Veterans Affairs Contracting: Improvements in Policies and Processes Could Yield Cost Savings and Efficiency
Published: 2016-09-16T00:00:00

Fast Facts:
The VA spent nearly $20 billion in 2015 to buy goods and services to serve veterans. However, its purchasing process may be inefficient and unnecessarily complex. We identified several factors that are preventing the VA from effectively managing this process, including incomplete data, outdated and fragmented policies, and not taking advantage of discounts.
Recommendations: The VA should clarify its procurement policies so that its contracting officers know where to turn for guidance. It should also understand the barriers to effectively managing contracting workloads, and leverage its buying power through strategic sourcing.

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: The Department of Veterans Affairs (VA) spent about $20 billion on goods  and services in fiscal year 2015. The wide range of goods and services  that VA procures—including construction, information technology, medical  supplies, and many other categories—is essential to meeting its mission  to provide health care and other benefits to the nation’s military veterans.  Prior assessments of VA management, both internal and external, have  found shortcomings in VA procurement. For example, a 2015 MITRE  Corporation assessment of VA health care required by the Veteran  Access, Choice, and Accountability Act of 2014 found that VA’s  acquisition function was unduly complex and did not always result in  procuring goods and services for the lowest available price. Also, in  2015, we reviewed VA’s use of interagency agreements and federally- funded research and development centers and added VA Health Care to  our High Risk list; both reports cited issues including ambiguous policies,  inconsistent processes, and inadequate oversight and accountability.
In response to your request, this report assesses 1) the extent to which  VA data systems accurately reflect VA procurement spending for fiscal  years 2013 through 2015, 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 to save money.
To assess the extent to which VA data systems accurately reflect VA  procurement spending, we obtained VA-provided contracting data from  fiscal years 2013 through 2015. We determined that the data were  sufficiently reliable for the purposes of our reporting objectives. We  analyzed this data to assess a number of characteristics, including extent  of competition and use of contracting preferences—such as those to  service-disabled veteran-owned small businesses. We obtained  documentation related to VA’s Electronic Contract Management System  (eCMS), and also interviewed system administrators and other officials  regarding the reliability and completeness of this data. To review VA  procurement policies and lines of authority, we obtained and analyzed  policy documents, and interviewed policy officials, heads of contracting  activity, contracting officers, and other officials. To assess the extent to  which VA’s acquisition workforce is positioned to carry out its  responsibilities, we obtained and analyzed data on certifications and the  number of contracting officers in various VA contracting organizations,  which we found sufficiently reliable for the purposes of our reporting  objectives. We interviewed contracting officers, as well as other  contracting officials. Additionally, we obtained information on the VA  Acquisition Academy and interviewed the Deputy Chancellor. To assess  opportunities to improve VA’s key procurement functions and to save  money, we reviewed a non-generalizable sample of 37 contracts and 19  associated task orders. Our basis for selection included dollar value,  whether these contracts were competed or not, and contracts awarded at  contracting offices we selected to visit. We visited three Veterans Health  Administration (VHA) contracting offices, located in Long Beach, CA;  Minneapolis, MN; and St. Petersburg, FL, selected primarily by total  contract obligations during fiscal years 2013 through 2015, and  interviewed contracting officers and other officials at each location. We  also visited three national contracting offices, selected based on total  contract obligations and the types of contract requirements they procure.  Additionally, we interviewed contracting officer’s representatives for about  half of our selected contracts, focusing on those who were located at the  VHA locations we visited. Finally, to review VA’s contracting for medical  supplies, we obtained and analyzed information regarding VA’s medical- surgical prime vendor program and interviewed officials with roles in  management, contracting, and operations for the program. Appendix I  provides a more detailed description of our scope and methodology.
We conducted this performance audit from July 2015 to September 2016,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: VA serves veterans of the U.S. armed forces, and provides health,  pension, burial, and other benefits. In fiscal year 2015 VA procured about  $20 billion—more than a quarter of its discretionary budget—of goods  and services via contracts. As shown in the organizational chart below,  these contracts were awarded by VA’s eight heads of contracting activity  (HCAs). The department’s three operational administrations—VHA,  Veterans Benefits Administration, and National Cemetery  Administration—operate largely independently from one another. Each  has its own contracting authority, though all three also work with national  contracting organizations under the Office of Acquisition, Logistics, and  Construction for certain types of purchases, such as medical supplies and  information technology.
In addition to the operating administrations, VA’s acquisition function is  spread across a number of organizations that have department-wide  roles:
The Office of Acquisition, Logistics, and Construction (OALC) is a VA  headquarters organization responsible for directing the acquisition,  logistics, construction, and leasing functions within VA. The Principal  Executive Director of OALC is VA’s Acting Chief Acquisition Officer.
The Office of Acquisition Operations (OAO), which falls under  OALC’s purview, conducts procurement activities for customers  across the department, has two primary operating divisions:
The Technology Acquisition Center (TAC) is a contracting  office designated by VA policy to conduct the vast majority of  information technology-related purchasing for customers VA- wide.
The Strategic Acquisition Center (SAC) is responsible for  procurement of certain types of goods and services for the  operating administrations, such as VHA. Responsibility for  VHA medical-surgical supply contracting was recently  transferred to SAC from NAC—including the medical-surgical  prime vendor (MSPV) program, a single logistics provider that  delivers supplies to medical centers from many different  contractors.
The Office of Acquisition and Logistics (OAL) is responsible for  oversight of contracting across VA, including setting policy and issuing  warrants to contracting officers. The Deputy Assistant Secretary for  OAL is VA’s Senior Procurement Executive.
The National Acquisition Center (NAC) is an OAL contracting  organization which serves VHA by providing contracting for  certain health care-related goods and services. It awards  national contract vehicles for pharmaceuticals, prosthetics,  and other supplies and services, which are used by medical  centers to meet operational needs. NAC also purchases most  high-tech medical equipment for medical centers. Finally, NAC  is responsible for managing VA’s Federal Supply Schedules.
In July 2015, the Secretary of Veterans Affairs announced an  organizational transformation for the department called MyVA. The  initiative outlined goals for improving the veteran experience and the  employee experience, along with related goals such as improving support  services and enhancing strategic partnerships. One of these efforts  includes a pilot program on supply chain modernization—aimed at  consolidating requirements and reducing contracting workload, among  other things. The MyVA initiative also includes some organizational  changes; for instance, VA is in the process of reducing the number of  VHA’s Veterans Integrated Service Networks (VISNs) from the 21 that  existed in 2015 to 18 by the end of fiscal year 2018.
subsections: section_title: Veterans Health Administration
paragraphs: VHA provides medical care to veterans and is by far the largest  administration in VA, with a budget of $61.1 billion for fiscal year 2016,  representing the majority of VA’s $75 billion discretionary budget. In fiscal  year 2014, VHA provided healthcare to almost six million patients at 167  medical centers. These medical centers are currently organized into 19  VISNs, regional networks that manage some aspects of operations, such  as facility planning. VHA’s procurement function is overseen by a  separate management hierarchy, as shown in figure 1, led by the Office  of Procurement and Logistics. Its three Service Area Offices oversee 19  Network Contracting Offices (NCOs), each of which serves one of the 19  VISNs.
section_title: VA’s Acquisition Workforce
paragraphs: Like in other agencies, contracting officers in the GS-1102 job series are  a key part of VA’s department wide acquisition workforce. Only warranted  contracting officers—individuals who are authorized to commit  government funds to procurements—may award contracts. VA has eight  individuals designated as heads of contracting activity (HCA) who are  responsible for managing the contracting activity of their offices in  accordance with the Federal Acquisition Regulation (FAR). Contracting  officers are responsible for maintaining a Federal Acquisition Certification  in Contracting (FAC-C) in order to hold a VA warrant. The VA Acquisition  Academy (VAAA), in Frederick, MD, offers contracting officers the internal  training necessary for obtaining and maintaining FAC-C certifications.
section_title: Electronic Contract Management System
paragraphs: In 2007, VA mandated that its contracting officers use the Electronic  Contract Management System (eCMS), a contract writing system, as the  official repository for contract documents. Generally, all contract actions  over the current micro-purchase threshold of $3,500 must be recorded in  eCMS. In addition to documents, the system also records summary data  such as dollar value, award date, and contractor name. This information  is then entered into the Federal Procurement Data System-Next  Generation (FPDS-NG), a government-wide repository of contracting  data, which includes most actions over the current micro-purchase  threshold. VA uses data from eCMS to provide management visibility into  procurement activity.
In 2007 and again in 2012, VA issued policy requiring that contracting  officers use eCMS for all contract actions valued above the current micro- purchase threshold, as well as ensuring that contracting officers are  properly trained on how to use the system. However, the VA Inspector  General has repeatedly found problems with the completeness of  documentation in eCMS. Specifically, audits conducted between 2009  and 2014 revealed incomplete eCMS data, and, in 2009, the Inspector  General recommended that VA assess the feasibility of connecting eCMS  to the department’s accounting system to provide more robust internal  controls. VA agreed to assess the feasibility of taking this action, but, to  date, the systems have not been integrated.
