Nonprofit research corporations exist solely to support VA research and  education, using their funds to support local VA medical centers’ research  environments. Flexibility Allows Nonprofit Corporations to Enhance VA Research

Nonprofit corporations provide a flexible funding mechanism to support  the indirect cost of VA’s research environment. Investigators on research projects administered by VA nonprofit  corporations must follow federal statutes and regulations applicable to  federal employees concerning conduct and conflicts of interest. Because  investigators design and control the research, they may also be subject to  additional federal conflict of interest regulations. These  regulations require investigators to disclose their financial interests. In contrast, VA nonprofit research corporations cannot own  stock, have an equity interest in private companies, or own patents. Consequently, these types of institutional conflicts are unlikely to occur. VA Headquarters Does Not Monitor or Oversee Nonprofit Corporations’ Financial Activities

The Secretary of VA has delegated responsibility for overseeing and  evaluating nonprofit corporations to the directors at local medical centers. While each nonprofit corporation submits its financial statements  and management letters to VA, VA headquarters does not use this  information to oversee and monitor the nonprofits’ financial activities and  ensure that identified deficiencies are corrected.
Why GAO Did This Study

GAO reviewed the Department of Veterans Affairs' (VA) nonprofit research corporations, which receive funds primarily from non-VA sources to conduct medical research at VA facilities.

What GAO Found

Since VA's nonprofit corporations were first established, there has been limited oversight of their operations and contributions to VA research. Nonprofit corporations support VA's research environment by funding a portion of the department's research needs, such as laboratory equipment and improvements to infrastructure, and by providing flexible personnel and contracting arrangements to respond to investigators' needs. To detect conflict of interest, investigators on research projects administered by VA's nonprofit corporations are subject to federal statutes and regulations applicable to federal employees concerning conduct and conflicts of interest and may be required to disclose their financial interests. Institutional conflicts of interest are unlikely to occur in VA's nonprofit research corporations because they cannot own stock, have an equity interest in private companies, or obtain intellectual property rights. VA has delegated responsibility for monitoring and overseeing the activities of nonprofit corporations to the directors of VA medical centers; however, VA headquarters does not oversee and monitor corporations' financial activities and ensure that identified deficiencies are corrected.