacramento VA Medical Center campus building in Mather, California, determined that a former NCO 21 contracting officer did not ensure adequate competition as required by the Federal Acquisition Regulation prior to awarding the contract to COG. Additionally, the contract with COG violated the bona fide needs rule mandating that a fiscal year's appropriations only be obligated to meet a legitimate, or bona fide, need arising in (or before) the fiscal year for which the appropriation was made. This rule was violated when the former NCO 21 contracting officer awarded the contract to COG despite having information that fiscal year (FY) 2009 funds would be used to purchase goods and services for renovations in FY 2011 and later. Performance under the contract also exceeded authority limitations when it continued past the contract’s original performance end date of December 31, 2009. NCO 21 management did not exercise oversight to ensure compliance with applicable laws and regulations and relevant government guidance. The former NCO 21 Director did not implement a process to monitor contracts to ensure the former contracting officer took action to prevent extended performance. VA was exposed to the risk of making payments for services and goods using funds that could have been deobligated and reallocated. As a result, opportunities to reallocate $1.1 million of unspent funds as of September 2014 were missed. The VA Office of Inspector General made three recommendations to improve oversight and ensure compliance with federal and VA acquisition regulations—two recommendations to the Service Area Office West Executive Director and one recommendation to the Veterans Integrated Service Network 21 Director.