Because eCMS and the accounting system are not integrated, contracting  officers must enter information into a separate system, called the  Integrated Funds Distribution Control Point Activity, Accounting and  Procurement (IFCAP). We reported in 2015 that, in part because  information is manually entered into this system, eCMS data on  interagency agreements were not sufficiently reliable for fiscal years 2012  through 2014, but we also found that eCMS data on contract actions  related to federally-funded research and development centers during this  period were sufficiently reliable for our purposes. As a result, we  recommended that VA improve the completeness of interagency  agreement data recorded in eCMS, including procedures to routinely  check this data against transaction data in IFCAP. While VA agreed with  this recommendation, it did not address how it would improve the  completeness of data recorded in eCMS.
section_title: Findings of Other Reviews
paragraphs: In addition to the VA Inspector General audits, a recent external  assessment, as well as our prior work, has focused on VA procurement:  In 2015, MITRE conducted the Choice Act Independent Assessment,  which reviewed VHA operations overall, and identified a number of  issues related to procurement. For instance, it found that VA has  limited ability to monitor and enforce contract requirements because  complete data are not recorded in eCMS. It also found the VA supply  chain to be complex and duplicative, contributing to VA failing to take  full advantage of its scale to obtain the best pricing. The assessment  had several procurement-related recommendations, including that VA  consolidate its contracting and logistics offices, standardize and  simplify purchasing, and improve management of its acquisition  workforce.
We have also found problems related to VA procurement and policies  in prior reviews. In 2015, we found gaps in the documentation for  interagency agreements and federally-funded research and  development center contracts. Also, in 2015, we added “Managing  Risks and Improving VA Health Care” to our High Risk list. This  report identified concerns about VA’s ability to ensure timely, cost- effective, and quality health care, with findings including ambiguous  policies, unclear resource needs and allocation priorities. However,  we have also found that VA achieved some cost savings through  strategic sourcing efforts.
section_title: Available Data Are Incomplete but Indicate That VA Obligated Nearly $46 Billion from Fiscal Years 2013 to 2015
paragraphs: Our analysis of the available eCMS data found that VA obligated about  $46 billion on goods and services via contracts in fiscal years 2013  through 2015; however, the data are incomplete. VHA accounted for 62  percent of these obligations during fiscal years 2013 through 2015. While  eCMS—VA’s central repository for all contract actions and supporting  documentation—provides useful data on VA contracting, we found that  data on high-tech medical equipment and prime vendor orders were not  complete, leading eCMS to reflect much lower total obligations than  FPDS-NG. While we determined that the available data were sufficiently  reliable for describing certain characteristics of VA contract obligations  over this period, we found that shortcomings limit its usefulness.
subsections: section_title: Overview of VA Procurement Spending
paragraphs: According to our analysis of the available data from VA’s eCMS, the  department spent about $46 billion from fiscal years 2013 to 2015 on  goods and services. VHA accounted for 62 percent and, together, VHA  and department-wide contracting offices (the NAC, SAC, and TAC),  accounted for nearly 98 percent of total obligations recorded in eCMS  during this time period, spending roughly $28.3 and $16.7 billion,  respectively. See figure 2 for the distribution of contract obligations within  VA.
VA spent about $30.9 billion on services over this period, about twice as  much as the $15 billion it spent on goods. Information technology ($6.7  billion) and medical services ($6.3 billion) were the largest categories of  contract obligations for services. Medical supplies accounted for the  majority of spending on goods, at $11.1 billion. As discussed in more  detail below, supply orders placed under the MSPV program are  generally not included in this total.
Our analysis also indicates that the VA relied on competitive procedures  for the majority of its spending on goods and services from fiscal year  2013 through fiscal year 2015, obligating roughly $28.8 billion, or 63  percent of its total obligations, using full and open competition, as shown  in figure 3. VA also obligated about 14 percent non-competitively. We  could not determine the extent of competition for about 5 percent of  obligations because this field was not populated in eCMS.
According to the available data, most of the remaining $8.3 billion (18  percent) of obligations were competitively awarded after limiting the pool  of available contractors—a process known as full and open competition  after the exclusion of sources. VA has special statutory contracting  preferences for Service-Disabled, Veteran-Owned Small Businesses  (SDVOSB) and Veteran-Owned Small Businesses (VOSB), and these  accounted for a significant portion of these “limited competition”  obligations. VA set aside $6.5 billion, or 14 percent, of its total fiscal year  2013 through fiscal year 2015 obligations to competitively award set- aside contracts to SDVOSBs and VOSBs and used sole source  procedures to award another $219.4 million to these businesses. We  reported earlier this year that total contracting awards to SDVOSB and  VOSB firms have increased in recent years, in part because of the  Veterans Benefits, Health Care, and Information Technology Act of 2006,  which required VA to set annual goals for contracting with SDVOSBs and  VOSBs and directed VA to restrict competition to veteran-owned small  businesses if it is reasonably expected that at least two such businesses  will submit offers and the award can be made at a fair and reasonable  price, known as the Rule of Two. In June 2016, a Supreme Court  decision concluded that VA must use the Rule of Two every time it  awards contracts, even when VA will otherwise meet its annual minimum  contracting goals.
section_title: eCMS Does Not Meet Business Needs of One of VA’s National Contracting Organizations
paragraphs: According to the director of NAC’s National Contract Service, NAC  contracting officers only began recording orders for high-tech medical  equipment into eCMS in 2013. Prior to 2013, NAC awarded and  administered these orders—on which VA reported spending $424 million  in fiscal year 2015—outside of eCMS, and recorded the obligations in a  separate, NAC-specific system. NAC officials stated that they continue  to use their own system alongside eCMS, as it provides essential  functionality not provided by eCMS, such as the ability to exchange data  with systems run by other agencies and NAC contractors. OAL officials  responsible for maintaining VA data systems stated that they are working  to develop updates to eCMS. However, according to NAC contracting  officials, planned updates will not provide the ability to exchange critical  data such as pricing and sales reports with other government and  contractor data systems. As a result, NAC contracting officers must  maintain data on their contract actions in both systems, which requires  duplicative work and increases the risk of errors in eCMS. Without  resolving the functionality issues that are driving this duplicative data  entry, VA cannot be assured that its high-tech medical equipment  spending is properly accounted for in eCMS.
section_title: VA’s Recent Direction to Record MSPV Data Is Positive, but Implementation May Fall Short, and Other Prime Vendor Data Are Not Recorded in eCMS
paragraphs: Our review of the MSPV program found that orders placed under this  program have not been consistently recorded in eCMS, meaning that VA  was missing important information on its spending. VA procurement  policy, dated June 15, 2012, requires mandatory usage of eCMS for most  procurement actions valued above the micro-purchase threshold  (currently $3,500). Many individual MSPV orders are under the micro- purchase threshold, and those actions were not recorded in the system.  Further, VA policy exempted MSPV orders placed by ordering officers  from being recorded in eCMS. According to VHA’s MSPV program office,  because ordering officers—as opposed to contracting officers—do the  bulk of VA’s MSPV ordering, this exemption resulted in VA not capturing  these orders in eCMS. VA’s total MSPV obligations are substantial. NAC- provided data—reported by the prime vendors—showed that VA  obligated $465 million under the MSPV prime contract during fiscal year  2015.
As of April 2016, VA policy has changed regarding how MSPV orders are  to be recorded. Ordering officers are now required to report summaries of  MSPV orders to the responsible contracting officers in monthly  summaries, which the contracting officers are then to record in eCMS— even for orders under the micro-purchase threshold. But the policy is  silent regarding the procedures ordering officers should use to do so.  VA’s Senior Procurement Executive stated that the department lacks  procedures to ensure that these orders are consistently reported, despite  the new policy. Without putting in place procedures to implement the new  policy, VA is at risk of continuing to lack a complete picture of its  substantial MSPV obligations.
