GAO Adds VA Acquisition and MSPV Program to High Risk List

On Wednesday, March 6, the Government Accountability Office (GAO) published its “High Risk List” of Federal programs and operations that are vulnerable to waste, fraud, abuse, mismanagement, or that need broad reform. The report, which GAO submits bi-annually to the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Reform, identifies 35 “High Risk” areas that need further address. Significantly, although GAO noted that 7 of the identified areas have demonstrated improvement, the agency determined that more than half of the areas remained unchanged since its last report.

Notably, a new addition to GAO’s High Risk List detailed in the report is the Department of Veterans Affairs’ (VA) acquisition management, including the Department’s implementation of the Medical/Surgical Prime Vendor (MSPV) program and Veterans First policy. Specifically, GAO identified seven areas of concerns for the VA’s acquisition:

  • The VA has outdated acquisition regulations and policies – GAO reported that the acquisition regulations have not been fully updated since 2008 and the VA has been working on completing a comprehensive revision of its acquisition regulations since 2011.
  • The MSPV program lacks an effective procurement strategy – Previously GAO found that the VA’s strategy for MSPV was rushed, lacked stakeholder involvement, and relied on non-competitive contracts, which resulted in low utilization by medical centers. Although the VA’s goal was a 40 percent MSPV utilization rate, the nationwide average utilization rate was 24 percent in May 2017.
  • Inadequate acquisition training – The VA’s training on the Veterans First policy did not address challenging aspects and contracting officers were uncertain about how to balance the preference for veteran-owned small businesses with fair and reasonable price determinations. Additionally, the VA’s trainings were not mandatory and only 52 percent of contracting officers completed the training by the spring of 2018.
  • Contacting officer workload – About 54 percent of surveyed VA contracting officers said that their workload was not reasonable and that workload stresses have exacerbated the struggles to implement the Veterans First policy. Additionally, VA contracting officers relied on emergency procurements for almost 20 percent of contract actions, which reduced contracting officers’ efficiency.
  • Lack of reliable data systems – The VA’s historical purchase data was used by the VA to identify items for the MSPV catalog. The data, however, was flawed and the initial MSPV catalog could not meet the needs of medical centers.
  • Limited contract oversight and incomplete contract file documentation – GAO found that although the VA obligated $3.9 billion to veteran-owned small business in 2017, contracting officers were not effectively monitoring compliance with limits on subcontracting. In many cases, clauses required compliance were not included in the VA’s contracts with veterans’ businesses.
  • Leadership instability – The VA’s procurement leadership instability has made it difficult for the VA to execute the implementation of their programs and policies. As an example, the MSPV program office has had four directors since 2014, and over the past two and half years there have been six acting directors monitoring compliance with the Veterans First policy.

Since 2015, GAO has made 31 recommendations to improve the VA’s acquisition management, and the VA has implemented 10 of the recommendations. Of the remaining 21 recommendations, GAO has prioritized six recommendations:

  • Prioritize the completion of the revision of acquisition regulations, which has been in process since 2011;
  • Develop, document, and communicate to stakeholders a strategy for the MSPV to achieve program goals;
  • Provide targeted training for the more challenging aspects of implements the Veterans First policy;
  • Identify opportunities to strategically purchase goods and services that are frequently purchased on an emergency basis;
  • Update its contract management system’s functionality; and
  • Conduct a fraud risk assessment of its Veterans First program.