The Mid-Atlantic Regional Group
Blinded Veterans Association
Legislative News
December 17, 2009
For all BVA members and key contacts, the press release from the House VA Committee Chairman today about VA contracting is of interest to all the veteran service organizations because of the way each medical center has managed its contracting of services for local veterans.
Clear Need for Procurement Reform at VA:
House Committee Taking Steps to Fight Fraud, Abuse and Waste
Washington, D.C. – On Wednesday, December 16, 2009, the House Veterans’ Affairs Oversight and Investigations Subcommittee, led by Chairman Harry Mitchell (D-AZ), conducted a hearing to examine the processes and needs of the Department of Veterans Affairs (VA) acquisition system and procurement structure. The Subcommittee reviewed recent Government Accountability Office (GAO) and VA Inspector General (IG) reports that detail unfairness and inefficiency in VA contracting.
“We all know that the acquisition system within the Department of Veterans Affairs has failed to develop a process that is both transparent and fiscally responsible,” said Chairman Mitchell. “Our hearing will hopefully determine the extent of the reform needed in order to ensure that the acquisition process within the VA is one that is fair, fiscally responsible, and effective. And, most importantly, serves veterans.”
Reports indicate that VA does not consistently acquire the best available price at a detriment to the taxpayers and veterans for several reasons. Most notably, most medical centers have negotiated and purchased medical healthcare services through contracts that individual VA medical centers have negotiated. This erodes the federal government’s leverage of its tremendous buying power. A 2004 GAO report stated that though VA had implemented policies and procedures that required medical centers to purchase medical products and services through VA’s contract programs, a VA IG report found that the medical centers continued to make many less cost efficient purchases from local suppliers. The VA IG estimated that, with improved procurement practices at medical centers, VA could have saved, in 2004, about $1.4 billion over 5 years.
Financial management oversight and lack of reliable financial information have plagued the VA for some time. As recently as a Fiscal Year 2008 financial statement audit report, the independent auditor reported serious weaknesses in internal control over financial reporting. Common causes for the weak financial management oversight include recording financial data without sufficient review and monitoring, lack of human resources with the appropriate skills, and lack of capacity to effectively process a significant volume of transactions.
Another area of great concern to the Subcommittee, and a casualty of the fragmented acquisition structure of the VA, is the lack of VA oversight of companies claiming Service Disabled Veteran Owned Business status (SDVOB). Fraud and abuse in the SDVOB program allowed ineligible firms to improperly receive millions of dollars in set-aside and sole-source SDVOB contracts, potentially denying legitimate service-disabled veterans and their firms the benefits of this program. Currently, there is little oversight to suppress and deter fraudulent pass-through or rent-a-vet businesses from benefiting from SDVOB status. In case studies that GAO conducted, it found that even when firms were found ineligible to receive a contract, they can still retain it because current regulations do not require that the contracting agency terminate the contract. Currently, neither Small Business Administration, except when responding to a protest, nor contracting officials are currently verifying the eligibility of firms claiming to be SDVOBs.
Chairman Mitchell concluded, “It is no secret that there are major deficiencies within VA’s procurement process, and to blame are a number of things, including a lack of a centralized acquisition structure, self policing policies in place that allow fraud and abuse, and continuous material weaknesses. Although I remain fairly optimistic that reform of this system can be accomplished, legislation to fix these problems may be necessary, along with change in policy and procedures.”
“It is imperative that leaders at the VA take a proactive approach to address the issues discussed today,” said Bob Filner (D-CA), Chairman of the House Committee on Veterans’ Affairs. “The Obama Administration has worked to bring a higher level of transparency to government and serious attention must be paid to the acquisition deficiencies at the VA. There is a lack of due diligence regarding firms that do business with VA, no clearinghouse for contracting data which leads to hidden and invisible contracts, no consequences for abusive firms, and the process of self-certification continually leads to fraud. This Committee is committed to providing necessary resources to VA – but those resources are intended for veterans.”
Witness List
Panel 1:
· Scott Amey, General Counsel, Project on Government Oversight
· Scott F. Denniston, President, Scott Group of Virginia, LLC
· Anthony R. Jimenez, President and CEO, Microtech
· Bob Hesser, President and CEO, Vetrepreneur, LLC (Testifying on behalf of the Veterans’ Entrepreneurship Task Force)
Panel 2:
· Kay L. Daly, Director for Financial Management and Assurance, U.S. Government Accountability Office
· Gregory D. Kutz, Managing Director, Forensic Audits and Special Investigations, U.S. Government Accountability Office
· Maureen T. Regan, Counselor to the Inspector General, Office of Inspector General, U.S. Department of Veterans Affairs
Accompanied by:
o Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office of Inspector General, U.S. Department of Veterans Affairs
Panel 3:
· Glenn Haggstrom, Executive Director, Office of Acquisition, Logistics and Construction, U.S. Department of Veterans Affairs
Accompanied by:
o Jan R. Frye, Deputy Assistant Secretary for Acquisition and Logistics, Office of Acquisition, Logistics, and Construction, U.S. Department of Veterans Affairs
o Ed Murray, Deputy Assistant Secretary for Finance, Office of Management, U.S. Department of Veterans Affairs
o Craig Robinson, Executive Director, National Acquisition Center, U.S. Department of Veterans Affairs
o Frederick Downs, Jr., Chief Prosthetics and Logistics Officer, Veterans Health Administration, U.S. Department of Veterans Affairs
o David Canada, Senior Procurement Analyst, Center for Small Business Utilization, Office of Small and Disadvantaged Business Utilization, U.S. Department of Veterans Affairs
Prepared testimony for the hearing and a link to the webcast from the hearing is available on the internet at this link: http://veterans.house.gov/hearings/hearing.aspx?newsid=506.
For those interested in the other news, this is the last hearing of the first session of the 111th congress ending a long and often hectic year of hearings.
Time for two weeks of break from the schedules of hearings, and expect more in January 2010.
Happy Holidays to everyone on the contact list.
Tom Zampieri
Director Government Relations
BVA Washington DC
BVA's Legislative Alerts Group
End of Document