In addition to the MSPV data, we also found that other prime vendor  orders are not recorded in eCMS. We compared FPDS-NG and eCMS  data for fiscal years 2013 through 2015 and found that the total  obligations recorded in FPDS-NG were about $10.4 billion more than in  eCMS. Based on our analysis, it appears that the primary reason for this  gap is that orders under the pharmaceutical prime vendor program are  not being recorded in eCMS but rather are being manually reported to  FPDS-NG. VA’s Senior Procurement Executive told us that the omission  of many prime vendor orders from eCMS limits VA’s knowledge and  oversight of its contract obligations. As the Standards for Internal Control  in the Federal Government also note, leadership needs complete  information to provide effective management and oversight. Those  standards state that U.S. government agencies should clearly document  transactions, ensure that documentation be readily accessible, and  ensure that transactions are complete and accurate. As described  above, we found billions of dollars not contained in eCMS. While VA has  taken some steps to improve the completeness of eCMS information,  such as adding data on high-tech medical equipment orders, most prime  vendor orders are still omitted. This situation results in missed  opportunities for VA to understand the full picture of where its obligations  are going, information that is needed to effectively monitor and provide  oversight of procurement actions.
subsections: section_title: eCMS Continues to Lack Integration with VA’s Accounting System
paragraphs: eCMS is not linked to VA’s accounting system, requiring duplicate effort  and increasing the risk of errors, a known problem that VA has been  struggling to address. This situation causes duplicative work for  contracting officers since data must be entered separately into both  systems, thus increasing the risk that differences between these data  might occur. In 2009, the VA Inspector General recommended that not  only should the department implement an eCMS oversight program, but  also that additional steps should be taken to assess the feasibility of  connecting eCMS to the accounting system. Similarly, in 2015, GAO  recommended that the VA put into place procedures to improve the  quality of contract action data in eCMS, which could include implementing  procedures to routinely check eCMS data against transaction data in VA’s  accounting system, and VA concurred. We found that some individual  contracting organizations within the VA have made efforts to address this  risk. For instance, as we previously noted, VHA’s Service Area Offices  routinely compare IFCAP records to eCMS records to identify actions that  do not match. VA’s Office of Management, which is responsible for the  accounting system, estimates that VA will replace IFCAP in fiscal year  2019; VA’s Senior Procurement Executive stated that when this change  occurs VA would likely obtain a new interoperable contract system to  replace eCMS.
section_title: VA’s Procurement Policy Framework Is Outdated and Fragmented, and Acquisition Responsibilities Are Not Always Clear
paragraphs: 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. The VA Acquisition Regulation (VAAR), VA’s acquisition  regulation, is outdated, and contracting officers need to consult both the  1997 and 2008 versions. An updated version is in development but will  not be ready for several years. In the interim, VA communicates  procurement policy in a number of different forms that, taken together,  pose challenges for contracting officers who need clear guidance to  effectively perform their duties. For example, there is ambiguity about  whether over one hundred previously-issued Information Letters (policy  memoranda) are still in effect. Additionally, we found that VA’s  decentralized acquisition function—which does not always have clearly  delineated organizational roles and responsibilities—contributes to  confusion among customers regarding which contracting entity they  should consult to acquire various goods and services, sometimes causing  VA contracting entities to perform overlapping roles.
subsections: section_title: VA Does Not Always Ensure That Procurement Policies Are Cohesive and Effectively Communicated
paragraphs: Key VA procurement policies are outdated and difficult for contracting  officers to use. Standards for Internal Control in the Federal Government  state that it is important for an organization’s management to update its  policies over time to reflect changing statutes or conditions, and that  those policies should be communicated to those who need to implement  them. However, many of VA’s regulations and policies—most  importantly the VAAR, which has not been updated since 2008—are  outdated, and the department has issued a patchwork of policy  documents in the interim to fill this gap. VA asks contracting officers to  refer to two different versions of the VAAR, one from 1997 and the other  from 2008. The VA Director of Procurement Policy stated that the 1997  VAAR was not completely rescinded upon the publication of the 2008  edition because some of the prior provisions remained relevant. We found  that the necessity to use two VAAR versions to understand which of the  provisions are relevant is causing confusion among contracting officers.  For instance, a 2015 edition of the VA Handbook for Acquisition  Professionals states:  There are two active versions of the VAAR: 1997 and 2008. Neither  version is comprehensive. All information in the 2008 version still  applies (unless an Information Letter, circular, directive or  memorandum specifically states otherwise); not all of the information  in the 1997 version still applies. To determine if information in the 1997  version still applies, you must review the 1997 version and look for ‘:::’  preceding the section. If the section is preceded by ‘:::,’ it still applies.  If the section is not preceded by ‘:::,’ it no longer applies.
Since contracting officials voiced confusion and raised concerns with the  2008 VAAR, the Office of Procurement Policy undertook a gap analysis of  three sections of the 1997 version of the VAAR, for which the language  either differed between the 1997 and 2008 versions or was omitted from  the more recent 2008 version entirely. Following our inquiries about this  issue, the Office of Procurement Policy took action to fully rescind the  1997 VAAR. In June 2016, VA’s Senior Procurement Executive informed  us that this process had been completed, including the rescission of the  1997 VAAR in its entirety, meaning that VA contracting officials are now  to refer solely to the 2008 VAAR.
A new revision of the 2008 VAAR is also in development, but the  progress towards completion has faced delays. VA began the process in  2011 but does not plan to finalize the new VAAR until December 2018,  including the required rulemaking process. According to VA’s Director of  Procurement Policy its Senior Procurement Executive, several reasons  contributed to these delays, including various steps in obtaining internal  review from VA’s legal department and input from other stakeholders,  such as VISN and Medical Center Directors. VA’s Senior Procurement  Executive also stated that this revision of the VAAR has just recently  become a high priority for the department and senior management  attention may be needed to help expedite revisions and the ultimate  issuance of the updates. In addition to revising the VAAR, VA’s Office of  Procurement Policy, within the Office of Acquisition and Logistics, is also  developing a new VA Acquisition Manual that will serve as a companion  to the VAAR and replace VA’s other sources of procurement policy.  Issuance of the manual is expected to follow the same schedule as the  updated VAAR. The lengthy delay in updating this fundamental source of  policy for contracting officers impedes their ability to effectively carry out  their duties. Without sustained senior management attention and a plan to  expedite the revisions, there is the risk of further delays.
In the absence of an updated VAAR, VA has communicated interim  procurement policies in a number of different forms, some of which can  be duplicative. Figure 4 illustrates the numerous sources that contracting  officers must turn to for guidance.
The sheer number and different forms of communications—many of  which are outdated—are confusing and present challenges for contracting  officials seeking appropriate guidance.
VA’s Information Letters are largely obsolete, but many have not been  rescinded, creating potential for confusion. The Office of Procurement  Policy is no longer issuing these policy memoranda, but in previous years  it and other offices had issued at least 170, which typically did not have  expiration dates. The Director of Procurement Policy stated that the  guidance set forth in these letters was meant to be temporary in nature.  For example, a 2009 Information Letter outlining contract oversight  processes established dollar thresholds for certain reviews—which  officials in VA contracting offices cited during our visits—but Procurement  Policy officials said that these thresholds had since been revised by an  interim Acquisition Flash until a Procurement Policy Memorandum can be  developed. The Director of Procurement Policy also stated that the  Office of Procurement Policy does not have a complete list of all  Information Letters and is working to develop a complete repository, in  some cases by gathering them from the contracting officers themselves.  As of April 2016, the office had identified approximately 170 Information  Letters through this process, 70 of which the Director said had been  rescinded entirely or were replaced by Procurement Policy Memoranda.  The Director of Procurement Policy further stated that access to the  repository is limited to Office of Procurement Policy staff to prevent  recirculation of outdated Information Letters among the department’s  contracting staff, which could cause confusion on which policy is in effect.  The Office of Procurement Policy has not established a firm time frame  for completing its efforts to rescind or replace the Information Letters.  Without a firm time frame, there is the risk that this effort will lose traction.
As an example of the confusion we found among the various sources of  policy and guidance, we analyzed information specific to contracting with  SDVOSBs, which is an important part of VA’s procurement process.  Additionally, we spoke with one contracting officer who found the  available information on this issue challenging to navigate. Several  sources of VA policy address SDVOSB contracting. Figure 5 shows an  example of VA making policy changes without incorporating them into the  VAAR.
For example, the contracting officer responsible for one of our selected  contracts for surgical equipment stated that, using the VAAR as her  guide, she awarded a $335,000 contract to an SDVOSB on a sole-source  basis without a justification and approval. However, an internal post- award review found that this action was not permitted based a 2012  VAAR deviation and a 2013 Procurement Policy Memorandum. Both  required a justification and approval from contracting office management  for a contract of this value. The contracting officer was unaware of this  policy change because she believed the VAAR to be the most current  policy. This particular contracting office subsequently provided training to  its staff regarding sole-source contracting with SDVOSB firms.
The issues associated with contracting with SDVOSB and VOSB firms  have recently been subject to heightened attention due to the June 2016  Supreme Court decision, which concluded that VA must restrict  competition to veteran-owned small businesses if it reasonably expects  that at least two veteran-owned firms will submit offers and the award can  be made at a fair and reasonable price, even when VA will otherwise  meet its annual minimum contracting goals. According to VA’s Senior  Procurement Executive, this decision will have a large impact on VA  contracting because, among other things, the ruling requires training for  VA contracting officers. VA began providing this training in July 2016 and  plans to continue it on an ongoing basis through webinars. VA also plans  to staff a hotline to assist contracting officers in implementing the  Supreme Court ruling. VA also plans to pursue a “train the trainer”  strategy where field-based staff can offer support on implementing the  Supreme Court’s rule.
section_title: VA’s Complex Procurement Structure Creates Challenges for Users
paragraphs: VA procurement is highly decentralized and spread across six acquisition  contracting organizations, each of which is led by an individual  designated as an HCA. Three of these acquisition organizations  represent each of the department’s operating administrations, and three  represent each of the VA-wide contracting entities that serve customers  across the agency. A given customer—such as a department in a medical  center or a program office—may need to work with more than one of  these contracting entities to meet its procurement needs. Figure 6  illustrates customer relationships contracting offices across VA.
