In fiscal year 2015, VA spent about  $20 billion on goods and services via contracts—more than a quarter of  its discretionary budget. The Office of Acquisition and Logistics (OAL) is responsible for  oversight of contracting across VA, including setting policy and issuing  warrants to contracting officers. In July 2015, the Secretary of Veterans Affairs  announced an organizational transformation for the department called  MyVA. VA’s Complex Procurement Structure Creates Challenges for Users

Given VA procurement’s highly decentralized structure, a given  customer—such as a department in a medical center or a program  office—may need to work with multiple contracting entities to meet its  procurement needs. VA Procurement Policies Are Outdated and Not Always Cohesive and Effectively Communicated

Key VA procurement policies are outdated and difficult for contracting  officers to use. However, many of VA’s regulations and policies are outdated,  most notably the VA Acquisition Regulation (VAAR), which has not been  updated since 2008. Figure 3 illustrates the  numerous sources that contracting officers must turn to for guidance. VA Can Improve Its Processes for Medical Supply Purchasing and Identify Other Cost Savings Opportunities

VA medical centers use contractors called medical-surgical prime  vendors to obtain many of the supplies they use on a daily basis, such as  bandages and surgical sutures. Use of these national contracts is also required by VA policy and  regulation. In our September 2016 report, we recommended that VA take steps to  facilitate the transition to the new MSPV process, including ensuring that  SAC collects data to monitor the use of national contracts in the new  system, that SAC and VHA establish achievable time frames for  eliminating Federal Supply Schedule items from the MSPV catalog once  national contracts are in place, and that the new ordering interface clearly  distinguish between items on national contracts and the 4,500 items on  the Federal Supply Schedules. VA’s substantial buying power presents many opportunities for  procurement cost savings, but the department has not consistently taken  advantage of them. A key aspect of strategic sourcing is consolidating  similar requirements to manage them collectively, reaping cost savings  and efficiency gains. There are opportunities to better apply strategic sourcing principles at the  regional level, as well. In our review of 37  selected contracts, we did find several instances of VISN and contracting  officials consolidating requirements for greater efficiency and to obtain  better pricing. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

This testimony summarizes the information contained in GAO's September 2016 report, entitled Veterans Affairs Contracting: Improvements in Policies and Processes Could Yield Cost Savings and Efficiency ( GAO-16-810 ).

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.