	Selected VAMC’s Time Frames for Developing High- Value SSACs Can Be Significant, But VHA Has Not Established Standards for Timeliness and Does Not Collect Data

We found that the 11 high-value, long-term SSACs we selected for review  from three of the five VAMCs we visited took nearly 3 years (33.8 months)  on average to develop and award. According to leadership officials and contracting officers from all five of  the network contracting offices we visited, establishing high-value, long- term SSACs in a timely manner has been challenging for several  reasons, including (1) not always receiving a complete, actionable, and  timely initial information package from the VAMC that contains  information the contracting officer needs to begin acquisition planning; (2)  lengthy review processes for high-value, long-term SSACs; (3)  negotiation challenges with the affiliates on the price of high-value, long- term SSACs; and (4) VAMC resistance to developing and pursuing high- value, long-term SSACs. Moreover, VAMC  officials from all five VAMCs we visited indicated that the length of time it  takes to develop and award high-value, long-term SSACs presents many  challenges for their VAMCs, including the potential for gaps in patient  care and the need to repeatedly establish short-term solutions. Federal internal control standards recommend establishing and  reviewing performance standards at all levels of an agency. Absent  such standards, VHA cannot ensure that its high-value, long-term SSACs  are being developed in a timely manner. To ensure  the timely development of high-value, long-term SSACs, we  recommended that VA (1) establish performance standards for  appropriate development time frames for high-value, long-term SSACs  and use these performance standards to routinely monitor VAMC,  network contracting office, and Medical Sharing Office efforts to develop  these contracts; and (2) collect performance data on the time spent in  each phase of the development of high-value, long-term SSACs and  periodically analyze these data to assess performance. Short-Term SSACs Have Been Used to Overcome Lengthy High-Value, Long- Term SSAC Development Time Frames, but VHA Lacks Effective Oversight for Their Development and Use

We found that short-term SSACs are used to provide coverage to bridge  the gap between an expired or expiring high-value, long-term SSAC and  its replacement. Specifically, we found 5 short-term  SSACs we reviewed from one network contracting office where (1) a  solicitation was not issued to the affiliate, (2) the affiliate did not provide  VHA a formal proposal outlining its services and instead submitted a price  quote, and (3) negotiations were not conducted to address potential  pricing issues before awarding the final contract. We found that  this contracting officer’s supervisor had reviewed all 5 of these contracts  prior to their award; however, the review process did not identify the  areas that did not adhere to VA and VHA policy requirements for the  development of SSACs. However, without ensuring that contracting officers are  adhering to VA and VHA policies and network contracting offices are  effectively reviewing the development of short-term SSACs as required by  VA and VHA policies, VHA may be at risk for overpaying for affiliate  services provided through these contracts. To ensure  the effective development and use of short-term SSACs, we  recommended VA (1) develop requirements for VAMCs and network  contracting offices to effectively engage in early acquisition planning for  the replacement of expiring high-value, long-term SSACs, (2) prioritize  the review of SSAC contract data to identify patterns of overreliance on  short-term SSACs that avoid appropriate Medical Sharing Office  oversight, and (3) develop standards for the minimum amount of time  necessary to develop and award short-term SSACs to minimize cases of  nonadherence to VA policy for these contracts. High Turnover and Limited Training Opportunities Result in Inexperienced VHA Medical Sharing Contracting Officers and Impede the Development of SSACs

We found a high level of turnover among medical sharing contracting  officers in all 21 network contracting offices that was exacerbated by a  high level of inexperience among contracting officers responsible for  developing SSACs. We found, however, that more than half of medical sharing contracting  officers had 2 years or less medical sharing contract experience and less  than one-quarter had more than 4 years of experience developing  medical sharing contracts. However, in  contrast to these standards, VHA does not have a plan to address  medical sharing contracting officer turnover.
Why GAO Did This Study

This testimony summarizes the information contained in GAO's May 2016 report, entitled VA Health Care: Improvements Needed for Management and Oversight of Sole- Source Affiliate Contract Development (GAO-16-426).

What GAO Found

GAO found it took nearly 3 years on average to develop and award 11 selected high- value, long-term sole-source affiliate contracts (SSAC) from three of the five Department of Veterans Affairs (VA) medical centers (VAMC) GAO visited. The two remaining VAMCs GAO visited did not use high-value, long-term SSACs. High-value, long-term SSACs generally require the most oversight of all SSACs by the Veterans Health Administration (VHA), have total initial values of $500,000 or more, and provide affiliate services for more than 1 year. Officials from all five VAMCs GAO visited said that the lengthy development time frames of these contracts can impact VAMCs in several ways—including creating potential gaps in patient care and the need to repeatedly establish short-term solutions. GAO found that 10 of these 11 selected high-value, long-term SSACs exceeded the informal estimates created by VHA as planning guides for the expected development time frames that high-value, long-term SSACs should take. According to VA officials, these informal estimates are not used to measure the performance of this process and VHA has not established standards for the timely development of high-value, long-term SSACs. Federal internal control standards recommend establishing and reviewing performance standards at all levels of an agency. Absent such standards, VHA cannot ensure that its high-value, long-term SSACs are being developed in a timely manner.
VHA uses short-term SSACs to overcome lengthy high-value, long-term SSAC development time frames, but lacks effective oversight for the development and use of short-term SSACs. Short-term SSACs have total initial values of less than $500,000, provide affiliate services for up to 1 year, and are not reviewed by VHA Central Office. Instead they are developed and awarded independently by contracting officers within VHA's network contracting offices. Of the 12 short-term SSACs that GAO reviewed, 7 did not adhere to VA and VHA policy for the development of short-term SSACs—including 5 where (1) a solicitation was not issued to the affiliate (a required document detailing VA's performance requirements to enable a prospective contractor to prepare its proposal); (2) the affiliate did not provide VHA a formal proposal outlining the services to be provided and instead submitted a price quote; and (3) negotiations were not conducted between the contracting officer and affiliate to address potential pricing issues before awarding the final contract. The contracting officer responsible for these five contracts cited the lack of adequate time to develop and award the contracts and a lack of contract negotiating skills as the primary factors that impacted his ability to ensure that these short-term SSACs adhered to VA and VHA policy requirements. By not developing standards for short-term SSACs, VA has limited assurance that contracting officers have enough time to develop and award these contracts and also adhere to VA and VHA policy requirements.
GAO found a high level of inexperience among contracting officers responsible for developing SSACs in all 21 of VHA's network contracting offices. Specifically, about one-third of medical sharing contracting officers had 1 year or less experience developing medical sharing contracts, including SSACs, and more than half of medical sharing contracting officers had 2 years or less medical sharing contract experience. The high level of inexperience can be attributed in part to high turnover in recent years. About one-quarter of medical sharing contracting officers working within network contracting offices either left VA or were reassigned to other contracting teams. Inconsistent with federal internal control standards, VA does not have a plan to address the retention of its contracting workforce, nor has it taken adequate steps to expand training opportunities to enhance the level of competence.