The complexity of the organizational structure can contribute to confusion.  Several of the contracting officials we spoke with stated that they were, at  times, uncertain of which contracting office handled a particular  requirement. Many program offices must not only work with their local  contracting office (such as the NCOs within VHA) but also with national  contracting organizations such as the SAC or NAC. In the course of our  review, we encountered examples of confusing roles and responsibilities,  uncoordinated procurements that resulted in duplication, or unofficial  agreements about procurement responsibilities. For example:
A VISN official reported procuring one type of high-tech medical  equipment through the SAC, even though this area is specifically  designated as NAC’s responsibility, because she expected that the  SAC could execute the purchase more quickly.
The VBA and VHA separately acquired similar types of contract  support services through the SAC; however, because the requirement  was procured by each administration through a different SAC office  location, two separate contracts were awarded.
An official from VBA’s Office of Acquisitions stated that in the absence  of an official policy on the division of responsibilities between his office  and national contracting organizations, he informally agreed with the  Office of Acquisition Operations that his office would handle all  procurements under $5 million, while the SAC would handle those  valued above this amount.
Standards for Internal Control in the Federal Government state that it is  important for an organization to fully communicate its policies to those  who need to implement them. However, the variability in procurement  processes and lack of clearly-defined organizational roles and  responsibilities could result in inconsistent implementation of VA’s  procurement policy.
Leaders in VA’s procurement organizations have recognized that  organizational complexity is a challenge and have taken some steps to  address it. The Office of Acquisition, Logistics, and Construction, in its  role as the overseer of VA’s national contracting organizations, issued a  memorandum in March 2013 that established lead responsibility for  various types of purchases among the national contracting  organizations—SAC, TAC, and NAC. Table 1 shows the responsibilities  outlined in that memorandum.
VA’s Acting Chief Acquisition Officer stated that, although the policy  delineates separate responsibilities, he is aware there is overlap in the  functions of some contracting organizations, especially the NAC and the  SAC. He also stated that he is aware of confusion among customers  regarding whom to go to with their requirements. For example, SAC’s  responsibility for specialty medical and surgical supplies could include  some areas covered by the NAC—especially since the NAC had this  responsibility in prior years. Some contracting officials we spoke with  characterized the March 2013 memorandum as more of a guide than a  mandate, resulting in confusion about how flexible these roles and  responsibilities really are. While issuing the March 2013 memorandum  was a good first step, the fact that there is still confusion indicates that  more needs to be done to clarify roles and responsibilities—particularly  regarding the NAC and the SAC. Without clearly delineated  organizational roles and customer relationships, the possibility of  duplication is increased, and customers lack clear guidance on what  organization to approach for certain types of procurements.
section_title: VA’s Acquisition Workforce Faces Workload Challenges and Aspects of Workforce Data Could Be Improved
paragraphs: VA’s contracting officers are concentrated in VHA. Managing workload  can be a challenge for these staff as well as for the contracting officer  representative (CORs), the officials in customer offices throughout the  department who help manage contracts on behalf of contracting officers.  In 2014, VHA directed medical centers to implement contract liaisons, in  part to address the demands on CORs, but this initiative has not been  consistently implemented. VA also does not have historical data on the  certifications of its contracting officers, impairing its ability to plan and  identify recurring problems. Finally, of the contracting officers who shared  their opinion of the VA Acquisition Academy with us, most said that they  were satisfied with the training it provided.
subsections: section_title: VHA Employs the Majority of VA’s Contracting Officer Workforce
paragraphs: VA’s contracting officer workforce is spread across a number of  organizations, but the majority of VA’s 2,716 contracting officers work  within VHA. As figure 7 shows, VHA accounts for 80 percent of the  department’s contracting officers. The largest share of the remaining  contracting officers work in SAC, TAC, or NAC, with about 12 percent in  other organizations.
Over the last 5 years, VA’s total number of contracting officers has  generally increased, as shown in figure 8.
section_title: Workload Is a Challenge for Some Members of VA’s Acquisition Workforce
paragraphs: We found indications that managing workload is a challenge for some of  VA’s acquisition workforce, which includes contracting officers and CORs.  In our discussions with officials who rely on contracting staff, they told us  they had experienced difficulties due to workload constraints. Specifically,  one medical center’s chief logistics officer—responsible for managing  supplies—stated that his local contracting office had at times turned away  some purchase requests because it could not staff them. In some cases,  workload prevented contracting officials from pursuing the optimal  acquisition strategy. For example, medical center and contracting staff  identified a medical center’s month-to-month purchase orders for patient  transportation as problematic because no long-term contract was in  place, but no action was taken for more than a year due to lack of staff  availability. Once a new contract was finally awarded about 2 years later,  the annual value of the contract had decreased by about $1.7 million.  According to the COR, the pricing on this new contract was much better.  These savings could have been realized much sooner if the contracting  office had been able to proceed immediately once the need was  identified. Another contract that we reviewed covered a requirement for  the delivery of durable medical equipment. The contracting officer that  currently oversees the requirement said that the contract passed among  several contracting officers who had retired or were on extended sick  leave; the current contracting officer stated that he received the  requirement just as the contract was ending and expected to non- competitively extend the contract due to a lack of time to compete the  requirement. Additionally, a recent GAO review of one specific type of VA  contract—sole-source contracts for affiliates—found that workload  demands and training shortcomings for the contracting officers were a  challenge to VA’s ability to manage these contracts in a timely manner.  One contracting officer we met with also stated that, while training at the  VAAA, he had to work each evening following class because his  colleagues were not available to provide backup. We spoke with the  leadership of seven different contracting offices in the course of our  review, and, in six of those cases, managers said that workload was a  challenge for their staff.
Our analysis supported the concerns we heard from VHA contracting  officers and their managers. VHA’s contracting officers process a large  number of small dollar-value actions to support medical center  operations. According to eCMS data, contracting staff in the three VISNs  we visited executed a total of about 36,000 actions in fiscal year 2015, the  majority of which were small transactions, representing total obligations of  about $1.6 billion. According to figures provided by local managers, the  three offices had a total of about 363 contracting officers. This average of  about 100 actions per year per contracting officer is indicative of the fact  that VHA contracting officers must process a comparatively large number  of small transactions. The number of actions a given contracting officer is  able to process varies, given the wide spectrum of cost, complexity, and  risk, and there is no single standard to apply. GAO has previously noted,  in our inclusion of strategic human capital management on our High Risk  list, that contract specialists are one area of the federal workforce that has  been identified by an Office of Personnel Management working group as  having a skills gap.
As VA’s Acting Chief Acquisition Officer noted, the need for contracting  officers to process frequent and urgent small-dollar transactions reduces  their ability to plan ahead and take a strategic view of procurement needs.  We found that many VHA contracting actions are short-notice urgent  purchases to support immediate patient care, even though many of the  items are repetitive procurements. For instance, a review of eCMS  records for one of the VISNs we visited indicated that from fiscal years  2013 through 2015 hundreds of actions each year were identified as  “emergency” purchases in the requirement description. In many cases,  these purchases were for routine items such as surgical or lab equipment  supplies. The Acting Chief Acquisition Officer said that VA’s efforts to  consolidate requirements through strategic sourcing and make greater  use of ordering officers for routine items will help reduce these demands;  however, these efforts are in their initial stages.
Several of the CORs we spoke to also cited workload as a challenge. For  these representatives, who work in program offices, medical departments,  and other operational roles, an additional challenge is that working with  contracts is not their primary role. Of the 19 CORs we spoke with, 5 said  that it was difficult to balance their COR duties with their regular job  responsibilities. CORs typically develop key portions of the contract  documentation, such as work statements and cost estimates. We have  previously reported that VA CORs on clinical contracts had difficulty  managing their COR responsibilities due to the demands of their primary  job. As a result, they reported that they were not always able to effectively  monitor their contracts.
section_title: VHA Directed Medical Centers to Create Contract Liaisons to Address Demands on CORs but Implementation Is Uneven
paragraphs: Recognizing that the COR role was not working optimally, in part because  workloads were too high and oversight was being impacted, VHA directed  medical centers to implement contract liaisons to assist CORs. An  interdisciplinary team convened by VHA’s Office of Procurement and  Logistics had found that there were not enough CORs to meet medical  center needs and that staff lacked the resources necessary to efficiently  prepare procurement documents. But the review also found that certain  medical centers had been successful in creating new staff positions to  assist CORs. In April 2014, VHA officials directed all VISNs and medical  centers to develop and fund medical-center-based liaisons to assist in the  contracting process. These contract liaisons, some of whom have  backgrounds in contracting, were intended to assist CORs in performing  their duties by providing guidance, assisting with procurement  documentation, and supporting COR training status. For example, two  CORs we spoke with, as well as chief logistics officers from facilities in  VISNs that had implemented the contract liaison position, said that the  liaisons have improved the procurement process by clarifying  documentation and process requirements. In particular, one chief logistics  officer at a facility we visited stated that the liaisons have helped ensure  that procurement packages are complete, and, as a result, paperwork is  less frequently returned to CORs for additional information, thereby  speeding up the procurement process.
