VA’s Procurement Policy Framework Is Outdated and Fragmented, and Acquisition Responsibilities Are Not Always Clear

Our analysis of VA’s contracting regulations and policies, which VA  contracting officers must follow, found a framework that is disjointed and  difficult to use. Several  sources of VA policy address SDVOSB contracting. Workload Is a Challenge for Some Members of VA’s Acquisition Workforce

We found indications that managing workload is a challenge for some of  VA’s acquisition workforce, which includes contracting officers and CORs. However, this initiative has not been fully implemented. Without  taking more proactive steps to understand and address obstacles to  implementing the directive, VHA cannot ensure that all of its medical  centers are taking advantage of this potential improvement in the  efficiency and effectiveness of its procurement efforts. VA Can Improve Its Processes for Medical Supply Purchasing, Identifying Cost Savings Opportunities, and Documenting Contracts

VA can improve the functioning of key procurement processes. Medical supplies are one area where strategic sourcing efforts have  lagged. More Than a Third of the Selected Contract Files Lacked Key Documents, and Internal Compliance Reviews Did Not Always Identify These Issues

VA contract files we reviewed were often missing key documents,  increasing the risk that key processes and regulations were not followed. As evidenced by missing documentation in  our review of selected contract files, existing compliance reviews are not  identifying all contract file shortcomings. Conclusions

To fulfill its mission to serve veterans, VA’s discretionary budget was $75  billion in fiscal year 2016, more than a quarter of which was spent on  essential goods and services, such as medical services and supplies,  provided by contractors. Given the volume of those procurements, which  add up to about $20 billion a year, VA must have clear policies and  effective oversight in place to ensure that veterans’ needs are being met  and that VA is taking full advantage of discounted pricing. Recommendations for Executive Action

We are making the following 10 recommendations to the Secretary of  Veterans Affairs. 1. 2. In order to ensure that VA’s procurement data is complete and  accurate, the Office of Acquisitions and Logistics should develop  policies and procedures to ensure that obligations made through  prime vendor orders—such as medical-surgical orders—are  consistently captured in eCMS. 3. 4. To improve the efficiency of the procurement process, VHA should  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. However, the  department did not send the formal, written response in time for us to  include it in this report, although it had over 30 days to respond. Appendix I: Objectives, Scope, and Methodology

To assess the extent to which Department of Veterans Affairs (VA) data  systems accurately reflect VA procurement spending for fiscal years 2013  through 2015, we obtained data on VA contract spending from fiscal  years 2013 through 2015 from VA’s Electronic Contract Management  System (eCMS). To assess VA procurement policies and lines of authority, we obtained  and analyzed VA policy documents, including procurement regulations,  policy and guidance, as well as organizational charts and related  documentation. We interviewed Office of Procurement Policy officials  regarding current and planned policies. We selected six contracting offices to visit, based on those with the  largest total contract obligations in fiscal years 2013 through 2015 in  eCMS, as well as their organizational structure (in order to select a mix of  VHA contracting offices with greater and lesser degrees of centralization)  and the types of requirements they procure (in order to select national  contracting offices):
NCO 8, St. Petersburg, Florida;
NCO 22, Long Beach, California;
NCO 23, Minneapolis, Minnesota;
National Acquisition Center (NAC), Hines, Illinois;
Strategic Acquisition Center (SAC), Frederick, MD; and
SAC, Fredericksburg, VA.
For the three VHA NCO contracting offices we selected, we also met with  officials from their corresponding VISNs, including leadership, CORs, and  logistics officials. To assess the extent to which VA’s contracting workforce is positioned to  carry out its responsibilities, we obtained and analyzed data on VA  employees in the GS-1102 contracting job series from two sources, both  of which we found sufficiently reliable for purposes of reporting summary  data:
Personnel data from the Office of Human Resources and
FAC-C certification data from OAL’s eCERT system. To assess the extent to which opportunities exist to improve VA’s key  procurement functions and to save money, we selected a non- generalizable sample of 37 contracts across five locations—NCO 8, NCO  22, NCO 23, NAC, and the SAC location in Frederick, Maryland.
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.

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.

What GAO Recommends

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.