Review of Regional Procurement Office East’s Contract Closeout Compliance

The VA Office of Inspector General (OIG) reviewed whether Regional Procurement Office (RPO) East followed the Federal Acquisition Regulation (FAR) and the Veterans Health Administration (VHA) procurement manual when closing out contracts. Contract closeouts provide the last opportunity to ensure taxpayers’ and veterans’ interests are protected. If proper procedures are not followed, financial and legal risks increase, and excess funds may not be made available for other—perhaps better—uses. The review team examined a random sample of 40 closed contracts worth $500,000 or more from fiscal year 2018 to determine whether closeout procedures were followed. The team also reviewed an open obligations report to identify contracts with remaining excess funds. The OIG found contracting officers did not consistently close out contracts on time and did not fully document contract closeout requirements. The review team identified about $6.8 million in unreleased excess funds that could have been put to better use. Contracting officers said a heavy workload affected their ability to comply with closeout requirements. The OIG determined that contracting officers did not give contract closeouts as much attention as awarding contracts. Incorrect internal training for contracting officers and unclear standard operating procedures also contributed to noncompliance with closeout requirements. The OIG’s review of closed contracts revealed ineffective oversight of closeout processes as well. The OIG recommended VHA Procurement’s executive director establish effective and consistent quality assurance reviews for contracts to ensure closeout meets FAR and VHA procurement manual requirements, and that all contracting officers are retrained on procedures. The OIG also recommended the executive director ensure closeout is fully documented for the 40 OIG-sampled contracts.