However, this initiative has not been fully implemented. As of July 2016,  37 percent of VA medical centers had not implemented the contract  liaison role. Two of the VISNS we visited had implemented the contract  liaison position in all of their medical centers; the third VISN had not  created contract liaisons at its own facilities but did have liaisons at two  medical centers it had recently absorbed from a different VISN. VHA  officials said that medical centers had implemented the role differently:  some had created and staffed new positions, while others delegated the  duties to existing staff. VHA officials responsible for this directive said  medical centers had cited a lack of designated funding as an obstacle to  the creation of full-time contract liaison positions.
VHA directed that all VISNs and medical centers implement the contract  liaison role to alleviate COR workload, and, based on the feedback we  heard during our review, the position has the potential to do so. 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.
section_title: VA Lacks Historical Data on the Certification Status of Its Contracting Officers, Limiting Its Ability to Monitor Expired Certifications
paragraphs: VA currently has limited historical data on its contracting officers’ FAC-C  certifications, which limits its visibility into potential lapses in their  certification status. From fiscal year 2011 through fiscal year 2015, VA did  not archive any underlying data from the systems it used to monitor  contracting officers’ FAC-C certifications, meaning that VA has no record  of individuals’ certification status over time. During this period, VA  maintained two systems for monitoring contracting officers’ FAC-C  certification status: the Acquisition Resource Center until January 2014,  and the eCERT system from January 2014 until the end of 2015. During  most of the period it used eCERT, VA created monthly summary reports  on contracting officers’ FAC-C certification status but did not archive the  underlying data. The monthly summary reports include information such  as the number of contracting officers with FAC-C certifications and the  number of lapsed certifications within each VA contracting organization  but do not include individual records. A senior VA official stated that,  under the government-wide Federal Acquisition Institute Training  Application System (FAITAS) that VA transitioned to in 2016, the agency  does not plan to continue to create monthly summary reports but will  begin to archive historical data extracts every 6 months.
The lack of historical data on contracting officers’ certification status  leaves the office of the Acquisition Career Manager without information  that is needed to perform effective strategic planning and management of  the contracting officer workforce. In our 31 interviews with contracting  officers, we spoke with four who said that their certifications had lapsed  for a period of time—two did not meet training requirements, and the  other two had problems with the certification process. Two of the  contracting officers said that their certifications had lapsed for about a  year or more; as a result, they were unable to perform their jobs  independently and needed certified coworkers to sign all of their work.  Because VA did not maintain archived data extracts, the summary data  do not allow VA to determine the duration of these lapses, or in which  offices they occurred. As of the end of fiscal year 2015, the summary data  showed no contracting officers with lapsed certifications. Archives of the  full data extracts would allow historical tracking of certifications of  individual contracting officers, but doing so on a biannual basis may not  provide timely enough data to allow VA management to fully monitor the  certifications of its contracting staff.
section_title: Most Contracting Officers We Spoke with Are Satisfied with VAAA Training
paragraphs: The contracting officers we spoke with were generally satisfied with the  training provided by VA; of the contracting officers who shared their  opinion of the VA Acquisition Academy (VAAA) most said they were  satisfied with the training it provided. In 5 of the interviews, contracting  officers stated that the applicability of VAAA training to their work could be  improved, stating that they would prefer more VA-centric examples. For  example, most of the case studies used in VAAA contracting courses are  based on Department of Defense acquisitions, such as how to procure  helicopters or body armor, rather than items a VA contracting officer  might actually acquire, like medical supplies. The Defense Acquisition  University manages the FAC-C curriculum. VA contracting officers work  toward their certification through a combination of courses provided by  Defense Acquisition University and equivalent courses at the VAAA,  which are delivered by contractors. A senior official at VAAA stated that  the Academy’s contract with the instructors requires that at least 20  percent of the case studies used in the courses be based on VA-specific  procurements. VAAA has offered webinars in recent years, which the  head of VAAA stated are typically focused on VA-specific issues.
section_title: VA Can Improve Its Processes for Medical Supply Purchasing, Identifying Cost Savings Opportunities, and Documenting Contracts
paragraphs: VA can improve the functioning of key procurement processes. First, VA’s  MSPV program is a tool for medical centers to efficiently obtain supplies  used on a daily basis, but current processes do not consistently ensure  that orders comply with policy or take advantage of available discounts.  Second, VA organizations are missing opportunities to realize cost  savings and greater efficiency through strategic sourcing of medical  supplies and services purchased by individual medical centers. Finally, a  number of our selected contract files were missing key documents. Each  contracting office we visited had a compliance function, but they varied in  their approach to this role.
subsections: section_title: The Current MSPV Ordering Process Is Inefficient and Makes It Difficult to Comply with Policy; Improvements Are Underway to Address Some of These Problems
paragraphs: VA medical centers use contractors called medical-surgical prime  vendors to obtain many of the supplies that they use on a daily basis,  such as bandages and surgical sutures. The prime vendor operates a  local warehouse and delivers supplies ordered by the medical center,  typically multiple times per week. The prices for these medical supplies  are established by VA national contracts. The NAC contracting officers  who award these national contracts delegate authority to place orders on  the contracts to ordering officers at the medical centers, who place the  orders with their local prime vendor. VA has substantial buying power— spending $465 million in fiscal year 2015 through the MSPV program  alone—and its national contracts typically provide significant discounts  over the Federal Supply Schedule prices—an estimated 30 percent on  average, according to a senior NAC official. Use of these national  contracts is also required by VA policy and regulation. Figure 9 provides  an overview of the MSPV process.
However, the current MSPV process is confusing and cumbersome. This  makes it difficult for ordering officers to buy their supplies through the  correct national contracts (administered by the NAC) and take full  advantage of their discounted pricing, as required by VA policy. As noted,  these savings can be substantial. In addition to the supply items available  on national contracts, the MSPV system also allows ordering officers to  buy thousands of items directly from VA’s Federal Supply Schedule  contracts, which lack the degree of discounted pricing of the national  contracts. Further, the information technology systems that support the  ordering process create obstacles for ordering officers to easily use the  discounted national contracts. Most orders are placed through IFCAP, a  decades-old IT system with a text-based interface, which does not include  a tool to look up items that are available on the national contracts. For  instance, ordering officers must know the exact item number—which is  different for each vendor—to enter into IFCAP. Replicating a prior order is  simpler than cross-referencing contracts and item numbers to ensure that  the items are being procured on the national contracts. Figure 10 shows  an example of the IFCAP text-based interface used by ordering officers.
We found that while tools are available elsewhere to help ordering officers  identify the right national contracts, these are not easy to use. NAC has  provided spreadsheets listing its national contracts and the thousands of  items available under them, but ordering officers must visit the website to  find the spreadsheets and then cross-reference manually to the items that  they need to purchase. Ordering officers can also search for supplies via  the web-based Contract Catalog Search Tool, which is also operated by  NAC. This tool can be searched multiple ways, such as by item name or  contract vehicle. In addition, its search results include thousands of  Federal Supply Schedule items—for instance, a search for “bandage”  returns 5,073 results, as shown in Figure 11. Given these obstacles,  ordering officers may be ordering based on historical purchases because  it is simpler or because of local preferences. By failing to use VA’s  national contracts, medical centers may be failing to take advantage of  their discounted pricing.
In addition to possibly missing out on discounted pricing on national  contracts, orders over the current micro-purchase threshold of $3,500  placed directly on the Federal Supply Schedules via the MSPV system  are subject to a FAR requirement to document a best value determination  after review of pricing from at least three vendors. Some orders are over  the micropurchase threshold, though the majority of orders are under the  threshold. Ordering officers placing orders directly on the Federal Supply  Schedules via the MSPV system would not conduct a best value  determination because the system does not present them that  opportunity. Thus, VA runs the risk of not complying with FAR  requirements in this regard.
