Veterans Affairs Contracting: Improvements in Policies and Processes Could Yield Cost Savings and Efficiency
Fast Facts
The VA spent nearly $20 billion in 2015 to buy goods and services to serve veterans. However, its purchasing process may be inefficient and unnecessarily complex. We identified several factors that are preventing the VA from effectively managing this process, including incomplete data, outdated and fragmented policies, and not taking advantage of discounts.
Recommendations: The VA should clarify its procurement policies so that its contracting officers know where to turn for guidance. It should also understand the barriers to effectively managing contracting workloads, and leverage its buying power through strategic sourcing.
Photo of VA headquarters.
Highlights
What GAO Found
GAO found opportunities for the Department of Veterans Affairs (VA) to improve the efficiency and effectiveness of its multi-billion dollar annual procurement spending in several areas including data systems, procurement policies and oversight, acquisition workforce, and contract management.
Shortcomings in VA's recording of procurement data limit its visibility into the full extent of its spending. A recent policy directing that medical-surgical supply orders be captured in VA's procurement system is a step in the right direction, but proper implementation is at risk because procedures are not in place to ensure all obligations are recorded.
VA's procurement policy framework is outdated and fragmented. As a result, contracting officers are unclear where to turn for current guidance. VA has been revising its overarching procurement regulation since 2011 but completion is not expected until 2018. Meanwhile, contracting officers must consult two versions of this regulation, as well as other policy related documents. Clear policies are key to ensuring VA conducts procurements effectively on behalf of veterans. The figure below depicts the various sources of regulations, policy, and guidance.
Sources of Veterans Affairs (VA) Procurement Policy as of June 2016
Managing workload is a challenge for VA's contracting officers and their representatives in customer offices. A 2014 directive created contract liaisons at medical centers in part to address this issue, but medical centers have not consistently implemented this initiative, and VA officials have not identified the reasons for uneven implementation.
VA can improve its procurement processes and achieve cost savings by complying with applicable policy and regulation to obtain available discounts when procuring medical supplies; leveraging its buying power through strategic sourcing; ensuring key documents are included in the contract file, as GAO found that more than a third of the 37 contract files lacked key documents; and ensuring that compliance reviews identify all contract file shortcomings.
Why GAO Did This Study
The VA spent about $20 billion in fiscal year 2015 for procurement of a wide range of goods and services that are essential to meeting its mission to serve veterans. A 2015 independent review commissioned by VA found that the procurement acquisition function was unduly complex and inefficient.
GAO was asked to look at how VA manages procurement. This report assesses 1) the extent to which VA data systems accurately reflect procurement spending, 2) VA procurement policies and lines of authority, 3) the extent to which VA's acquisition workforce is positioned to carry out its responsibilities, and 4) the extent to which opportunities exist to improve VA's key procurement functions and save money. GAO analyzed VA policies and procedures and reviewed a non-generalizable sample of 37 contract actions for fiscal years 2013 through 2015, selected based on their dollar value, extent of competition, and use of small business set-asides. GAO interviewed relevant officials and visited six contracting offices.
Recommendations
GAO is making 10 recommendations, including that VA develop procedures to ensure all obligations are recorded in the procurement system, update and clarify its policy framework, assess and address inconsistent implementation of the contract liaison initiative, review strategic sourcing efforts, and improve contract reviews. VA stated that it agreed with all of GAO's recommendations; however, VA did not provide its written response in time for publication in this report.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | In order to ensure universal usage and reduce duplicate work, the Secretary of Veterans Affairs should direct the Office of Acquisition and Logistics (OAL) to work with the National Acquisition Center to develop a plan for adding functionality to the Electronic Contract Management System (eCMS) that will alleviate the need for National Acquisition Center contracting officers to enter obligations for high-tech medical equipment into two different data systems. |
VA concurred with this recommendation. In March 2019, VA provided GAO with a demonstration of its Financial Management Business Transformation (FMBT) program, which will deploy a commercial off the shelf solution to replace its financial management system, as well as eCMS. FMBT officials stated that the system would incorporate all functionality needed by the National Acquisition Center (NAC) upon completion of implementation in 2027. However, in subsequent follow-up with NAC and VA officials who manage eCMS, both organizations confirmed that the plans for FMBT would not address the NAC's functionality needs, as originally intended. As a result, the NAC will need to continue using its separate contract management system for VA's Federal Supply Schedules, which will need to be maintained alongside FMBT. VA cannot address the duplication of systems at NAC without including this capability in the FMBT program; accordingly, we are closing this recommendation as not implemented.
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| Department of Veterans Affairs | In order to ensure that VA's procurement data is complete and accurate, the Secretary of Veterans Affairs should direct the Office of Acquisitions and Logistics to develop policies and procedures to ensure that obligations made through prime vendor orders--such as medical-surgical orders--are consistently captured in eCMS. |
VA concurred with this recommendation. In April 2016, VA issued a Procurement Policy Memorandum requiring VA ordering officers to provide monthly reports on prime vendor orders (such as those via the Medical Surgical Prime Vendor program) to VA contracting officers for inclusion in VA's Electronic Contract Management System (eCMS). In July 2019, VA provided a demonstration of eCMS functionality that implements procedures for ensuring that orders are reliably captured in eCMS.
