Summary

The Department of Veterans Affairs (VA) operates one of the largest health care systems in the nation. For fiscal year 2007, VA estimates that it will provide health care to more than 5 million veterans, either in its own facilities or through other health care providers. During the past decade, the numbers of VA patients and the costs for treating them have increased rapidly, due in part to an expansion in the number of veterans eligible to receive care. The Veterans Health Administration (VHA)--the VA entity responsible for the health care of veterans--spends about $35 billion a year providing health care to veterans, including more than $7 billion to acquire health care services and products. In its own health care facilities, VHA contracts for a broad range of medical services such as anesthesiology, for other services that support the delivery of medical care such as facility maintenance and laundry services, and for products such as medical equipment, food, and hospital linens. It also contracts for medical care for veterans provided in non-VA hospitals and community based clinics. Contracting for services at VHA represents a large and growing proportion of total contract spending. In an effort to improve the operation of VHA's health care system, VA's Inspector General (IG) conducted reviews of individual VHA facilities through structured site visits with teams of IG officials from fiscal year 1999 through fiscal year 2006. These teams included officials from three IG offices--Audit, Health Care Inspections, and Investigations. These reviews, known as the Combined Assessment Program (CAP), focused in part on actions to increase the efficiency and effectiveness of VHA's contracting. The IG issued a summary report in September 2006 on the results of these CAP reviews, including summaries of recommendations made to address systemic, recurring deficiencies in the planning, management, and oversight of service contracts. In addition the IG issued other reports in recent years on weaknesses in VHA health care contracting. Congress requested that GAO review the recommendations made by the VA IG to improve the award and administration of service contracts for veterans' health care, and VA's efforts to implement these recommendations. In this report GAO identifies (1) the recurring themes among the key recommendations from recent reports of the IG concerning VHA's award and administration of service contracts for veterans' health care, and (2) the current status of VHA's implementation of the recommendations, according to VA data.

GAO identified five recurring themes among the 214 key recommendations contained in recent VA IG reports concerning service contracts for veterans' health care. Three of these themes track the phases of the procurement process--pre-award, award, and post-award--and account for about 61 percent of the key recommendations identified. For the pre-award phase, the IG recommended that contracting officers request pre-award audits when needed, and that VHA facilities ensure that legal and technical reviews are conducted on large-dollar contracts. In awarding contracts, the IG recommended that contracting officers explain the rationale for the award in price negotiation memoranda and conduct background checks once a contractor is selected prior to contract performance. The post-award recommendations focused mostly on payment issues such as verifying invoices and taking action to identify and recover overpayments. In addition to these themes, GAO also identified two other overarching recurring themes--human capital and management concerns--that account for about 39 percent of the key recommendations identified. About one quarter of the key recommendations involved human capital issues--such as ensuring the timely appointment and ongoing training of contracting officers' technical representatives, the staff who oversee contractor performance--while the remainder focused on the need to ensure compliance with applicable laws and regulations through management oversight of contracting activity. According to VA data, all the key acquisition-related recommendations identified in recent VA IG reports have been implemented. In general, managers of the VHA facilities that were reviewed as part of the IG's Combined Assessment Program had taken at least some action in response to the IG's recommendations before the reviews had been completed or in some cases had prepared plans for taking action, as detailed in the IG reports. Analysis of the key recommendations shows that the IG made the same or similar recommendations at many VA facilities. The VA IG Office of Audit told GAO that the issues that led to the same or similar recommendations being made at many facilities may be evidence of recurring and systemic issues throughout VA, and is therefore changing the way it conducts reviews to take a more agencywide approach to these issues.