VA officials recognize that placing orders directly on the Federal Supply  Schedules through MSPV is problematic because they may be missing  out on discounted prices. However, neither we nor VA are able to assess  the full the extent to which MSPV orders are placed directly on Federal  Supply Schedules because of data limitations. But VA officials estimate  that this represents a substantial number of purchases. As noted above,  individual MSPV orders are generally not recorded in eCMS, although a  2016 policy now requires these orders to be reported in summaries at  least monthly. Currently, the prime vendors submit sales reports to NAC  that show transaction-level detail, but VA officials stated that these  reports are not consistent across the seven prime vendor contractors—for  instance, the data fields vary. The acting head of VHA’s MSPV Program  Office stated that it is not possible to estimate the portion of purchases  that are made directly on Federal Supply Schedules because VHA’s data  do not differentiate between FSS and national contract purchases.  Officials from NAC and SAC also acknowledged that ordering officers can  order supplies directly from the Schedules, even when national contracts  are available. Officials from the SAC, which is now responsible for the  MSPV program, told us they plan to analyze the vendor-provided data to  determine the extent to which MSPV orders are bypassing national  contracts by being placed directly on the Federal Supply Schedules.  However, the SAC does not yet have the mechanisms in place to do so.
subsections: section_title: Changes Planned in the Transition of MSPV Will Address Some Issues, but Additional Work Remains to Ensure Transition Fully Addresses Issues
paragraphs: Administration of the MSPV program is being transferred from NAC to  SAC, and, along with this transfer, some new approaches will be used in  an effort to address the issues discussed above and streamline the  process. Under the new approach, SAC has already awarded new prime  vendor contracts and is in the process of awarding the supporting national  contracts for individual types of supplies. According to the Acting Chief  Acquisition Officer, VA has been planning for this change since 2011  when VA outlined a new approach to the MSPV program to improve  efficiency. More recently, improving the efficiency of how VA buys  medical and surgical goods has been identified as a priority under the  Secretary’s MyVA initiative, including consolidating requirements to obtain  a larger portion of supplies through standardized national contracts.
There will be a number of changes to how the MSPV program operates  under the new approach. First, SAC implemented new prime vendor  contract clauses that prohibit certain kinds of fees. According to NAC and  SAC officials, the current prime vendors charge suppliers fees to stock  their products in their warehouses, and these costs are indirectly passed  on to VA on the national contracts. SAC officials estimated the fees the  MSPVs charge suppliers—which the current prime vendor contracts do  not prohibit—range from 10 to 14 percent of the cost of the item. These  fees could represent a substantial increase in cost to VA. From fiscal  years 2013 through 2015, NAC reported that the VHA spent about $1.2  billion on MSPV sales. Using SAC’s estimate of the scale of fees, we  calculated this could equal between around $120 million to $169 million in  fees paid by suppliers—and, in turn, the VA medical centers—over that  period. According to SAC officials, the new prime vendor contracts  specifically restrict the prime vendors from charging suppliers fees to  stock their products.
Second, SAC plans to restrict ordering officers to a catalog of items on  national contracts, as opposed to allowing them to order directly from  Federal Supply Schedules. However, SAC faces a challenge in doing so.  In the initial rollout of the new process, purchases of certain Federal  Supply Schedule items not on VA national contracts will still be an option.  SAC officials stated that in order to ease the transition, about 4,500  Federal Supply Schedule items will be available initially. To accomplish its  goal of having all MSPV items under national contracts, SAC is also  awarding new national contracts for the thousands of items that will be  available for purchase through the new MSPV program. These national  contracts will cover supplies based on requirements identified by VHA  medical centers. To support this effort, VHA’s MSPV program office is  identifying needs and setting consistent national requirements for medical  supply items. According to the director of this program office, VHA is  identifying items that should be offered in the new MSPV catalog through  a combination of analyses of current purchases and consulting with  project teams comprised of medical center clinicians. According to VHA  and SAC officials, they believe that about 8,000 to 10,000 unique items  will ultimately need to be available on national contracts to meet the  needs of all medical centers once ordering officers are no longer able to  use the Federal Supply Schedules for medical and surgical supplies.
As of July 2016, SAC officials stated that VA had awarded national  contracts for about 1,800 items, including those on contract vehicles  transferred from NAC. VHA has set an internal goal of providing all  requirements—detailed descriptions of the items to be purchased—to  SAC by November 2016. However, the director of SAC stated that he  believes this timeline is aggressive and may be delayed. Once VHA has  submitted all requirements to SAC, additional time will be required to  award contracts. VA does not anticipate that SAC will be able to award  contracts for the full 8,000 to 10,000 items by the time the new MSPV  contracts become operational in late 2016—the primary reason for the  addition of Federal Supply Schedule items to the catalog, as mentioned  above. According to the Standards for Internal Control in the Federal  Government, management should define objectives clearly to identify  risks. One example of objectives is time frames for achieving goals such  as this one. Given the importance to VA of ensuring that all MSPV items  are purchased through national contracts, it is critical that VA have  clearly-defined time frames for eliminating the ability for ordering officers  to directly order Federal Supply Schedule items from the MSPV catalog.  Without such time frames, VA is at risk of not ensuring that it gets the  available discount for these items.
The final major change that SAC and VHA plan to implement is a new  online ordering interface, developed by a contractor for VHA, which will  provide ordering officers a more intuitive interface for the outdated and  difficult-to-use IFCAP system that is currently used for most orders.
Figure 12 shows a sample screen from a pilot version of the new  interface.
According to the Standards for Internal Control in the Federal  Government, information systems should be designed to help achieve an  organization’s objectives. As VHA continues to develop the ordering  interface, it will be important that ordering officers can clearly distinguish  between items on national contracts and items directly on Federal Supply  Schedules. The national contracts are the required method of ordering,  when available, and they provide substantial discounts.
There have been some delays in rolling out this new approach. In the  meantime, NAC and then SAC awarded one-year bridge contracts on a  sole-source basis to all current prime vendors to provide time for the  transition. VA anticipates transitioning operation of the MSPV to the new  contracts in December 2016. VA is currently preparing for this transition  to take place. Figure 13 shows the key events in this transition.
Work remains to ensure that the transition to this new approach will be  successful. Updating the MSPV process affects how essential supplies  are ordered and delivered at 167 medical centers on a daily basis, and  facility logistics staff, including ordering officers, must be able to  implement the new approach. Some of the chief logistics officers and  ordering officers we spoke with expressed confusion over details of the  MSPV transfer to SAC. Three of the five medical center chief logistics  officers we spoke with said that they were uncertain about some details of  the transfer. Also, two of the three ordering officers we spoke with  expressed similar uncertainty. All of the chief logistics officers expressed  concern over whether the new MSPV approach would include all of the  items their medical centers currently require; one of these officials said  that he planned to work with his local Network Contracting Office to  procure supplies in the event that the new MSPV approach did not  include critical items. He reported that his office’s analysis found 14 items  deemed critical to the function of the medical center that were not on a  preliminary list of supplies available through the new MSPV, nor were  acceptable substitutes. He stated that another 287 items they currently  purchase did not appear on the list, and his staff is in the process of  assessing whether acceptable substitutes will be included on a future list.  VHA’s MSPV program office has developed a communication plan for the  transition that includes conferences, memoranda, and other  communications aimed at logistics personnel nationwide. For instance,  representatives from the program office presented at a national  conference of medical center logistics personnel. VHA plans to continue  to update its communication plan as implementation of the new MSPV  proceeds.
section_title: VA Is Missing Opportunities to Save Money with National and Regional Strategic Sourcing Efforts
paragraphs: 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. VA has done this successfully in some areas. In  2015, GAO found that VA had implemented several key strategic  sourcing practices, including performing spend analyses and tracking cost  avoidance  The largest savings came from pharmaceutical purchasing,  where VA reported $1.4 billion in cost avoidance in fiscal year 2015  alone, but VA also realized some strategic sourcing savings on medical  supplies. However, VA does not know how much of its contract spending  remains outside of strategic sourcing efforts, which could lead to VA  paying higher prices than it could otherwise obtain.
Medical supplies are one area where strategic sourcing efforts have  lagged. As discussed above, the MSPV program does not ensure that  supplies are consistently purchased through VA’s favorably-priced  national contracts, and many purchases were instead made directly from  Federal Supply Schedules. For example, in 2015, the Choice Act  Independent Assessment team conducted an analysis which found that  within one VISN, a single item—a disposable blood pressure cuff—was  purchased from six different vendors at significantly different prices,  despite the fact that a national contract was in place. According to VA  policy, use of a national contract is mandatory when one is in place for a  given type of supply, but VA does not have a process in place to monitor  VISN and medical center compliance with this requirement. GAO has also  previously reported that VISNs and medical centers have fallen short in  complying with VHA policies regarding the standardization of medical  supplies. If VA was able to realize savings of 10 percent on its fiscal  year 2015 MSPV spending, it could save about $46 million annually. VA  estimated that it saved approximately $103 million through the use of  national medical surgical contracts in fiscal year 2015. The planned  changes to the MSPV program, discussed above, may help increase the  percentage of supplies purchased via standardized national contracts  once fully implemented, but it is too soon to evaluate their success.
There are opportunities to better apply strategic sourcing principles at the  regional level, as well. Within VHA, each of the 19 VISNs is responsible  for a regional network of multiple medical centers and clinics. Individual  medical centers within each VISN procure many goods and services  separately, despite the fact that their requirements are similar. There are  opportunities to consolidate these requirements—such as security  services, elevator maintenance, and eyeglasses for patients—to realize  both cost savings and greater efficiency in awarding and administering  contracts.