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| Department of Veterans Affairs |
Priority Rec.
In order to ensure that contracting officers have clear and effective policies as soon as possible, the Secretary of Veterans Affairs should direct the OAL to identify measures to expedite the revision of the Veterans Affairs Acquisition Regulation (VAAR), which has been ongoing for many years, and the issuance of the VA Acquisition Manual. |
VA concurred with this recommendation. As of March 2022, all 41 VAAR parts have been updated. The final part was published in the Federal Register on March 9, 2022.
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| Department of Veterans Affairs | To help contracting officers use current policy that is in effect in the period before the updated VAAR and VA Acquisition Manual are released, the Secretary of Veterans Affairs should direct OAL to take interim steps to clarify its policy framework, including establishing and adhering to set time frames for completing the process of reviewing all Information Letters, and either rescinding them or reissuing updated policy through Procurement Policy Memoranda. |
VA concurred with this recommendation. In January 2019, VA reported that it had rescinded or re-issued updated policy memoranda for all information letters.
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| Department of Veterans Affairs | To address remaining ambiguities in roles and customer relationships, the Secretary of Veterans Affairs should direct the Office of Acquisition, Logistics, and Construction to assess whether additional policy or guidance is needed to clarify the roles of VA's national contracting organizations, beyond that provided in its March 2013 memorandum outlining the current structure. |
VA concurred with this recommendation. In February 2017, VA issued guidance to clarify the roles of its national contracting organizations for 26 categories of commonly procured commodities and services.
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| Department of Veterans Affairs | To improve the efficiency of the procurement process, the Secretary of Veterans Affairs should direct the Veterans Health Administration (VHA) to assess why its April 2014 directive to implement contract liaisons at all medical centers has been inconsistently implemented and take appropriate steps to increase use of these liaison positions, if warranted. |
As part of a broader logistics transformation effort, VA found the contract liaison function valuable and incorporated the role into new standardized position descriptions that individual medical centers are being asked to adopt. Extent of implementation will vary by location based on available resources.
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| Department of Veterans Affairs | To ensure that VA has the data required to fully monitor the certifications of its contracting workforce, the Secretary of Veterans Affairs should direct OAL to determine the appropriate frequency for archiving the data extracts on Federal Acquisition Certification-Contracting certifications to ensure that up-to-date data are readily accessible to management. |
VA concurred with this recommendation. In 2016, VA determined that because archiving functions are now handled by administrators of the government-wide Federal Acquisition Institute Training Application System (FAITAS), VA did not need to conduct additional archiving.
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| Department of Veterans Affairs | To facilitate consolidation of similar requirements and leverage buying power across medical centers within VISNs, the Secretary of Veterans Affairs should direct VHA Procurement and Logistics to conduct a review of VISN-level strategic sourcing efforts, identify best practices, and, if needed, issue guidance. |
The Veterans Health Administration's Office of Procurement and Logistics compiled a list strategic sourcing efforts within VISNs and estimates of their associated cost savings. In September 2017, VA distributed this list to all VISN directors, recommended that they implement similar consolidations of contracts across medical centers where feasible, and asked for additional feedback on related best practices that could be shared with other VISNs.
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| Department of Veterans Affairs | The Secretary of Veterans Affairs should direct the Senior Procurement Executive to issue guidance to the Heads of Contracting Activity to focus internal compliance reviews on ensuring that required contract documents are properly prepared and documented. |
VA concurred with this recommendation. VA issued two Procurement Policy Memoranda, in October 2016 and January 2018, respectively. These policies outline the role of Heads of Contracting Activities in overseeing compliance reviews, such as maintaining an effective review process to ensure completeness of Electronic Contract Management System files. VA is monitoring results, and, in April 2019, VA's Risk Management and Compliance Service reported on compliance rates for key contract documents, such as market research and solicitations.
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| Department of Veterans Affairs | To maximize compliance with mandatory national contracts during the transition to the new medical-surgical prime vendor (MSPV) process, the Secretary of Veterans Affairs should direct the Strategic Acquisition Center (SAC) and VHA Procurement and Logistics to take steps to ensure that: (1) SAC has mechanisms in place to collect and monitor transaction data to determine the extent to which Veterans Integrated Service Networks (VISNs) and their medical centers are complying with the requirement to use national contracts. (2) They establish achievable time frames for eliminating the ability for ordering officers to directly order Federal Supply Schedule items from the MSPV catalog once SAC awards national contracts for these items and monitor progress on an ongoing basis. (3) The ordering interfaces developed by the prime vendors clearly distinguish and prioritize standardized national contracts over items on Federal Supply Schedule contracts. |
VA concurred with this recommendation. VA provided details showing that as of August 2017, the Medical Surgical Prime Vendor Program-Next Generation program provides SAC with sufficient transaction data to monitor medical center compliance with the program. Additionally, controls have been implemented to limit ordering to items on national supply contracts..
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