We found efforts underway to consolidate requirements at the regional  level, but local autonomy and limited planning capacity pose obstacles.  For instance, one VISN we visited recently began an initiative to  consolidate requirements for purchases made by all of its medical  centers, especially services. VISN managers explained that they began  with the easiest requirements, such as security guard services and  elevator maintenance. They issued a draft memorandum with plans to  broaden this approach to most purchases. However, medical center staff  provided feedback that they preferred their own local contracts and did  not want VISN-wide contracts to become the default approach.
Nevertheless, in our reviews of selected contract actions, we found a few  instances where program or contracting staff had been successful in  consolidating similar requirements across multiple medical centers. For  example, officials in two different VISNs told us that they had awarded  VISN-wide laboratory support contracts—one VISN awarded a contract  for laboratory reagents, and the other VISN awarded a single contract for  outside testing services. In both cases, the contracting and laboratory  officials reported that they faced challenges, such as determining the  volume of the requirements, given that different medical centers have  slightly different equipment and demand. Both contracts are awarded,  and the COR for the testing services contract stated that it had achieved  significant savings for the VISN as a whole.
Standards for Internal Control in the Federal Government state that  visible leadership commitment is needed to drive changes like  consolidating fragmented procurement. Also, as stated in our 2012  report on strategic sourcing, best practices include clear guidance on  metrics for measuring success, including setting goals for use of strategic  sourcing contracts, establishing a centralized office, and holding senior  managers accountable to meet goals. VHA does not yet have these  types of practices in place for its regional medical centers and has not  taken steps to identify existing effective regional strategic sourcing  practices. VA’s Acting Chief Acquisition Officer acknowledged that  fragmented procurement based on local preferences is a problem,  especially within VHA, and stated that he is trying to identify ways to  change this culture. While VA officials recognize that obstacles stem from  VA’s culture of local autonomy, the cases we found where regional VISNs  had taken action—in one case a VISN-wide initiative, and in other cases  for individual procurements—indicate consolidating procurement is  possible with leadership buy-in, and that there are opportunities to share  lessons learned across VISNs. Within VHA, in VISNs where there is not a  consistent push by local leadership to pursue consolidation, it is  challenging for efforts driven by individual departments or contracting  personnel to overcome cultural obstacles.
section_title: More Than a Third of the Selected Contract Files Lacked Key Documents, and Internal Compliance Reviews Did Not Always Identify These Issues
paragraphs: VA contract files we reviewed were often missing key documents,  increasing the risk that key processes and regulations were not followed.  Among the 37 VA contracts we reviewed, 13 were missing at least one  key required document—including justifications for non-competitive  awards, documentation of market research, and documentation of price  negotiations—from the base contract. Additionally, in one case, the  eCMS file—the official contract record—did not contain a copy of the  signed contract. Table 2 summarizes the number of contracts missing key  documents.
In six additional cases beyond those listed above, key documents were  not recorded in eCMS, but contracting officers were able to provide them  to us from hard copies or copies saved on their own computers. VA policy  requires that all contract documentation be saved in eCMS, and  documentation not saved in eCMS does not enable effective  management by subsequent contracting officers. For instance, for one of  the contracts, the contracting officer stated that she had only recently  been given responsibility for the contract, which had been awarded and  administered by a different contracting officer. There was very little  documentation in the eCMS file—only a statement of work—and the  contracting officer said that she was unsure how to perform contract  closeout activities without any invoices to reconcile against the funds  obligated.
Of the 35 base contracts we reviewed, 10 were awarded to SDVOSB  firms under the Veterans Benefits, Health Care and Information  Technology Act of 2006. The contracting preference for these firms in  this statute is specific to VA. VA’s Vets First Certification Program office  maintains a database of firms that have been verified as being owned by  a service-disabled veteran. Among these 10 contracts, contracting  officials took the extra step in seven cases of documenting this  certification in the contract file. Checking SDVOSB status is an important  safeguard to ensure that these contracts are awarded only to firms  eligible to receive them.
In addition to missing documentation across many of the selected  contracts, one case indicates more fundamental shortcomings in the  procurement process. A medical center had procured non-emergency  patient transportation services, but that contract ended in 2010. The local  contracting office issued a solicitation for a new contract, but, due to  protests by a losing offeror (the incumbent), the award was withheld. To  continue to meet patient transportation needs, the contracting officer  awarded non-competitive purchase orders to the incumbent contractor— and continued to do so for 36 months. Medical center and contracting  office staff later identified this as a problem, and awarded a non- competitive one-year bridge contract to the incumbent vendor until a new  competitive contract could be awarded. However, the contracting office  was not able to move forward with a competitive contract, and instead  awarded a second one-year non-competitive bridge contract to the  incumbent contractor. In January 2016, a contract was awarded  competitively for patient transportation services, but it was also withheld  due to another protest. According to the COR and the contracting officer,  from October 2015 to June 2016, the contracting office again awarded  monthly purchase orders to the incumbent. The protest was resolved and  the new contractor began providing services in June 2016. According to  the COR, this contract provided substantial savings over the incumbent.
VA policy requires some form of independent review for all acquisition  actions above the simplified acquisition threshold (currently $150,000).  All seven contracting offices we spoke with had an internal compliance or  quality assurance function but varied in their approach, including how  individual contract files were reviewed. One office conducted post-award  audits of only one percent of contracts, which it said reflected the staff  resources available to cover the workload. Another office audited 10  percent of all contracts. A third office audited the top 25 contracts by  obligation amount. Finally, another office conducted audits of all contracts  over the simplified acquisition threshold; particularly in VHA contracting  offices, this approach would exclude the majority of actions from  compliance review. About 95, 94, and 96 percent of actions, respectively,  were under the simplified acquisition threshold in fiscal year 2015 at each  of the three NCOs we reviewed. Collectively, these actions represent  obligations of $509 million, about 33 percent of all fiscal year 2015  contract obligations by those three NCOs.
The varied nature of the internal compliance reviews among the  contracting offices we visited results in a lack of consistency in selection  of contract actions for review. According to the FAR, file documentation  must be sufficient to establish a complete history of a transaction so that  informed decisions can be made at each step in the acquisition process,  actions taken can be supported, and information can be provided for  reviews and investigations. In addition, according to the Standards for  Internal Control in the Federal Government, documentation is a key  process control to ensure that procurement regulations and other policies  are implemented as required. As evidenced by missing documentation in  our review of selected contract files, existing compliance reviews are not  identifying all contract file shortcomings. We found that a few of these  actions had been subject to local pre-award compliance reviews. While  our findings cannot be generalized to all VA contract actions, more than a  third of the files we reviewed were missing one or more key documents,  including some that were subject to compliance reviews. The absence of  these required documents leaves VA without information needed to  effectively make informed decisions on these contracts, such as when  executing additional actions on them.
section_title: Conclusions
paragraphs: 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. VA faces  challenges in doing so, in large part due to the highly decentralized nature  of its procurement organization. However, it is incumbent on the  department to take actions—and in some cases, ensure that ongoing  initiatives are properly monitored and have the attention of senior  management—to maximize use of taxpayer dollars and make the best  use of VA’s contracting and COR workforce.
In terms of data, eCMS, VA’s system for recording and tracking its  contracting actions, is not capturing complete spending data on prime  vendor orders, including medical surgical and high- tech medical  equipment as well as pharmaceuticals—areas where VA spends  hundreds of millions of dollars each year. At the NAC—which is  responsible for buying high-tech medical equipment—contracting officers  must enter data in their own business system and then enter it again in  eCMS. This situation opens the door for errors or missing information in  eCMS.
Regarding the workforce, VA’s outdated and confusing policy framework  is cumbersome to contracting staff and creates potential oversights and  inefficiencies. While VA has taken some recent steps to alleviate this  confusion, more can be done to help ensure that efforts continue with a  sense of urgency. At a more tactical level, the shortcomings we found in  contract files—where required documents as fundamental as justifications  for sole source awards had not been prepared—indicate that current  internal compliance reviews could be more effective. VHA tried to  alleviate workload challenges for its CORs by directing that all VISNs  implement contract liaisons, but the fact that 37 percent of medical  centers have not done so indicates that there is an impediment which  senior VHA officials have not addressed.
Given the volume of VA spending on goods and services, it is important  that the department identify and implement cost savings opportunities.  While VA has had some success in this regard recently, more can be  done in terms of how medical supplies are ordered and how services  across medical centers could be leveraged for savings.
In many cases, VA has changes underway—including development of  revised acquisition regulations and rollout of the next-generation medical- surgical prime vendor program—that are intended to address some of  these challenges. Implementation is still to be seen, however. To help  ensure that these initiatives are successful, sustained senior  management attention is needed.
section_title: Recommendations for Executive Action
paragraphs: We are making the following 10 recommendations to the Secretary of  Veterans Affairs.  1.  In order to ensure universal usage and reduce duplicate work, the  Office of Acquisition and Logistics (OAL) should work with the  National Acquisition Center to develop a plan for adding functionality  to eCMS that will alleviate the need for NAC contracting officers to  enter obligations for high-tech medical equipment into two different  data systems.  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.  In order to ensure that contracting officers have clear and effective  policies as soon as possible, the OAL should identify measures to  expedite the revision of the VAAR, which has been ongoing for many  years, and the issuance of the VA Acquisition Manual.  4.  To help contracting officers use current policy that is in effect in the  period before the updated VAAR and VA Acquisition Manual are  released, OAL should take interim steps to clarify its policy framework,  including establishing and adhering to set time frames for completing  the process of reviewing all Information Letters, and either rescinding  them or reissuing updated policy through Procurement Policy  Memoranda.  5.  To address remaining ambiguities in roles and customer relationships,  the Office of Acquisition, Logistics, and Construction should assess  whether additional policy or guidance is needed to clarify the roles of  VA’s national contracting organizations, beyond that provided in its  March 2013 memorandum outlining the current structure.  6.  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.  7.  To ensure that VA has the data required to fully monitor the  certifications of its contracting workforce, OAL should determine the  appropriate frequency for archiving the data extracts on FAC-C  certifications to ensure that up-to-date data are readily accessible to  management.  8.  To maximize compliance with mandatory national contracts during the  transition to the new medical-surgical prime vendor process, SAC and  VHA Procurement and Logistics should take steps to ensure that:
SAC has mechanisms in place to collect and monitor transaction  data to determine the extent to which VISNs and their medical  centers are complying with the requirement to use national  contracts.
They establish achievable time frames for eliminating the ability  for ordering officers to directly order Federal Supply Schedule  items from the MSPV catalog once SAC awards national contracts  for these items and monitor progress on an ongoing basis.
The ordering interfaces developed by the prime vendors clearly  distinguish and prioritize standardized national contracts over  items on Federal Supply Schedule contracts.  9.  To facilitate consolidation of similar requirements and leverage buying  power across medical centers within VISNs, VHA Procurement and  Logistics should conduct a review of VISN-level strategic sourcing  efforts, identify best practices, and, if needed, issue guidance.  10. The Senior Procurement Executive should issue guidance to the  Heads of Contracting Activity to focus internal compliance reviews on  ensuring that required contract documents are properly prepared and  documented.
section_title: Agency Comments
paragraphs: We provided a draft copy of this report to the Department of Veterans  Affairs for their comment. The Acting Chief Acquisition Officer, OALC said  the department concurs with all of our recommendations. 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.
We are sending a copy of this report to the appropriate congressional  committees, the Secretary of Veterans Affairs, and other interested  parties. In addition, the report will be available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff has any questions concerning this report, please  contact me at (202) 512-4841 or by e-mail at mackinm@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. Key contributors to this report are  listed in appendix II.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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). We used eCMS as our main source of information  because it is intended to be the official repository for VA procurement  information and contains fields, such as the responsible contracting office  and obligation amount, relevant to our review. While we found errors and  missing data in eCMS, we determined that the data were sufficiently  reliable for the purposes of our reporting objectives. We made this  determination by conducting our own testing of the data for consistency,  including matching it against Federal Procurement Data System-Next  Generation (FPDS-NG) data for the same period, which we found  sufficiently reliable for our purposes. This comparison matched individual  contract numbers across the two databases, and, although it found a  large gap in total obligations, it indicated that the gap was due almost  exclusively to obligations under the pharmaceutical prime vendor  program. We also compared entries in certain data fields to information in  contract files for the 37 contracts and 19 task orders we selected for  review and found that data on extent of competition was generally  accurate. Finally, we discussed the accuracy and completeness of the  data with contracting office managers, system administrators, and other  VA officials who work with eCMS, and gathered information on internal  controls used to ensure the reliability of the data.
We analyzed the eCMS data by contracting organization, extent of competition, and other factors such as use of contracting preferences.
We also discussed how the system interacts with other VA data systems  with local contracting officials and system administrators. Additionally, we  reviewed prior VA Inspector General’s findings and interviewed Inspector  General officials. We generally focused our review on Veterans Health  Administration (VHA) procurements, as VHA represents 62 percent of  VA’s total spending over the period of our review.
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 also interviewed a number of  VA officials about organizational roles and procurement policies,  including:   the Acting Chief Acquisition Officer,   the Senior Procurement Executive, six heads of contracting activity (HCAs),
Veterans Integrated Service Network (VISN) and Network  Contracting Office (NCO) leadership at three selected locations, contracting officers for all 37 contracts included in our review, and contracting officer’s representatives (CORs) for 19 contracts  included in our review.
Additionally, we analyzed how certain policy requirements had changed  over time. To determine which contracting offices are responsible for  different organizations’ procurement needs, we analyzed policy  documents, reviewed selected contract files, and interviewed cognizant  program and contracting officials.
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. At some locations, we also met with ordering officers  and contract liaisons. In addition, we met with leadership from a seventh  contracting office, the Technology Acquisition Center in Eatontown, New  Jersey.
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.
We reviewed VA annual acquisition workforce reports submitted to the  Office of Management and Budget for fiscal years 2011 through 2014. We  also obtained and analyzed information on VA and VHA policies related  to contracting officers and CORs. To assess the extent of lapses in  contracting officer Federal Acquisition Certification-Contracting  certifications, we analyzed eCERT data. We obtained data on VHA  compliance with its contract liaison directive from the Office of  Procurement and Logistics and from the three individual VISNs we  visited. We also interviewed the Acquisition Career Manager, the Acting  Chief Acquisition Officer, Senior Procurement Executive, six HCAs, VISN  and NCO leadership, and contracting officers for all 37 selected contracts.
To assess training opportunities for VA’s acquisition workforce, we  obtained and analyzed budget and course information from the VA  Acquisition Academy, located in Frederick, Maryland. We also  interviewed the Deputy Chancellor of the Academy, as well as contracting  officers for all 37 contracts regarding their experiences with training,  including that provided by the Academy.
In order to assess VA’s medical-surgical prime vendor (MSPV) program,  we obtained and analyzed contract documentation for one of the NAC  prime vendor contracts. We also obtained and analyzed other NAC  MSPV information, as MSPV was under the NAC’s purview during the  time of our review. We obtained sample prime vendor sales reports from  the NAC in order to review what information they contain and how they  are used by NAC and VHA. We also obtained documentation on plans for  changes to the MSPV program from officials at the SAC in  Fredericksburg, Virginia, and the VHA MSPV Program Office. We  interviewed NAC, SAC, and VHA officials responsible for the program.  Finally, during our site visits to VA medical centers, we discussed the  MSPV program with logistics officials, including observation of ordering  officers using the Integrated Funds Distribution Control Point Activity,  Accounting and Procurement (IFCAP) system to place orders in the  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. The  sample contracts were selected from contracts with obligations during  fiscal years 2013 through 2015 at the selected contracting offices, based  primarily on   those with the highest dollar value;   type of purchase; and extent of competition, to obtain a mix of fully competitive, limited  competition, and non-competitive contracts.
Within the three selected VHA contracting offices, we focused on contract  actions for minor construction, and services.
We focused on these categories because they each represent major  categories of purchases made by VHA NCOs. We excluded other major  categories of contracts, such as those for clinical support or major  construction projects, because they were addressed by recent or ongoing  GAO reviews.
In cases where the selected contracts were indefinite delivery/indefinite  quantity contracts, we also selected one order from each—a total of 19— to include in our review. These were selected primarily based on those  with the highest dollar value.
For each selected contract and order, we obtained the entire contents of  the eCMS files from headquarters system administrators. We reviewed  these files to assess compliance with the FAR, focusing on key  documentation, including market research, price determinations, use of  Service-Disabled, Veteran-Owned Small Business (SDVOSB) set-asides,  and justifications for non-competitive awards (when applicable). In cases  where we did not locate these documents in the files, we contacted the  responsible contracting officer to determine if the documents existed  outside of eCMS. We also interviewed the contracting officers for all 37  selected contracts regarding the circumstances of the award and to clarify  any inconsistencies in the documentation; in cases where the awarding  contracting officer was not available, we spoke with the individual  currently assigned to the contract. We also spoke with the contracting  officers for each of the 19 selected orders. Finally, we interviewed with  CORs for 19 of the selected contracts and orders to discuss the nature of  the requirement, their experience with the contracting process, and  contractor performance. We selected these CORs primarily based on  those that were physically located at medical centers we visited.
We conducted this performance audit from July 2015 to September 2016,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact:
section_title: Staff Acknowledgments:
paragraphs: In addition to the contact named above, Lisa Gardner, Assistant Director;  Emily Bond; George Bustamante; Margaret Hettinger; Julia Kennon; John  Krump; Katherine Lenane; Ethan Levy; Teague Lyons; Jean McSween;  Sylvia Schatz; Erin Stockdale; and Roxanna Sun made key contributions  to this report.